Academic journal article The European Journal of Comparative Economics

The European Union and Its Neighbours: "Everything but Institutions"?

Academic journal article The European Journal of Comparative Economics

The European Union and Its Neighbours: "Everything but Institutions"?

Article excerpt

1. Prodi's promise

1.1 Introduction

Facing the greatest enlargement of its history (in terms of the number of countries, territory, and population), and a possibly long interruption of the enlargement process, the EU launched in 2003 the European Neighbourhood Policy (henceforth ENP) in order to furnish to its new neighbours of the East, left outside of immediate, or any, prospects of enlargement, some compensation and a kind of comprehensive framework for their relations with the EU, which could apply also to the neighbours (or alleged neighbours) of the South. (2) Presenting the basic philosophy of ENP in 2002 President Prodi made the famous promise: "everything but institutions." (3) The promise refers to the possibility for neighbours to have the same treatment and economic advantages of EU membership, except the participation in EU institutions, through a process of gradual adaptation to EU's membership requirements. Has Prodi's promise been fulfilled, or is it going to be fulfilled? We believe it has not, nor is it likely to be. Considering the figures of the new Financial Perspective 2007-2013, the issue of market access, and the internal power dynamics of the EU, we see that it is hardly conceivable that the ENP would ever give in practice to its neighbours, notwithstanding the theoretical possibility, the same economic advantages that membership offers to the poorer members of the EU, at least until when, if ever, the EU radically changes its decision making mechanisms.

1.2 Economic advantages for neighbours of "Everything but Institutions"

Let us consider now what are the advantages of membership and how nonmembers could share them. Considering the economic aspects only, the main advantages are three: The first refers to the creation of public goods, such as standards and norms, that can benefit economic activity, notably trade (not only with the EU), through predictability and uniformity. This can benefit non-members provided they accept those standards and norms, (4) but does not require in principle a specially devised Neighbourhood Policy (no more than the non-participation in the European Monetary Union may hinder countries outside the EU from adopting the euro as a legal tender). (5) The EU does not hold a copyright on its legislation and can only be happy if anybody else decides to mirror it. (6) However, neighbours cannot take part in the process in which these norms and regulations are established, and these standards are devised, even if they can in principle influence the agreements that can be reached in the framework of the international organizations to which they may belong, which may constrain the establishment of those standards and regulations. (7) Still EU legislation creates standards for its neighbours, what in itself amounts to a public good. The neighbourhood policy includes an operational structure for assisting the neighbours (as the EU does with candidates) that can facilitate the adoption of EU standards and regulations. This could be of some help for trade, especially by improving the opportunity for access to EU market through elimination, in particular, of the technical barriers to trade.

The second possible advantage refers to the net benefit (that is, net of contribution to the EU budget) of aid and financial assistance to the poorer members of the Union. This kind of assistance would certainly be provided to neighbouring countries if they were to be admitted to the EU (with the possible exception of Israel, since it is much better off than the others). (8) The third benefit refers to the possibility of integration between neighbours' and EU markets ("a stake in the Internal Market"), as characterized by the four freedoms (free movement of goods, services, persons and capital). In turn harmonization of legislation and market access could bring the additional benefit of stimulating foreign direct investment. This has performed an important role in the progress of the economies of Central European new members as well as of the more backward EU economies in the past. …

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