Select Committee on European Communities Twenty-First Report


66. Even before the announcements on 13 October 1999, all the recent public statements by the European Council, the Presidency, the new Commission and the individual Member States had stressed both the high priority afforded to the enlargement goal and general confidence in its progress. The first wave applicant States seemed to have made steady (though unequal) progress in meeting the accession criteria, and all of them continued to hope that the target dates to which they had been working could be achieved. The EU had agreed a financial perspective for 2000-2006 and committed itself to agreeing the necessary institutional reforms by the end of 2000, and the progress of the actual negotiations seemed satisfactory.

67. Nevertheless, there were fears that the timetable was slipping. Privately, some senior Commission officials had conceded that 2005 seemed a more realistic date for the first accession. Some of the first wave applicant States were showing both nervousness and anger that they would be internally ready to join, but would find their accession delayed. Applicants not in the first wave were wondering when negotiations with them might be opened. The announcements by the Commission therefore came as a relief to many. In this Part of this Report, we consider whether that relief is justified.

68. We look first at the implications of the Commission's proposal to open negotiations with the remaining applicants, and consider whether there should be a timetable for the negotiations or target dates for accession. We consider whether the European Union is likely to be ready to accept new members within the timescale envisaged. We then examine the progress being made by the Central and Eastern European "first wave" States, and the issues which are likely to present difficulties in their negotiations, looking at the extent to which transition periods should be allowed, and the possible consequences within applicant States if their accession is delayed. Finally, we ask whether enlargement is in danger of being delayed by perceptions and attitudes, either in the applicant States or in the existing Member States.

Should negotiations with the remaining applicants be opened in 2000?

69. The Commission will propose to the Helsinki European Council that all the outstanding CEE applicants (together with Malta, but not Turkey) should be invited to begin accession negotiations[47]. Mr Keith Vaz, the Minister for Europe in the Foreign and Commonwealth Office, told us that all the indications were that the other Member States would support this proposal (Q 78); we understand that the idea received general support in a brief discussion at the October 1999 Special European Council in Tampere.

70. Mr van der Pas, now the Commission's Director General for enlargement[48], confirmed that the impetus for proposing further enlargement had come from the "tragedies that we have gone through in the Balkan region … These countries were always there at the edge of our field of vision, but now they have gone straight to the centre" (Q 98). This implied that relations should also be strengthened with the States which were already candidates: hence the Commission's proposal for a "big political gesture" in Helsinki. Applicants would have to meet only the political criterion before negotiations could start, but Mr van der Pas made it clear that

    "while we accept countries into the negotiations that 'only' fulfil the political criterion, we can also ensure that none of the applicants will join the European Union until they fulfil all of the criteria … We must be sure that once the European Union is enlarged it must function and the applicant countries must be able to play their role fully" (Q 98).

Challenged on whether the EU could be sure that successful applicants would actually implement all their obligations once they were admitted to membership, Mr van der Pas said that a "leap of faith will be necessary at a certain moment". It would not be possible for the EU to reach the end of negotiations and then draw back (QQ 99-102). This did not mean that at the end of negotiations the EU would just cave in; Parliaments in Member States, which would have to ratify accession Treaties would not accept that. The criteria should not be relaxed, but the EU should be "generous" in helping the applicants to meet them (Q 105).

71. There is a potential danger in opening the field too wide. In a previous Report, we said:

    "We do not support 'the regatta approach' to opening negotiations with the applicants for accession. It might have some short term diplomatic advantage but once substantive negotiations began the real difference in readiness could not be disguised or ignored. Hopes of early progress would have been raised only to be dashed"[49].

It has of course always been the case that the conclusion of negotiations with each applicant would depend on its own readiness for accession. But the Commission's new proposal provides an additional safeguard against the raising of expectations by specifying that "each applicant country [will] progress through the negotiations as quickly as is warranted by its own efforts to prepare for accession"[50]:

    "The principle of differentiation … should now also be firmly applied each time when deciding which and how many chapters of the EU acquis will be opened for negotiations [with each candidate] thus discontinuing the practice of opening an equal number of chapters for all candidates"[51].

72. Accession negotiations are already in progress with Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia. Recognising the strong political imperative to accelerate enlargement, we welcome the Commission's proposal that negotiations should now be opened with Bulgaria, Latvia, Lithuania, Malta, Romania, and Slovakia. We considered whether widening the field like this would carry the same danger of raising false hopes as the (misleadingly named) "regatta approach" which had been previously rejected. But we think there is a crucial difference. It has always been the case that the negotiations on each chapter would be closed separately at the pace of individual applicants, but chapters have hitherto been opened with all the applicants at the same time. Under the new approach, chapters would be opened with individual States only when they were judged to be ready. This would make it quite explicit from the start that each applicant country would proceed at its own pace, with the speed of negotiations as well as the ultimate date of accession depending on the individual situation of each country.

73. We note that the Commission is suggesting that the invitation to Bulgaria and Romania should depend on their first meeting certain conditions[52]. Mr van der Pas accepted that Romania in particular still had a long way to go before it could meet the economic criterion. He spelt out in more detail what would be required, explaining that the Commission would want to look at three points:

    "First of all, we would like them to show that the recent arrangements they have made with the World Bank and the IMF are really on track and they are sticking to them. Secondly, we would like them to overcome the hesitation shown up to now in defining a medium term economic strategy. Thirdly, we would ask them to sit down with us in a somewhat formal structure in order to overlook the way in which they are doing all these things. It is more the structural approach that we want to look at" (Q 103).

74. We can see that it might have been more logical simply to say that Bulgaria and Romania were not yet ready to open negotiations, but we appreciate that the events in Kosovo have prompted a particular sense of obligation to those two countries (which suffered considerable economic damage), as well as heightening the perception of the geo-political importance of EU enlargement as a potential contributor to regional stability.

75. For Turkey, the Commission proposes that it should be considered as a candidate country, but should not yet be invited to open negotiations. The Turkish situation is obviously linked with the position of Cyprus. Mr van der Pas explained that without the political problem of a divided island Cyprus would probably be among the first to enter, but

    "some of our Member States have said that as long as the island is divided it will be extremely difficult to envisage this country joining the European Union. They fear that we would otherwise import the political problem, it is as simple as that … If anything goes really wrong with Cyprus the Greeks have already said quite publicly that everything will go wrong with the rest of the accession negotiations" (Q 98).

He saw direct contact between the EU and Turkey as the best possibility of addressing the situation in Cyprus, and he hoped that the attention devoted to Turkey in the Commission proposals[53], although short of an offer to open negotiations, would facilitate such contact.

76. Although we recognise the danger of disappointment if negotiations do not proceed as fast as they might wish, we understand the political need to send a positive message to Bulgaria and Romania by including them in the list. We did not take detailed evidence on the positions of Turkey and Cyprus, but we appreciate the sensitivity of their situations and we wish the Commission well in its attempts to resolve them.

77. We were interested in the views of the first wave applicants on the possible broadening of the field[54]. They agreed at a meeting in Tallinn on 11 October 1999 "that inviting additional countries to begin negotiations—on the basis of the Copenhagen criteria—would help ensure the credibility of enlargement"[55]. But there has been some speculation that opening out negotiations in this way might have the effect of slowing down the momentum of the first wave of enlargement. We asked our witnesses from the first wave States whether this was a matter of concern to them.

78. Mr Ananicz, Secretary of State at the Ministry of Foreign Affairs in the Republic of Poland, said that Poland "strongly supported" the inclusion of other applicants in the negotiations, for both economic and political reasons: "we want to be a larger, stable Europe" (Q 8). He was convinced that the Commission would have sufficient capacity to handle all the negotiations (Q 9). For Hungary, Dr Gottfried (State Secretary for EU Integration) began his oral evidence to us by welcoming the Commission's new "more political" approach which he considered "in the light of the events which have taken place earlier this year in the Balkan area [to be] more than justified" (Q 31). He shared Poland's confidence that "no delays will occur because of the enlargement of the group of countries negotiating" (Q 31), and was particularly keen that Hungary's neighbours (such as Slovakia and Romania) should undertake "similar developments" as soon as possible (Q 35). For Slovenia, Mr Juri (State Secretary in the Ministry of Foreign Affairs) drew attention to the implications of the events in Kosovo for the EU Common Foreign and Security Policy, which he described as "the new channel through which stabilisation in our continent is possible", and in which Slovenia hoped to play an important role (Q 48). Slovenia fully supported the opening of negotiations with other applicants, provided that individual candidates were considered on their own merits, or at the most grouped into "smaller 'packages' of candidates which objectively belong together" (Q 47), and that the same criteria were applied as for the applicants already in negotiation (Q 53). The inclusion of Romania and Bulgaria would "show the other countries of the region that European integration remains possible" (Q 54). The Estonian Government welcomed the decision to open negotiations with other applicants "in accordance with the Copenhagen criteria", which it considered would "promote reforms in Central and Eastern Europe and add credibility to the enlargement process as a whole" (p 24).

79. On the basis of what we have been told, both by the first wave applicant States and by the Commission, we see no reason to believe that opening up the field should of itself slow down the progress of accession of the first wave States, provided that the Commission is well enough staffed to cope with so many different sets of negotiations.

Should there be a timetable for negotiations?

80. Although the first wave applicant States have their own target dates for accession[56], the EU has so far declined to make a formal commitment to a timetable[57]. The question of whether a timetable should be agreed for each applicant now arises explicitly. We considered whether this would be desirable, and if so whether timetables should specify either a target for the overall completion of negotiations, or a target date for the closure of each chapter, or both.

81. In his speech to the European Parliament on 14 September 1999 (before the vote on the investiture of the new Commission), Commissioner Prodi put the question firmly on the agenda:

    "We need to give serious consideration in Helsinki to setting a firm date for the accession of those countries that are best prepared, even if this means granting lengthy transition periods to deal with their social and economic problems".

His proposal aroused heated debate, and in a later speech (on 28 September 1999), he seemed to be backtracking somewhat, saying rather that the candidate States should be given a "precise pathway" for the accession process because they had the right to know how long it would be, "even if we don't go into details on the dates". In his speech on 13 October, introducing the Commission's proposals, he further said that he would "recommend setting a target date for the closure of each chapter of the negotiations" with each applicant.

82. Mr Ananicz pointed out that many decisions in the European Union had been accelerated by the existence of a deadline, and he thought that the same would be true for accession negotiations (Q 5). At the Tallinn meeting of Foreign Ministers[58], the first wave applicant States "invited the EU to target 2002 as a realistic possibility for the accession of new countries bearing in mind the framework given by Agenda 2000 and the target dates set by the [first wave applicant] countries". Perhaps not surprisingly[59], the Czech Republic does not consider that a target date should be set at the December 1999 Helsinki European Council: it would prefer a decision to be postponed until the June 2000 Lisbon Council, by which time it believes that the Czech position will have improved substantially[60].

83. We understand that most existing Member States are reluctant to agree to a timetable, and some (most notably France) are said to be actively opposed. The United Kingdom's view, said Mr Vaz, was that if timetables were agreed for the first wave they would need to have a degree of flexibility, in particular to avoid disappointment if they could not be met (Q 73). He added: "I think it is premature to give any deadlines or any target dates for the second wave countries": negotiations were going to be tough, and "we ought to be very cautious before giving any dates of any kind" (Q 83).

84. There was general doubt about the feasibility of the idea floated by Commissioner Prodi of setting deadlines for the closure of individual chapters (an idea which is not included in the formal Commission proposals). Legally speaking, the acquis is in a constant state of development, and chapters would obviously need to be re-opened if the goal posts moved. Moreover, in any process of this kind one would expect a number of issues (usually the most difficult) to be put aside until the final negotiations.

85. In considering the desirability of a timetable, there are strong arguments on both sides. It can certainly be argued that failure to agree a timetable now that it has been explicitly proposed would be seen as sending a negative signal to the applicant States. Yet on the other hand raising expectations may prove dangerous in the long-term unless some realistic timetable can be agreed. There is therefore a difficult dilemma: is it more dangerous to set a date knowing that it could be subject to delays on a number of fronts, or to refuse to do so for the same reason and thereby appear less than totally committed to enlargement?

86. We do not think that there is any realistic prospect of setting a formally agreed timetable, either for the closure of individual chapters or for the overall completion of negotiations. This does not mean that targetting should be abandoned, but it should be seen as aspirational, because there are too many uncertainties for the EU to commit itself to targets being met. What is important is that they should not be missed simply because of a lack of readiness on the part of the EU itself.

Has the EU modified its policies enough be ready to accept new members?

87. In a previous Report, we looked at the policy changes which would be necessary if enlargement was to be possible. We concluded:

We have therefore considered whether the policy reforms agreed at the Berlin European Council are sufficient to allow enlargement.

88. On the Common Agricultural Policy, the answer must be no. In our Report on the Berlin agreement on CAP reform, we concluded:

    "[Even] the Commission's proposals in Agenda 2000 would not have been sufficient to equip European agriculture for the challenges of the next decade, in particular the needs to improve productivity; to facilitate enlargement of the Union; to develop a policy consistent with international trading agreements; better to protect the environment; and to promote rural development. The Berlin European Council agreement is substantially worse than the Commission's proposals, and is a bad outcome for the Community: its agricultural industry, its taxpayers and its consumers. [The Government] and others … have said that the deal will not be able to withstand the pressures acting against it and will have to be reformed before 2006. We hope that they will be proved right"[62].

89. The United Kingdom Government notes that "the Agenda 2000 agreement contains a number of mid-term CAP policy reviews" (p 27). Like some other Member States, it sees the Berlin agreement on CAP as only a first step, though this is not a universally held view. Mr van der Pas said that "the Berlin compromise … did not go as far as [the Commission] thought was necessary but a step has been taken" (Q 103).

90. The agreement reached at the Berlin European Council on future eligibility for the Structural and Cohesion Funds, on the other hand, was reasonably satisfactory. The reduction in the number of Objectives for the Structural Fund was agreed as proposed, though there was a considerable amount of horse-trading over the detailed application of the new rules (leading among other things to the agreement of 13 exceptions to the general rules). For the Cohesion Fund, the major issue had been whether Member States which had met the convergence criteria for membership of EMU should continue to benefit; the agreement was that they should still be eligible in 2000, but that "the overall allocation of assistance for Member States participating in the euro will be adjusted to take account of the improvement of national prosperity attained over the previous period".

91. We believe that the decisions taken at Berlin on the future of the Structural and Cohesion Funds are "accession-friendly". However, we remain convinced that more radical reform of the CAP is needed, and we hope - and expect - that the forthcoming WTO negotiations will bring renewed pressure for this.

Has the EU made adequate financial provision for enlargement?

92. In considering this question, we must look at three elements:

93. We concluded in a previous Report[63] that the own resources ceiling of 1.27 per cent of GDP was likely to be sufficient for the time being, although it would need to be considered at some time in the future. Within that ceiling, a new financial perspective for the period 2000-2006 had to be decided. It was a considerable achievement that Member States reached any agreement on this at the Berlin European Council[64], and the decision to ring-fence funds for enlargement was also welcome. The Foreign and Commonwealth Office pointed out to us that the package "allowed the EU to more than double [its] pre-accession aid to Central and Eastern European candidates to intensify their preparations for membership" (p 27), as well as making provision for new Member States once they have joined. We think it is likely that the agreement may not prove adequate or sustainable and so may need to be renegotiated, which would be extremely difficult. We sought views on this from our witnesses.

94. For Poland, Mr Ananicz said (Q 18) that the only potential lack of funds related to the CAP, where (as he had explained in his written evidence) "either the principles will [have to be] changed (to make the funds available for direct subsidies for farmers), or the new members will have to adopt transition periods" (p 2). In other areas, the problem was not inadequacy of funds, but the need for Poland to build up its absorptive capacity. Moreover, EU decisions on project funding were often taken so late that Poland had to set aside budgetary provision to cover the co-financing of projects which had not yet been agreed; this caused a risk that the funds would not be used to maximum effect (Q 18). Hungary's written evidence explicitly states that "the envisaged domestic and EU funds will be sufficient to allow accession on the time-scale originally planned" (p 12), and Dr Gottfried confirmed that he did not foresee financial problems (Q 43). Slovenia feels rather hard done by. Its written evidence explained that EU assistance for individual projects would be crucial (p 18), but Mr Juri said that Slovenia was getting less financial support than it had expected, and less than any of the other applicants—although he recognised that this was because the country already had a relatively high per capita GDP[65] (Q 61).

95. Mr van der Pas pointed out that the Berlin European Council had "earmarked money for enlargement that should be sufficient for the first accessions, [that is] welcoming the six countries we are now negotiating with". But, he added, "I say this tongue in cheek because there are a number of unforeseeable things in the negotiations". If agricultural income compensation had to be provided, "then the financial perspectives agreed upon in Berlin [would] have to be reviewed". Moreover the agreement had not reflected that fact that, as had been the case after previous enlargements, the contributions of new Member States would be phased in. But he reminded us that "the Berlin compromise" had foreseen periodical reviews of the financial perspective before 2006, and that there was considerable headroom between the amounts agreed in Berlin and the own resources ceiling (Q 115).

96. We have always been concerned that enlargement might be jeopardised by the failure of existing Member States to make sufficient funding available. We remain of the view that the own resources ceiling is adequate, at least for the time being. But we are less convinced that the new financial perspective will provide sufficient resources, and we urge that it should be reviewed before 2006 if necessary so that adequate provision can be made in annual budgets for the costs of enlargement.

Can EU institutional reform take place in time?

97. We intend to undertake a full enquiry shortly into matters arising from the need for institutional reform, and we do not wish to pre-empt the results of that. However, we have taken a first look at the issues insofar as they relate to the readiness of the EU to accept new members.

98. Member States agreed at the June 1999 Cologne European Council to hold an Inter-Governmental Conference "to resolve the institutional issues left open in Amsterdam that need to be settled before enlargement", and to agree the necessary changes to the Treaties before the end of 2000[66]. Mr van der Pas told us that he would then expect ratification by Member States to take a year (Q 115). We think this may be an underestimate: it took 18 months for the Treaty of Amsterdam to be ratified by all Member States. But Mr van der Pas hoped that the institutional changes would be in force by the end of 2001, to coincide with the conclusion of negotiations with the first applicants: "there would thus be a certain parallelism in the negotiating process and our own internal IGC preparations" (Q 115).

99. The agenda for the IGC remains to be agreed. The report by the "three wise men"[67] suggested that the IGC agenda should be widened beyond the three issues identified at the Cologne Council. This obviously has attractions to some[68], but there must be a danger that it would prolong the IGC—even though the report says that the group took the deadline of concluding the IGC by the end of 2000 as "imperative"[69]. We understand that most Member States are likely to support a restricted agenda. Mr Vaz believes that other Member States agree with the United Kingdom that "what we want … is a very focused IGC, a short IGC" (Q 95). According to Mr van der Pas, it was indeed the case that all Member States accepted the need to go ahead as quickly as possible with the decisions on institutional reform which were necessary for enlargement. They would have to consider whether the "more ambitious points" suggested by the three wise men were really necessary in order to welcome new members (Q 115).

100. However, it is not a foregone conclusion that consensus could be reached on the timescale envisaged by the Commission even if the agenda were limited to the three issues which were left open. In particular, some small Member States may be prepared to block any redistribution of votes in the Council intended to redress the political weight of small and large States in the latter's favour. And deciding to go ahead with enlargement without institutional reform is not an option: even if the Member States were prepared to follow that route, the European Parliament has threatened to withhold its assent to any proposal for enlargement unless it is convinced that the capacity of the EU to act effectively has been assured.

101. The possibility of delays in accession because of failure to reach a timely agreement on institutional reform is naturally of concern to the applicants. Estonia urges the existing Member States to ensure that the necessary institutional reforms progress rapidly: in order to continue to function as "a vehicle of peace, stability and prosperity in Europe" the EU must adapt to new circumstances (p 24). And Hungary explicitly suggests that the agenda should be "focused primarily on the Amsterdam left-over issues" (p 12).

102. We would not wish at this stage to express a view on what should be included on the IGC agenda, but only to emphasise the danger that agreement might not be reached in time, and the absolute political imperative that it should be. Currently, we fear that the most likely outcome is that the pace of enlargement will be constrained by failure to agree on the detail of institutional reform. This would be seriously damaging to the confidence of the applicants.

Will the first wave CEE applicants achieve their target dates?

103. In his speech on 13 October, Commissioner Prodi said that the Commission considered that by the end of 2002 "negotiations can be concluded with those countries meeting the criteria for accession". As for the first wave applicants themselves, Hungary has been working towards 1 January 2002 as its target for being ready for accession, and the other four first wave CEE applicants are committed to 1 January 2003. We take those dates as the targets for reaching an agreement at the conclusion of negotiations. Thereafter the treaties of accession would require the assent of the European Parliament, and would have to be ratified by the national Parliaments of the existing Member States and the applicant States themselves; these processes could well take 12 to 18 months. This might mean that actual accession did not take place until 2005[70].

104. Mr Ananicz said that he thought Poland's target date of 1 January 2003 was realistic; he hoped that both Poland and the EU would complete the necessary reforms by the end of 2002. This did not mean that he was complacent about progress:

    "I personally am not very satisfied. There are many things which could have been done better. We avoided some mistakes but this is a very harsh and difficult process" (Q 2).

In particular, he accepted the Commission's comment that

    "the pace of transposition [of EC law] remains sluggish in Poland … Performance in progress in institutional strengthening … has been sketchy, resulting in a situation where certain parts of the administration are well equipped to effectively implement EC laws while others have serious weaknesses"[71].

The Commission does acknowledge that the slow progress in legislative transposition has arisen because "Poland concentrated its political and administrative energies on domestic reform"[72]. In his written evidence, Mr Ananicz emphasised "the sheer range and scope of the reform process" (p 1), and he explained that it was very difficult to build a new administration from scratch in a big country where everything had previously been centralised (Q 13).

105. Poland had also been criticised by the Commission for slow progress on trade liberalisation. Mr Ananicz explained that the Polish trade deficit was nearly 12 billion euro[73]. Opening the Polish market would increase this figure, at least until Poland made sufficient progress to be fully competitive; he did not accept the suggestion that the trade deficit would be compensated by capital movements in the short term. Poland was not closing the market, but thought that its opening should be gradual (QQ 22-28).

106. The target towards which Hungary was working had been 1 January 2002. Dr Gottfried said that if the first accession treaties were to enter into force from 1 January 2003 (as Mr Prodi had suggested), Hungary would like to meet that date, which would mean that negotiations should be finished in 2001: he believed that to be achievable (Q 32). The Commission recognises that Hungary has made progress in many fields, citing in particular "adopting State aids and self-employment laws, further aligning public procurement and intellectual property legislation and continuing to emphasise that new approach in the standards and certification areas"[74]. But in a number of other areas it highlights shortcomings which it described as "worrisome". Dr Gottfried told us that the areas where criticisms were made had already been recognised in Hungary's own programme for adopting the acquis (Q 32). For example, he mentioned that measures had been introduced to strengthen the fight against corruption, and a medium-term strategy had been adopted to address the special problems of the Roma community (Q 42).

107. Mr Juri confirmed that Slovenia's target was to harmonise its legislation with the acquis by the end of 2002, so that it was internally ready for accession (Q 47). The Commission's 1998 progress report had been critical of a "loss of momentum" in Slovenia, but the new progress report says that Slovenia has

    "[taken] the message to heart and accepted that [its] pre-accession preparations would need to be accelerated. There has been a clear stepping up of the pace … the main political parties have agreed to give priority to adopting EU legislation and significant progress has been achieved"[75].

However, there were still areas needing attention, such as the legal framework for State aids, and the completion of alignment in areas of public procurement and free movement of persons, capital and services[76], as well as public administration and judicial reforms. Mr Juri accepted the Commission's comment that there was "a major challenge in actually setting up the institutions foreseen in recently adopted laws", but assured us that the target date would be met (Q 57). Slovenia wants to "join institutionally the democratic European family to which we feel we belong" (Q 47).

108. The Republic of Estonia confirms that it has the "firm aim" of being ready for accession by 1 January 2003. To achieve this, it suggests that the speed of its negotiations should be accelerated, so that they can be completed "by the end of [2000], but not later than in the course of 2001". Like other applicants, Estonia says that reforms are necessary for internal purposes as well as for being ready to join the EU:

    "European integration is not a goal in and of itself. It is a means of meeting our national objectives of building a state based on European traditions and values, developing a functioning market economy, consolidating democracy and creating a stable and prosperous society" (p 23).

In its progress report, the Commission acknowledges that Estonia is "building on a solid base", but expresses concern that "the pace of alignment … in key areas of the internal market…, veterinary and plant health, agriculture and employment and social affairs has slackened", and there are still "serious administration weaknesses" in key areas[77]. In the customs sector, reforms are proceeding worryingly slowly; tariffs have only been introduced so far for a very limited number of goods and the necessary administrative machinery has yet to be established[78].

109. Having for the second year running identified serious shortcomings in its preparations, the Commission now clearly considers the Czech Republic to be the weakest of the first wave candidates. Although it finds that the country can be regarded as a functioning market economy, it says that the situation in that respect "gives rise to concern", and the country "has continued to lose ground" in its capacity to withstand competitive pressure and market forces, though it "should still be able to meet this criterion in the medium term if it consistently implements remaining economic reforms"[79]. The pace of legislative alignment is found not to have picked up significantly, with uneven progress across sectors. The Commission identifies major shortcomings in most policy areas, and concludes that "the Czech Republic's record in meeting terms of meeting the short term Accession Partnership priorities is not satisfactory"[80]. Inevitably, the publication of a second critical report has prompted speculation that the Czech Republic might fall behind its target date. Mr Kavan (the Foreign Minster) has insisted that the target date of 2003 remains "not unrealistic", although "hard work must be done and we will have to speed up a lot"[81].

110. For all applicants, the capacity actually to implement the commitments they are taking on is assuming increasing importance. Thirty per cent of the PHARE budget is devoted to institution building in the CEE applicant States, partly through the twinning programme (which involves the long-term secondment of experts from Member States to relevant organisations in applicant States to advise and work on EU accession). The Commission has published a table showing an impressive list of twinning projects in various spheres in 1998 and 1999[82]. We understand that the United Kingdom's participation in twinning arrangements ranks third among the Member States. It has also provided assistance through the Know-How Fund, for which witnesses expressed their appreciation[83].

111. Mr Vaz said:

    "I think the target dates are realistic, but they are also ambitious … [The applicants] are making excellent progress, but … we should not underestimate the fact that there is a lot of work to be done" (Q 64).

We think that early progress in reaching provisional closure of chapters may have been deceptively rapid, because the negotiations deliberately started with the easiest and least controversial of the chapters[84]. The remaining chapters are much trickier, with a number of very difficult and sensitive issues for both the applicants and the EU. The really hard bargaining will begin once all the chapters have been opened: only then will all the difficult issues have been identified and put on the negotiating table. This was due to happen by the middle of 2000 for all the first wave applicants, but the process may now slow down because under the Commission's new proposals chapters would be opened with individual Member States only when they were deemed to be ready.

112. We recognise the magnitude of the effort which all the first wave Central and Eastern European countries are making to transform not only their economies but also their political, administrative and social structures. As the Polish Secretary of State at the Minister of Foreign Affairs said, "the people are making the changes, not the administration and not the Government but the people"[85]. We also welcome the support that is being offered both through EU funds and by individual Member States. But however hard the applicants try, it is clear that they cannot realistically hope to achieve everything at the same time. Even in Hungary, generally recognised as the best performing among the applicant States, there is still a lot of difficult work ahead. In particular, we share the Commission's concern that the applicants must develop their administrative and judicial capacity to ensure that the acquis is properly implemented and enforced. Although we recognise the need to keep up momentum, we think that the target dates being quoted both by the applicants and by the Commission may well be over-optimistic. We consider that it might be better for that to be explicitly recognised now.

Will transition periods be needed?

113. If transition periods are agreed, the applicants will not have to implement the whole of the acquis immediately. The realism of the target dates for the first wave applicants obviously depends crucially on the outcome of negotiations on transition periods, and this is likely to set a precedent for the approach to negotiations with the remaining applicants. We therefore looked carefully at the approach of the Commission and the Government to the principle of transition periods, and at the issues which have already emerged as likely to cause difficulties.

114. In his speech to the European Parliament on 13 October 1999, Commissioner Prodi said:

The Commission is now formally proposing that it may not be appropriate to insist that the acquis communautaire is fully implemented in all areas before applicants are allowed to accede[86]. Mr van der Pas explained that the Commission

    "would like to push the applicant countries as quickly as possible towards applying the whole of our legislation as from their admission to the EU. Only if they do that can we expect them to be members enjoying all the rights but also capable of fulfilling all the obligations" (Q 115).

Nevertheless, it had always been envisaged that there would be good reasons for granting short transition periods in some areas. Now that was being made more precise, especially in those areas where it was clear that applicant countries would have to make enormous investments. The Commission intended to keep the maximum pressure on, but once all the issues were on the table the EU would have to define a strategy for transition periods.

115. In a previous Report, we noted areas where we considered that

    "it would be unreasonable for the EU to insist on the full implementation of the … acquis before accession. We think that the way ahead should be for maximum help to be given to the applicant countries in terms of advice and access to investment capital and for accession to be followed by transitional periods, which may need to extend over ten or more years, determined on the basis of study of the physical and economic practicalities"[87].

116. The Government's attitude towards transition periods appears to be hardening. In evidence to our previous enquiry, Mr Nick Ilett (Head of the EU Finance team at HM Treasury) said in October 1997:

    "As a general proposition I agree [that] it is necessary to get these [transition] periods down as far as possible, but the environmental issue is the one which always comes out when we talk to our friends in Eastern Europe, and I think we would be deluding ourselves if we thought that is capable of a quick solution"[88].

Similarly, in her evidence in December 1998 to the House of Commons inquiry on enlargement, Ms Joyce Quin MP (then Minister for Europe in the Foreign and Commonwealth Office) said that enlargement should involve

    "as few exceptions and derogations as possible simply because what I would not like to see is some kind of two-tier European Union coming into effect through discriminatory arrangements"[89].

We would accept that: but the question is how few exceptions are "possible"?

117. In his evidence to us, Mr Vaz (then newly-appointed as Minister for Europe) echoed his predecessor's view:

    "What we do not want is a situation where you have a two-tier European Union, where you have a fast lane and you have a slow lane. That would be disastrous for the Community" (Q 74).

But he then went further:

    "I think we should be very, very wary indeed of giving exemptions and … allowing for transition periods because … the European Union will only work if everybody is signed up to the economic and political criteria and we do not want to create different streams for the Union … I do not want the message to go out from this Committee that we are in favour of [transition periods] … We want them kept to the very minimum because all the applicant countries have asked for them and everybody has a transition period in every single sphere and that is going to destroy the whole nature of joining the European Union, so we are going be very robust on this … They have simply got to sort themselves out given the support that they have received[90], and I do not think that long transition periods in particular areas are going to be very helpful" (QQ 80 and 84).

Specifically in relation to agriculture, he said that "nobody should be under any illusions" that they would be getting transition periods (Q 89). And in relation to environmental matters he said that

    "the applicant countries should do their best to try to make sure that they are up to standard … I would not like to begin by saying that in any way they will be allowed any transition period … I think we should be pretty robust on this" (Q 93).

118. There would be a certain irony if the United Kingdom were to take the position that transition periods could not be permitted, when—like all other new Member States—it benefited at its own accession from a whole range of transition periods of varying lengths in various policy areas[91].

119. We accept that the applicants are receiving both financial help and technical assistance to help them meet the acquis before they join the EU. Nevertheless, we are concerned at what seems to be a hardening in the Government's attitude towards transition periods. We take this to be simply a negotiating position, since it seems incompatible with the Government's enthusiasm for enlargement. After all, as the Foreign and Commonwealth Office noted in its evidence to us, the Prime Minister said in Romania in May 1999 that "Britain wants the EU to enlarge and to do so soon"[92]. It seemed clear from the evidence we received that without adequate transition periods very few applicants could accede "soon", and some would be unable to do so at any time in the foreseeable future.

120. The Commission is now proposing that transition periods could be acceptable in areas not directly affecting the functioning of the internal market and requiring huge investment. We sought views on this from our witnesses from the first wave CEE applicant States.

121. Dr Gottfried welcomed the proposed distinction (Q 31). He instanced environmental standards, where for Hungary "even if there is the best possible progress on the environmental legislative area there are certain pieces of the environmental acquis where full compliance cannot be there in the coming decade". He cited in particular waste water and air pollution as areas where the relevant legislation could be in place by the end of 2001, but transition periods would be needed before it could be fully implemented (Q 36). The Commission notes that "none of the candidate countries [is] very far advanced in the transposition of environment laws", even though "some progress has been made over the past year by most countries in analysing the challenges and developing strategies together with investment plans for alignment in the sector"[93].

122. As far as energy is concerned, one of the main problems will be the need to close and replace old Soviet-style nuclear power stations, which Member States see as a pre-condition for accession. The June 1999 Cologne European Council asked the Commission to pay particular attention to this issue in its progress reports this year, and both Lithuania and Slovakia[94] have agreed closure dates for their oldest nuclear power stations in return for the promise of additional financial assistance through the PHARE programme[95] to help with decommissioning[96]. Further financial assistance will be sought from the international community[97].

123. It is clear that the obligation to match EU environmental standards will impose enormous demands in terms of both financial and human resources which none of the applicant States will be in a position to meet for some years. Appropriate transition periods therefore seem inevitable here, as they do in the energy sector, and following years of neglect massive expenditure will obviously also be needed to bring other aspects of the infrastructure up to the standards in the present Member States.

124. But there may in addition be areas which are clearly linked to the Single Market, but where either applicant States or existing Member States will seek transition periods.

125. Outstanding among these areas is the issue of arrangements for agriculture. The EU is proposing to exclude CEE farmers from the system of direct compensation payments that farmers in the EU15 will continue to receive. Mr Vaz explained that

    "the Berlin settlement implied that at least in the period leading up to 2006 direct payments would not be made to farmers in the new Member States. The Commission took the view that a better use of funding would be to provide aid to help the infrastructure in the candidate countries rather than to pay direct payments to their farmers. That is what Berlin decided" (Q 90).

The reaction of some applicants will be to seek transition periods so that they will not have to open their borders immediately to agricultural imports from the EU15.

126. The problem is particularly pronounced for Poland, with its large agricultural sector. Mr Ananicz objected to the EU proposal on the grounds that it would create second class Member States, and expressed the hope that it was negotiable; he pointed to the fact that the current structure of the CAP was likely to be a major issue at the forthcoming WTO negotiations, which he hoped might lead to the removal of export subsidies for EU farmers (Q 10). Mr Vaz said that he expected the discussions with Poland on agriculture to be "very forthright" (Q 85), but the Government had sympathy with the plight of Poland and wanted to see a solution (Q 88).

127. Because of the composition of their economies or their existing agricultural price structures, the other first wave applicants are less concerned with perceived defects in the CAP. Dr Gottfried specifically stated that Hungary "does not even intend to try to take up the future of the Common Agricultural Policy in the context of the accession negotiations", though he added that "we strongly believe that equal treatment should be granted under the CAP, whatever the CAP will be after accession" (Q 40). In Slovenia, prices for agricultural products are high in comparison with the level in other applicant countries, because of the very small scale of agricultural holdings. Mr Juri said that the intention in 2002 was to harmonise prices, with direct state compensation for farmers: but this was still subject to negotiation (QQ 58-60).

128. Mr van der Pas (Q 103) accepted that, following the decision in Berlin, agriculture was "one of the sectors where we expect more difficulties than elsewhere", particularly on two points. The first was the question of the level of income support which would be necessary to compensate farmers for exposing them to lower world market prices. The existing Member States were starting from the assumption that such support would be less necessary in the applicant countries because their current agricultural prices were lower. The applicant countries were already protesting at this. The second was the restructuring of agriculture (which in countries like Poland implied the restructuring of society[98]). He pointed out that if the EU had to make concessions during the forthcoming WTO negotiations, the problem of comparing price levels might be "attenuated to a certain extent". But he accepted that the likelihood of changes to the CAP would make it difficult, if not impossible to close the agricultural chapter with applicants until the way forward was clearer (Q 104).

129. We can see that transition periods may also be needed in those parts of the acquis which clearly do raise Single Market issues. For agriculture, it is clear that little progress can be made until the EU grasps the nettle of further CAP reform; until that happens, applicants can reasonably seek transition periods on the grounds that their domestic agricultural products should be protected against subsidised imports from existing Member States. Changes in the agricultural support system may be forced on the EU in the course of the WTO negotiations, but we doubt if any change will happen by 2002. So unless applicants are allowed transition periods to protect domestic production, it seems that only those prepared to accept the CAP as it stands could conclude negotiations in accordance with their target dates.

130. There are other difficult areas, such as the right to purchase land. Asked about Poland's proposal that there should be an 18-year transition period before citizens of other Member States would be given this right, Mr Ananicz explained that although there was not currently an outright ban, special approval was needed, which he recognised to be "against the system of the EU". Polish farmers feared that, given the relatively low land prices in Poland[99], they would have no possibility of acquiring more land if the market was opened immediately, because foreign purchasers would flock in[100] (QQ 15-16). There was a similar price differential in Hungary, with the need to "live through the process" of closing the gap, in the hope that people living on the land would become entrepreneurs rather than selling their land (Q 40). The issue is also sensitive in the Czech Republic and Estonia. Slovenia, on the other hand, would not be seeking a transition period in this area: EU citizens who resided in Slovenia before the country became independent can already buy land (p 17), and Mr Juri said that the country was committed to liberalising the real estate market fully by the beginning of 2003[101] (Q 47).

131. On state aids to industry, the applicants will want transitional periods to protect vulnerable sectors. It will be difficult for the Commission to take too hard a line on this in negotiations, when so many examples of State aids still remain within the existing Member States.

132. We think that although the right to purchase land and the abolition of state aids to industry are clearly Single Market issues, it should be possible to find reasonable compromises over transition periods.

133. Free movement of people is a sensitive area both for applicants and for exiting Member States. As far as the applicants are concerned, the tightening of the EU's future eastern border has implications for inter-State relations in the region; for example, the Hungarian minorities in some neighbouring States face the prospect of needing visas.

134. Existing Member States, on the other hand, are concerned about excessive immigration. This is not a new concern; the same fears arose in previous enlargements[102], and proved unjustified. In her evidence to the recent House of Commons inquiry, Ms Heather Grabbe (of the Institute for German Studies, University of Birmingham) claimed that "allowing free movement of labour is unlikely to provoke large migratory flows", and pointing out that "the outcome of previous EU enlargements was relatively limited migration, despite wide disparities in employment and income between the poorer Mediterranean States when they acceded and richer northern Europe"[103]. In our 1997 Report, we also noted that in the past these fears had "always proved to be exaggerated". Nevertheless, we took the view that

    "Freedom of movement between a newly acceding State and the EU15 may not be in the interest of either side immediately at the time of accession … It may well be that some transitional period is desirable for sound economic reasons as well as on presentational grounds"[104].

135. We suggested to Dr Gottfried that after the gains made by the Freedom Party in the recent Austrian general election the question of allowing free migration might be even more difficult to resolve. His reaction was that he would

    "be interested in the real economic justification for the suggestion that the volume and the composition of the potential migratory force from Hungary would affect the labour market in Member States … When historical circumstances do not force Hungarians [to leave the country] the traditional mobility is lower than the European average" (Q 38).

136. It has to be recognised, however, that not all attitudes towards allowing free movement of persons arise from fears about threats to employment. We are well aware of the existence of xenophobia, and Mr van der Pas agreed that not enough attention had been given to this kind of human problem (Q 113).

137. We consider that transition periods will probably be needed in the area of freedom of movement of persons, if only to allay concerns in existing Member States. We note that there are precedents for this.

138. Looking at the whole issue of transition periods, we accept that it would be unwise for the existing Member States to adopt an over-generous attitude at this stage in the negotiations. Nevertheless, we continue to believe that their attitude must be realistic: it is simply not sensible to pretend that no transition periods will be needed. After all, transition periods have been a part of the accession negotiations before every previous enlargement, and it has been accepted that both the European Union and the new Member States might need time to adjust in certain sectors. We recognise that with the completion of the Single Market and the removal of border controls it is now more difficult to permit any special temporary arrangements, but we think that it is important not to appear to be making accession harder for the new applicants than it was when some of the present Member States joined.

139. We welcome the distinction proposed by the Commission between areas which are essential to the Single Market and those which are not, but we note that it would not solve the whole problem. There are some cases where we think that the demand for transition periods may be legitimate even though they relate to the Single Market. And there are others, like the Common Agricultural Policy, where transition periods may be needed because of the failure of Member States to face up to the real need for reform.

What will happen if the first wave applicants' target dates are not achieved?

140. In his speech to the European Parliament on 13 October 1999, Commissioner Prodi, said that the enlargement process must be

141. It could be argued that it would not really matter if enlargement started a little later than the first wave applicant States are hoping. In many respects, it is indeed the successful conclusion of the negotiations that should be the real goal. Once that has been achieved, the political and economic certainty about their future destiny should immediately bring dividends, for example in increased foreign direct investment. However, it may be difficult to persuade the general public in the CEE States that the EU is not deliberately going back on its presumed promises. There is concern about the growth of Euro-scepticism in many of the applicant States, and nationalist forces could exploit any apparent delay. Our witnesses confirmed this as a problem.

142. For Poland, Mr Ananicz said that if the process slipped

    "the most important setback would be in the psychology, that is the readiness of Poles to commit themselves to more sacrifices in this difficult process of modernisation of the state" (Q 4).

He pointed out that the changes necessary for accession were going together with "reforms that are not directly related to the acquis communautaire but are the result of Communist rule and the disaster in the economy and social life that was brought about by that system"(Q 2). As his written evidence said, "such brave and far-reaching reforms entail high social costs which tend to dampen public enthusiasm for rapid transformation" (p 1). He gave the example of the denationalisation of the steel industry, which could entail 40,000 workers losing their jobs in one small area (Q 19). Because the changes which Poland was making to its economy were painful, "we have to keep the momentum in order to have the support of the people for change" (Q 4).

143. Dr Gottfried, for Hungary, emphasised the need for balance between speed and quality. Speed was important because the end result would be of mutual benefit both to the existing Member States and to the applicants. For Hungary, only membership could bring "new dynamising elements". But, like Mr Ananicz, he said that the changes which were being made were not only in order to join the EU, but

    "because we want to make Hungary a successful country[105]. At the same time, … it would be difficult to live in a situation for too long where practically the majority of the obligations of membership are there but the country is excluded from the decision-making process and hence from the formulation of Community policies" (Q 31).

144. For Slovenia, Mr Juri said that accession

"still enjoys the strong support of Slovenian public opinion, despite a growth of euro-sceptical attitudes, provoked by the pressure for rapid changes and the fear of losing their sovereignty gained with their independence. Nevertheless the important fact is that pro-European will is stronger … For the moment, more than 65 per cent of public opinion fully supports Slovakian integration into the European Union (QQ 47 and 49).

He thought that "probably we can expect a growing of the Euro-sceptic pressure inside Slovenia" if the target date is not met, and in particular if there is not a clear guarantee that the institutional reforms needed in the EU will be settled on the same timescale:

    "The domestic consequences … would be mainly political, not economic, because we are well aware that the changes we are carrying out with our adoption of the acquis are needed also for our domestic economy" (Q 49).

145. The Government of Estonia pointed out that

    "a critical mass of goodwill needs to be maintained to bring the enlargement process forward. On the one hand, enlargement has made a good stimulus for applicant countries, including Estonia, to carry out reforms. On the other, it has been the driving force behind change in the European Union. A failure to move the enlargement forward would interrupt both reform processes" (p 24).

146. The reactions of our witnesses gave us a strong indication of the danger of arousing expectations which will not be satisfied if momentum is lost. We attach particular importance to the need to ensure that this does not happen as a result of existing Member States failing to do their part.

Could perceptions and attitudes delay the accession process?

147. When we asked witnesses from the first wave Central and Eastern European applicant States what they saw as the greatest single problem in achieving accession, we expected answers in terms of particular issues where the acquis seemed unacceptable, or where significant transition periods would be needed. Points of that kind were indeed made, but we were particularly struck by Dr Gottfried's comment that "the single most important issue of enlargement today is to have a proper public perception of [the] consequences" (Q 39). We would suggest that perceptions of the process are also important, and we therefore considered this issue.

148. In its written evidence, the Polish Government pointed out: "Enlargement is not charity—it is in the self-interest of the existing members too" (p 1). Interestingly, Mr van der Pas used exactly the same expression:

As the Hungarian Government said: "The enlargement of the EU is in the common interest of all European nations, creating better opportunities for progress and prosperity in every corner of the continent" (p 10). So why do the applicants sometimes feel like the recipients of charity?

149. Mr Alan Mayhew (Senior Fellow at Sussex University) has suggested that that "the EU is approaching this enlargement in a colonial spirit"[106]. He describes the Accession Partnerships as "not partnerships but unilaterally imposed conditions … Without agreement there can be no commitment". He suggests that the EU is trying to squeeze the applicants into a "perfect west-European mould", without considering their diversity and their existing links with neighbouring States.

150. Our witnesses gave some support to this view, albeit in milder language. Reading between the lines, we sensed that the process of "assessment" by the Commission is not seen as entirely appropriate in a negotiating situation. All the first wave applicants have their own national plans for the adoption of the acquis, and they preferred to see the changes being made as part of their own processes of economic and social transformation rather than as being imposed from outside.

151. There is also a suggestion that the Commission may be trying, as Mr Juri put it, to introduce "into this negotiation some political issues which are not part of the acquis communautaire" (Q 50), desirable as they may be in themselves. Dr Gottfried instanced reform of the health care system (QQ 33-34), and it has also been suggested that the emphasis on nuclear safety goes further than is required by the acquis (though it is evident that the Commission does not accept this[107]). Mr Juri feared that the introduction of such additional issues could "stop or slow down the negotiation despite the fact that we are carrying out very quickly and with all our willingness and energy the harmonisation [required of us]" (Q 50).

152. This feeling of being required to comply with fiats from outside was expressed forcefully in Mr Ananicz's written evidence, when he said that there were

    "questions which were yet to be cleared up … which relate to the very nature of a Union we are about to join. The questions which remain unanswered include those about subsidiarity, flexibility and the areas where it may be applied, the attitude of Brussels centralism to regionalism, and the evolution of the Union's identity in the realm of security, as well as its impact on the EU's relations with NATO" (p 2).

In particular, the position on CAP had not been negotiated, but was the outcome of financial decisions currently in force. He added:

    "Whenever we declare our interest in holding consultations or providing our views, we hear that there exist appropriate fora for dialogue, which we should use. Although we have at our disposal the so-called structural dialogue and the European Conference, we are not in the business of forcing through, in those fora, our favourite solutions. We know the club rules. These are laid down by members, and members alone. What we would simply like is to know where the discussion is heading, and what solution options are being contemplated" (p 2).

153. It does seem that applicants need at the very least to be kept informed of what is going on. Mr Vaz commented on the basis of his recent visit to Poland that "one of the things they very much wanted was to get as much information as possible and there was a feeling that they would read about enlargement in the newspapers long after decisions had been made" (Q 65).

154. But we would go further: there should surely be a two-way process whereby applicants not only receive information but have the opportunity to express their views. The House of Commons Foreign Affairs Committee were told by all the applicant states they visited that there was a lack of formal mechanisms for applicants to do this in relation to EU institutional and policy developments, even though they would have to accept them when they acceded. Their Report observes that:

    "Through the public pronouncements of its officials and Ministers of Member State governments, and through the attitude of EU negotiators, the impression is often given that the EU is a club with immutable rules which applicants should not seek to influence"[108].

Mr Vaz seemed to bear this out when he said that the Government thought that for one of the first wave applicants to join the negotiations as to what the European Union would look like after 2002 "would not be sensible, but we certainly feel that they should be kept informed fully of the changes that we are bound to make" (Q 66). We think that it can reasonably be argued that the applicants should not only be kept informed but should have a voice in matters which will affect them so crucially. Mr van der Pas agreed that there must be a forum in which the applicant countries "can be informed and be listened to in terms of the IGC", even though "they cannot co-decide as long as they are not members" (Q 115).

155. There is a question of whether the mechanism for this already exists. The Hungarian Government says that it is "ready to share its views on institutional matters in the framework of existing fora of dialogue between the EU and the associated countries" (p 11). The Polish Government obviously considers the existing fora inadequate.

156. That the applicants should be kept informed of what is going on within the EU seems a modest request. But we would go further. It does not seem unreasonable to suggest that applicants might usefully be involved in discussions—if not in decisions—on matters which will have a major effect on them when they join. We urge the Government to press for this, perhaps even by seeking observer status for them at the IGC[109].

157. Another example of attitudes which may make accession difficult for the applicants to swallow is the requirement that they should break off their relationships with other States which will not be acceding to the EU (or at least not yet). Alan Mayhew highlighted to the House of Commons Foreign Affairs Committee the danger that "by forcing the applicants to cut their close economic and political relations with neighbouring countries, the EU will create new divides in Europe, which are totally unnecessary"[110]. As an example, Mr Juri told us that Slovenia had free trade agreements with Croatia and Macedonia from which it was being pressed to withdraw, in return for a guarantee that the EU would liberalise its trade régime with the Balkan area (Q 55); his government was seeking a ten-year transition period until the promised new approach was in place (p 18). The problem would solve itself if the States concerned actually acceded to the EU at the same time (as may happen for the Czech Republic and Slovakia). But there are other cases (such as Poland and the Ukraine, or Estonia and the other Baltic States) where that solution will not be available.

158. Existing relations may also suggest that it would be sensible for applicants to accede in groups, rather than individually. Mr van der Pas agreed that "there are countries that have rather strong links and if you let them in separately at different times the existing links might be broken". Looking at the example of the Czech Republic and Slovakia, he thought that "when the moment comes for final decisions we cannot possibly tell those countries to break down what they have built up together; we will have to find some sort of solution which allows this relationship to continue". If the Czech Republic joined first, Slovakia's special relationship with it would have to be replaced by one with the EU. "The last thing we want by being generous in terms of enlarging the European Union is that we will be erecting all sorts of new barriers in Europe" (Q 108).

159. It would create a particularly unfortunate impression in the difficult situation of the Balkans if the EU were to require that applicant States should sever their existing economic and political relations with neighbouring States. We would urge that proper accommodation should be found.

160. Public perceptions depend partly on the substance of what is being perceived, so the points discussed above might improve the view of the process in the applicant States. But they also depend on presentation. The Hungarian Government told us that it had launched a communication programme in 1995 to increase public awareness on EU matters, and that accession was "widely supported" (p 11), but it nevertheless saw a need for the Commission to mount an information campaign on the subject.

161. The need to raise public consciousness is not confined to the applicant States. The Estonian Government suggested that "more efforts must be put into preparing the EU public for the upcoming enlargement", because a recent survey in existing Member States had revealed the dominant view that "while enlargement will result in clear political and security gains, these gains will be mitigated by the economic implications. If this view persists, it will be increasingly difficult to make the adjustments that need to be made—not just in terms of enlargement, but also those that are vital to the Union" (p 24).

162. This is a real danger. We note that in a survey earlier this year only 27 per cent of people in the EU15 regarded "welcoming new Members" as a priority for the EU. The average level of support for the applicant States' joining was 42 per cent; in the United Kingdom support was 40 per cent, but others showed significantly lower support (Germany 38 per cent, France 33 per cent and Austria only 29 per cent)[111]

163. We note from their report[112] that the "three wise men" discussed the need for "more simplicity and clarity in the governance of European affairs, more transparency, flexibility and accountability in the way the institutions work". We agree with them that "the fact that most Europeans do not understand the working of our institutions must surely be a problem governments should consider". But we do not agree that this is "not directly linked to enlargement". As they recognise, "the citizens of new Member States will be even more puzzled than those of Member States who have lived through half a century of European integration"; the EU must find ways of connecting or re-connecting to the people"[113].

164. Mr van der Pas was conscious that enlargement had not yet become front page news. He recognised a need to "turn to the citizens both in the applicant countries and in the European Union to explain in much more detail what it is all about" (Q 111). But, he asked:

    "How do you do that? Can we in the European Commission start travelling through the Member States with bus loads of officials in order to sound the trumpet about the virtues of European integration? Is that what we should do? I doubt it very much" (Q 112).

Instead, the Commission must encourage both the Member States and the applicants to issue their own information about the consequences of enlargement, both positive and negative (Q 113).

165. We agree that the EU must find ways of getting across the message of the potential benefits of enlargement. We are not convinced by the applicant States' suggestions that an information campaign mounted by the Commission would by itself have the desired effect. But we believe that if governments in the existing Member States do favour enlargement, then they must translate that political will into action as well as words.

47   See paragraphs 51-53 above. Back

48   And previously the Commission's chief negotiator. Back

49   The financial consequences of enlargement, op cit, paragraph 99.  Back

50   Composite Paper, p 27. Back

51   Ibid, p 28. Back

52   See paragraph 52 above. Back

53   Composite Paper, p 32. Back

54   Particularly since it has been suggested that the Commission's motive for the proposal might be that the new approach would make it possible to "discreetly let Poland and the Czech Republic drop behind": European Report, 16 October 1999. Back

55   Statement of Mr Toomas Hendrik Ilves, Foreign Minister of Estonia, after the meeting of the Foreign Ministers of candidate countries negotiating entry into the EU. Back

56   See paragraph 103 below. Back

57   It could be argued that there has already been a de facto recognition of the applicants' target dates, in that the financial perspective proposed in Agenda 2000 and agreed at the Berlin European Council was based on the working assumption that new accessions would start from 2002. Back

58   See paragraph 77 above. Back

59   In view of the critical comments on the Czech Republic's progress in the Commission's 1999 progress report: see paragraph 109 below. Back

60   Mr Pavel Telicka, chief negotiator for the Czech Republic, reported in European Voice, 30 September - 6 October 1999. Back

61   The financial consequences of enlargement, op cit, paragraph 15.  Back

62   A reformed CAP? op cit, paragraph 23. Back

63   Future financing of the EU: who pays and how? op cit, paragraphs 45-46. Back

64   Charles Jenkins has described the negotiations in Berlin as the time when "the camel of enlargement has come to the budgetary needle" (Paying for an enlarged European Union, Federal Trust Report, 1999, p 5). Back

65   See table at Appendix 4. Back

66   See paragraph 49 above. Back

67   The Institutional Implications of Enlargement, op cit: see paragraphs 60-65 above. Back

68   There have been a number of reports calling for much wider and more radical reforms from various think tanks, including the European Policy Centre, the Centre for European Studies, the Friends of Europe, the Foreign Policy Centre and the Trans-European Policy Studies Association (see European Voice, 23-29 September 1999).  Back

69   Op cit, paragraph 1.2. Back

70   This would conveniently follow the European Parliament elections scheduled for June 2004 (which could then reflect the redistribution of seats necessary to keep within the maximum of 700 MEPs set by the Amsterdam Treaty) and the appointment of a new Commission in January 2005 (which should reflect the changes in composition to be agreed by the forthcoming IGC). Back

71   Composite Paper, pp 20-21. Back

72   Ibid, p 38. Back

73   His written evidence claimed that this was contrary to the provisions of Poland's Europe Agreement, which had "stipulated asymmetry in trade, but to the advantage of Poland, and not of the EU" (p 1). Back

74   Composite Paper, p 38. Back

75   Ibid, pp 10-11. Back

76   12079/99: Regular report from the Commission on Slovenia's progress towards accession, p 69. Back

77   Composite Paper, p 42.  Back

78   12063/99: Regular report from the Commission on Estonia's progress towards accession, p 51.  Back

79   Composite Paper, pp 18-19.  Back

80   Ibid, pp 43-44. Back

81   As reported by Reuters, Prague, 14 October 1999. We were unfortunately unable to take evidence from the Czech Republic, so we had to rely on published sources. Back

82   Composite Paper, pp 49-54. Back

83   See pp 1 and 11. Back

84   See table at Annex A to written evidence from Foreign and Commonwealth Office, p 28. Back

85   Q 4. Back

86   See paragraphs 69-70 above. Back

87   The financial consequences of enlargement, op cit, paragraph 91. Back

88   Ibid, Q 88. Back

89   European Union Enlargement, Third Report from the Foreign Affairs Committee, HC 86 Session 1998-99, Q 63. Back

90   The Foreign and Commonwealth Office made the point that the provisions for enhanced accession aid agreed at Berlin were intended to help with the cost of expensive changes (p 27).  Back

91   Act concerning the conditions of accession and the adjustments to the Treaties, 1972. Back

92   See p 27. Back

93   Composite Paper, p 23. Poland is singled out as lacking an overall strategy. Back

94   However, the Austrian Government is reported to have rejected the proposed date of 2006 for the closure of Slovakia's plant at Bohunice, and as a result to have vetoed the opening of negotiations on the energy chapter in September 1999. Back

95   Though the European Court of Auditors has made serious criticisms of the execution of this programme: European Court of Auditors Special Report No 25/98: Operations undertaken by the EU in the field of nuclear safety in Central and Eastern Europe and in the Newly-Independent States. See also Partnership and Trust: the TACIS programme, HL Paper 157, 33rd Report Session 1997-98. Back

96   Bulgaria's reluctance to follow suit has led the Commission to place a caveat on the proposal that it should be invited to open negotiations; see paragraph 52 above. Back

97   Composite Paper, pp 23-24.  Back

98   He said that although 28 per cent of the population in Poland were engaged in agriculture, only about half of that number "is really engaged in farming for the market, the rest is engaged in farming for self-supply" (Q 103). Back

99   Mr Ananicz suggested that farmland in the United Kingdom was ten times more expensive than in Poland. Back

100   Moreover, Mr Ananicz feared that this would give scope for the very development of money-laundering that the Commission was rightly anxious to avoid. Back

101   The EU insisted on this as a condition of ratifying the Europe Agreement with Slovenia, which allows a four-year transition period. Back

102   On the accession of Spain and Portugal, there was a seven-year transition period in relation to free movement of workers. Back

103   European Union Enlargement, op cit, p 25, paragraph 14 ff. Back

104   The financial consequences of enlargement, op cit, paragraph 93. Back

105   The Hungarian Government's written evidence says that "the tasks stemming from the adoption of the acquis fully coincide with national interests and aspirations" (p 11). Back

106   In his evidence to the House of Commons inquiry European Union Enlargement: op cit, p 31. Back

107   Composite Paper, pp 23-24. Back

108   European Union Enlargement, op cit, paragraphs 62-63. Back

109   At the time of previous IGCs there have been no States in a position corresponding to that of the present applicants, so there is no precedent either way on this.  Back

110   Op cit, p 31. Back

111   European Commission: Eurobarometer: Public opinion in the EU, 51, Spring 1999. Back

112   Op cit, paragraph 1.4. Back

113   The Institutional Implications of Enlargement, op cit, p 4. Back

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