Enlargement Of The European Union Flashcards
Treaty of Rome article 232 stated what
Any EU country can join the European Union
First 4 enlargements were relatively straightforward.
5th was more complex. What countries did the 5th comprise of
8 CEECs (central and Eastern European countries)
+ Malta & Cyprus
What was the main thing to consider in enlargement
Optimum size of EU
(Too small is less benefits to trade etc, too much is harder to come to a decision)
We’ll use theory of clubs to see
So first 4 englargements were straightforward.
What was the main issues with the 5th enlargement (2)
CEECS were gormally centrally planned economies transitioning into market economies. (Soviet economies like Poland)
It was a change in the nature of the EU - adding generally small poor countries.
How was transitioning to market economies hard from a firm perspective (4)
No stock market - Hard to price a company and sell shares
No tax system. Had to be set up.
No business laws (e.g copyright, property rights)
FDI hard - exchange rate was articifical, issues with foreign ownership (still an issue today)
So 5th enlargement was hard!
Copenhagen Summit 1993 criteria for countries to join the EU (3)
Functioning market economy
Democratic (political system)
Acceptance of acquis communautaire
Enlargement:
The benefits from economic integration (4)
Comparative advantage
Trade creation (but possibly TD) e.g Gravity models found new 10 countries in 2004 increased EU15 exports (draw the 3 SEM diagram) 22% of EU GDP is EU trade in 2011
Investment +other dynamic economic benefits (Cecchini report found investment 2.7% higher in medium term)
Political benefits
Political benefits included: (2)
UK viewed it as more countries reduced chance of greater integration (widening meant chance of agreement falls in QMV, so no deepening)
Reward to ex-Soviet economies (gave them a safety buffer from Russia, and opportunity for growth through trade and FDI within EU)
Widening v Deepening debate : can they be complementary? Use theory of clubs
2 approaches to enlargement
Classical (first 4 enlargements)
Adaptive method (2004 enlargement)
Adaptive perspective - is EU currently progressing at 1 rate universally?
B) what would happen following more enlargement?
No - there is variable geometry (multi-speed EU)
Meaning not all country is in every policy, e.g different tax rates etc.
B) more enlargement = more variable geometry
Theory of clubs: where is optimal size of EU
B) what shifts MC
C) what shifts MB
B) MC shifts downwards for institutional changes & actions by new states (e.g SEA introduced QMV allowing from EU10 to EU15, reforming the union)
C) MB can shift e.g greater benefits from trade e.g more export opportunities
(for essay - improve single market by making trade easier can shift MB up.. could use in essay)
So, what does theory believe
Widening and deepening is possible
Subsidiaries principle
Decisions should be made to as close to the people as possible (localise decision making) as more efficent
If subsidiaries principle exists, what happens for MC curve
May shift it downwards (so same effect as institutional reform in the diagram)
Enlargement issues for EU (7)
Trade/FDI (some regions lose out)
Agriculture - Eastern countries heavily reliant E.g Romania 42% of population in agriculture, seek subsidies
Structural funds - poor countries joining want money
Budget - increases + imbalances e.g Ireland overfunded while Sweden underfunded
Migration intra EU - brain drain?
Voting
New poor members - 20% rise in population but the new 10 GDP equivalent to Netherlands!
3 C’s were required for EU institutional reform (to lower MC)
CAP
Cohesion
Control
Voting rules Pre-Nice treaty (pre-2004)
Qualified majority voting (weighted voting introduced from SEA 1986)
Bigger members have more votes. Need about 71% votes to win
Lisbon treaty came: what was the rule called
B) and the 2 requirements
Double majority voting - approval requires:
B)
55% of member states must approve, protects small states
65% of EU population, to protect the big states (from lots of small country members wanting change
Success of Lisbon treaty 2007 and its double majority voting:
Rules were very effective - probability of a measure coming through increased to 10%
Under SEA 1986 QMV, probability of a measure passing was only 2.8%
Effect of Lisbon treaty and DMV on theory of clubs
MC shifts downwards (since more institutional reform as more measures passed)
So probability of measure passing rises with more states, what does this suggest
EU25 is still below the optimum size regarding decision making
Is budget share spread fairly amongst EU?
Sweden Austria and Finland are getting far less budget than they should given their population
While Ireland are getting good funding given their population
Kelemen explores widening deepening debate (whether widening impedes or encourages deepening)
what do they argue widening on deepening depends on
Depends on preference distributions of the existing states and the proposed new entrant.
e.g if new entrant’s preferences diverge significantly from average of existing members of EU, widening discourages deepening!!
What is differentiated integration and why is it good
b) Schimmelfenning: does he argue widening has hindered or increased deepening?
c) how?
Differentiated integration is EU policies but opt outs can be done. Good as more flexible
b) He says widening has driven integration, in particular ‘differentiated integration’
c) widening (more members) increases heterogeneity between them, making consensus more difficult, making differentiated integration more feasible!
Hobolt surveys whether public think widening deepening trade of exists
1/3 believe there is a trade-off
Conant on widening deepening
Widening with CEES; some had poor human rights. So incentivised to deepn and coordinate human rights
