Academic journal article Law and Policy in International Business

The European Community's Expansion Mechanism and the Differing Approaches of EFTA and Eastern Europe to Community Membership

Academic journal article Law and Policy in International Business

The European Community's Expansion Mechanism and the Differing Approaches of EFTA and Eastern Europe to Community Membership

Article excerpt

I. Introduction

A. European Community Expansion-1992 and Beyond

Now that the European Community (EC or the Community) is approaching the end of its 1992 project, it is turning its attention to the matters that will follow the single market. Fiscal and monetary union, political coordination, and security cooperation will all be crucial. However, one of the most immediate and important items that the Community will face is expansion. while expansion has not garnered the public attention that Community attempts at coordination of fiscal and monetary policies have, the way in which the Community deals with and reacts to expansion will play a central role in shaping the future form, goals, and capabilities of the Community. In addition, the formation of a Community expansion policy will aid efforts to reform the governing structure of the Community. Increased Community membership will call into question the relative power that should be exercised by the various institutions of the Community and by the various states within the Community.(1)

By November 1992, seven additional countries had already applied for membership in the Community and several others were planning or contemplating applying for membership.(2) Norway became the eighth applicant when it formally presented its application on November 25, 1992.(3) The new and potential applicants to the Community were "of unprecedented diversity in size, wealth, and religion."(4)

This Note examines the issues relating to expansion of the Community to include Hungary and Austria. These two countries are representative of the two groups of nations most likely to gain admission to the EC in the foreseeable future: the former Communist nations of Eastern Europe and the nations of the European Free Trade Association (EFTA).(5) The issues presented by each of the states found within these two groups are not the same. By focusing on states that are among the most likely within their groups to gain admission, this Note will thereby focus as well on those issues common to the members of each group in preparing for and gaining admission. Additionally, Hungary and Australia may each provide a model that the other states in their respective groups may choose to follow in pursuing and preparing for admission.

The two groups of states seeking inclusion in the EC have very different needs. The members of EFTA are relatively wealthy and need to gather domestic acceptance for the diminution of political and economic sovereignty involved in EC membership. Hungary and the other nations of Eastern Europe, on the other hands, are in need of direct assistance from the EC prior to membership. These Eastern European nations face problems arising from economic transformation and the growing strength of the EC. They also must face technologically intensive world growth, debt problems, and the dissolution of their eastern bloc trade ties.(6) Potential crises for these nations include the debt burden, factory closures, rising unemployment, pollution levels that are choking off foreign investment, misfired privatization, and widespread credit shortages.(7)

Given the great differences between the two groups of countries pursuing Community membership, there will be corresponding differences in the ways that the EC will deal with their applications for membership. In order to highlight these differences and their ramifications for the applicants and the Community, This Note will examine the domestic motivations for seeking membership and the results desired from membership. The Note will also examine the prospects for membership of these countries. Finally, the Note will examine the fit between the model cases and the countries within their respective group that are applying or will apply for membership.

B. Requirements for Membership

There are two requirements that must be met for admission to the EC.(8) First, the country must be European. …

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