Towards a Pan-European Economic Space Ivan Samson1

Pan-European Economic Space: a lever for the unity of Europe

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Pan-European Economic Space: a lever for the unity of Europe
After its enlargement to 10 countries in Central and Eastern Europe, the EU has to show that it has a concept for helping the other transition countries in the CIS to resolve their problems. Reduction of the development gap between accession countries and other transition countries is a critical issue, and the initial task is to prevent further widening of this gap.
Research conducted on the Common Economic Space with Russia provided highly valuable conclusions. The CIS countries face basically similar structural problems, the main difference being the degree of each economic malaise (weakness of the state, weakness of economic institutions, difficulties in escaping the trap of a rent economy, corruption, barter and shadow economy, difficulties in building real firms with competitive and profit-seeking behaviours, low investment level and poor productivity, etc.)11 and possession or lack of commodities that can be sold on world markets. In order to address these problems the EU and its partners have to invent mechanisms and incentives for building a single market with the CIS based on implementation of the four fundamental freedoms (free movements of goods, services, capital and persons) complemented by a form of regulatory convergence (selective use of the acquis communautaire) and by strong flows of capital and know-how.
Such a Pan-European Economic Space should be built on the basis of tailored and complex agreements with regions consisting of groups of countries. The approach of negotiating PEES with several countries having common features, even if not strongly or formally integrated, has several advantages. It represents a half-way house between bilateralism and multilateralism that one could call regiolateralism (the EU term is “regional cooperation”). The justification for promoting forms of regiolateralism in relations between the EU and CIS countries are as follows.

- Regiolateralism echoes the Marshall Plan spirit, where US aid was conditioned by mutual trade development between the countries of Western Europe;

- It prevents mechanical crowding-out effects connected to bilateral FTA, without entering the overall approach of multilateralism, which is not the optimal framework for liberalisation in services and for regulatory convergence;

- The political message of opening from the EU is much stronger because instead of making a single state "negotiate" with 25 EU states, it shows respect by the EU for regional peculiarities and regional integration measures.

Regional cooperation is not new for the EU, which already has experience of the ACP (Africa, Caribbean, Pacific) agreements: the so-called Lome conventions, successively organising preferential trade with 71 developing countries. In 1989 the EU and the six-state Gulf Cooperation Council signed a cooperation agreement, in 1993 the EU-Central America Framework Cooperation Agreement was begun, followed by the EU-Mercosur Interregional Framework and Cooperation Agreement in 1996 and an agreement with the Andean Community in June 1999. Summits with the five Western Balkan countries are organising the process of further integration of these five states with the EU, and there is also a Euromediterranean partnership with 12 States from this region. This list is not complete and is merely intended to show examples of successful regional cooperation by the EU with very different regions and in very different forms.
Surprisingly, such regional co-operation never took place with transition countries, probably because of the enlargement paradigm, which gave priority to bilateralism. The fact that the EU is preparing deeper integration with transition countries, including forms of legal approximation on the basis of the EU acquis communautaire, is not a sufficient explanation. Deeper integration is also being developed with the Mercosur countries, where the aim is to move towards association agreements, and an economic partnership agreement is being prepared with ACP, not to mention the Western Balkans, which are sooner or later expected to become EU members.

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