   |
Member of the European Commission Responsible for Enlargement Avrupa Komisyonu Genişlemeden Sorumlu Üyesi We are on our way towards uniting a large part of the European continent driven by the same vision and goals as at the starting point of the European integration: We need to have peace, stability and prosperity. And the only way to achieve these goals is through integration. European history has shown us that there is no other reasonable way for the European continent than its unification. Politically, enlargement will become a reality on 1 May 2004. However, the most important effects of the strategic decision of enlargement have already taken place: today's Europe is a safer and better place to live in and to do business than it was 14 years ago. I am deeply convinced that the perspective of enlargement has supported a successful system transformation in a large part of Central and Eastern Europe and has helped to create intense political and economic ties between the two parts of Europe that were formerly divided by the Iron Curtain. Enlargement will add more than 100 million people to the EU once Romania and Bulgaria become Members after 2007. The enlarged EU will become the biggest economic player, bigger than Mexico, the US and Canada together. A huge potential lies waiting to be fully exploited. However, to make full use of the new emerging opportunities we need to develop the integration further. We need to strengthen the Institutions of the EU and we need to adapt our policies to the challenges of the 21-century. First and foremost we will need to further develop the political integration. This is absolutely crucial since we must become able to defend our interests with one European voice and not with a dissonant European chorus. We need to strengthen what we have in common to be able to cope with the new emerging problems and widening of the interests. Enlargement implies the incorporation of economies with different levels of development and significantly different economic structures and -what is perhaps the most challenging- with the particular background of a complete system transformation. On average, the relative importance of the public sector and agriculture to GDP in the acceding and candidate countries is significantly higher than that of the EU. The industry in the future countries is in general more specialised in labour intensive sectors than the EU. As a consequence the industrial structure of the incoming countries is to a large extent complementary to the structures within the present EU. However, substantial differences between the present and the future Member States exist in terms of technology, productivity, and physical and human capital stocks. Moreover, as result of enlargement income disparities in the EU will rather increase and the process of catching up with the European average will last rather long, at least for two or three decades. However, there is also no reason to exaggerate on the immediate economic impact of enlargement. First of all the total GDP size of all 12 future Member States is rather small in comparison to the present EU. As a result of enlargement the EU`s GDP will increase by less than 4%, up to 8329 bn. Euro (measured in current exchange rates). Secondly, and this is a direct result of the pre-accession strategy, there will not be any significant immediate economic impact of enlargement - neither for the present EU Members nor for the incoming countries. Only in a medium and long-term perspective will we see significant changes, and the economic benefits of completing enlargement will become clearly visible, not least because the growth potential of the new Member States is quite considerable. More generally, enlargement offers new opportunities and benefits for the 27 and more Member States and hopefully also for our neighbours in the East and in the South. Enlargement and in particular the further extension of the EU Single Market means creating a wider level playing field, where the same rules and standards will apply. This process will further encourage investors and business to go east. Moreover we may expect stronger competition in some sectors, which is likely to lead to price decreases. This will generate not only higher demand but also higher efficiencies and therefore support the potential for growth and employment. In addition, strong growth in new Member State's - and this is likely to happen - will further enhance trade, since new Members enjoy a higher capacity to absorb imports from the EU. This is not only an opportunity for the Member States directly bordering our future neighbours. Meanwhile for instance Italy, having only Slovenia next door, has become a very important trading partner for Poland and other countries. As a result the Italian trade surpluses were much higher than the German surpluses since 1999. Most economic models estimate that GDP could be slightly boosted due to enlargement. The addition to growth in the accession countries could be as much as 2.0%-2.5% over two years, but the quality of policy measures in these countries will greatly affect the growth potential. As I already indicated, many of the initial benefits of the enlargement process are already visible. Due to the enlargement perspective we have already reached a relatively high degree of economic integration between the EU-15 and the future Member States. This process, started in 1989, began to bear fruits in 1995/1996. Trade and foreign direct investment (FDI) have been the two main channels of integration. This development was merely fostered by the Europe Agreements. These agreements provide the institutional framework for bilateral relations between the EU and each of the negotiating countries. The Europe Agreements have resulted in reciprocal free trade in industrial products, by removing all tariffs and quantitative restrictions. In addition to the liberalisation of trade in industrial products and agriculture, the Europe Agreements also contain steps towards the free movement of services and capital, as well as commitments of our partners to approximate their economic legislation to that of the EU. Let's take a brief look at the situation at the moment. As to trade integration, all candidate countries including Turkey on the average, sent about 62% of their exports to the EU and 58% of their imports came from the EU. Excluding Turkey, the shares are about 67% for exports and 59% for imports. Each of the 12-acceding and candidate countries has over the period increased its share of exports to the EU. With a very remarkable result. Over the past decade, the candidate countries show the fastest growth in trade with the EU and accounted in 2002 for more than 16% of total EU exports with third countries up from 4% in 1989. Poland is now among the biggest trading partners of the EU. Let me give you also the German example. Since the year 2000 German imports from present candidate countries are higher than the German imports from the US. To complete I have, however, to admit that trade between the candidate countries remains comparably low, although it slightly increased for several of the countries. The massive inflow of Foreign Direct investment has been the other important driving force of transformation and economic integration. With a peak in 2000, FDI presently amounts to a volume of approximately 20 bn US $ per year for the entire Central and Eastern European countries. Poland and Czech Republic alone together received around 12 bn US $ in 2001. From 1989 onwards, since the beginning of the transition period, the future Member States have drawn in more than 150 bn US $ from FDI (at the end of 2002). Per capita and per year, with some countries such as the Czech Republic at much higher level, FDI inflow is about 200 US $. Expressed as a percentage of the GDP they represent some 5%, with countries as the Czech Republic and Slovakia at an even much higher level. Two thirds of net capital flows in the 1990s originated from the EU Member States. Most net capital inflows to the candidates have been FDI flows. Because of privatisation, nearly half of the FDI flows have been directed to non-tradable sectors such as financial institutions (banks) and public utilities (e.g. telecommunications). Greenfield investments are increasing in some countries, and for instance represent over half of FDI in Bulgaria and dominate in Hungary. In the tradable sector, one fifth of the total FDI has occurred in relatively labour-intensive industries such as textiles, clothing, electrical machinery and motor vehicles. In the context of transition and real economic convergence, FDI has, and will continue, to contribute to replace the outdated capital stock and to introduce new technology and management skills. Since this is the case the Commission has focussed attention on the business climate in our future Member States and urged the countries to do their utmost to strengthen their attraction for investors from abroad. This was one of the reasons why I have insisted on a policy of zero-tolerance against corruption. This was the reason why we have carefully monitored the development of the administration and the juridical system and why we are carefully continuing to monitor the implementation capacity of our future Member States. And this was also one of the reasons, why the EU has decided to continue with its financial assistance for the so-called "institution building" in our new Members until 2006. Market forces mostly drove the achieved level of economic integration. The financial assistance of the EU in particular during the 90ies was relatively low and did not play a major role. This might change a bit after enlargement, since all incoming countries will receive significantly more financial assistance than they have received before accession. Since 2000 3,12 Billion Euro were made available for central and Eastern candidate countries as our annual pre-accession assistance. The money was channelled through the Phare Programme and the two other pre accession instruments ISPA and SAPARD. Cyprus, Malta and Turkey have also pre accession assistance, but under different regulations. In addition, the Council of Ministers agreed an envelope of Euro 8,680 million for the lending activities of the EIB, for the period February 2000 - January 2007, in Central and Eastern Europe. In January 2000, the EIB's Board of Governors approved an extension of the EIB's pre-accession facility for lending to the candidates countries for an amount of up to Euro 8,500 million during a period of 3,5 Euro years. And I should add that Cyprus, Malta and Turkey are also eligible for EIB pre-accession financing. A substantial amount of the EU pre-accession means was concentrated on two crucial priorities: Support to meet the conditions for EU-membership and investment support. The ISPA instrument mainly does the latter, which is a kind of a pre-accession Cohesion Fund. And the EIB played a role in this regard as well. In order to upgrade these countries' communications infrastructure, the Bank financed, for example, links between the countries themselves as well as between the region and the EU. 56% of EIB's total lending in the Accession Countries went to transport and telecom schemes: Modernising and upgrading the capacity of the rail and motorway network, bridges over the Danube, enhancing fixed and mobile telecommunications. Emphasis was also placed on projects that contribute towards protecting and improving the environment (20%) in order to help the candidate countries to meet Community standards. Transport and environmental projects were co-financed, in a number of cases, with grant aid from the EU's ISPA programme. The substantial change as regards Community solidarity will come with enlargement. In Copenhagen, the 10 acceding countries obtained a three year (2004/5/6) envelope of 21,8 Billion Euro for the structural policies including 7,6 Billion Euro for the cohesion fund. As you know, the ceiling of the assistance is 4% of the GDP because of the weakness of the absorption capacity of the new Member States. Under this limit the new Member States will receive 137 Euro per capita in 2006 against 231 Euro in the current cohesion countries. You see from these figures where the discussion will be concentrated when negotiating the next Financial Perspective. What matters, however, now is not only the development of viable projects but also to look for sufficient co-financing means, which will be a huge challenge for most of the acceding countries. If they master these challenges then we may expect a clear boost of further economic integration, since public procurement in our new Member States will be opened upon accession for EU companies as well. The Commission stands ready to assist these countries as much as possible. However, we will need the assistance of the European financial community to mobilise the necessary co-financing means. After this presentation of the Community financial instruments towards the acceding countries I will now move to the financial market implications of EU-enlargement. Needless to point out that we are talking about countries with very limited financial markets - size XXS. Again I have to look into the past first. 8 of the 10 new Member States acceeding next year, the ten central and Eastern European countries that is started their transformation process with a nearly completely state-owned, centralised and inefficient financial sector. Having in mind the starting point we should not underestimate the success achieved so far. The transformation of the financial sectors has, since then, made significant progress. Banking based on market principles was established, former state-owned banking institutions were privatised, other parts of the financial sector started, and principles of proper regulation and supervision established. Nevertheless, it is also clear that the financial sectors in all future Member States have, although to clearly very different degrees, still a long way to go before they can compare in terms of size, scope, efficiency and stability with the financial sector in present Member States. One main feature differing significantly between candidate countries is the degree of financial intermediation. Deposits and loans, in percent of GDP, vary considerably from country to country. Cyprus and Malta are, compared to the size of the respective economies, close to EU levels, whereas the transformation countries are generally lacking behind. The size, and to a lesser degree also the costs of financial intermediation have a significant direct effect on domestic investment and, thus indirectly on real convergence. The candidate countries with a relatively high degree of financial intermediation, particularly the Czech Republic and Slovenia, are also the ones with the highest investment propensity in the country. Romania, Lithuania, and Bulgaria show the most modest situation on both counts. I am particularly concerned about the lack of access to cheaper loans for small and medium size enterprises and farmers, which may hinder regional and agricultural development. Such structures exist in current Member States and they have made a valuable contribution to economic and social development. And again I would like to invite you to look into this issue and to take it up with partners from the future member States. Obviously, successful real convergence relies not only on a certain size and efficiency of financial intermediation, but also on the stability of the financial sector as a whole and its participating markets and institutions. And again, this is also one of the reasons why we are not relaxed as regards institution building. Goldman Sacks has recently published a study on what we may expect as economic results of enlargement the years to come. A number of findings are quite close to what I see as the most important market implications. First of all I expect that the future Member States will continue to experience strong productivity growth. Such a strong growth, which was two to four times greater than in the EU has allowed Central European currencies to appreciate 30%-40% in real terms since the mid-1990s without losing fundamental competitiveness. We expect therefore real appreciation of almost the same magnitude during the next 5 or six years. Secondly, we will welcome the first new central and eastern European members of the Eurozone until 2010. However, to be clear: The time is not a goal in itself. First things first, please, since it could happen that a country would be squeezed between the challenge of complying with EU standards and the challenge to meet the conditions for the EMU. Good administration means also spending money. Money will also have to be mobilised for co-financing the EU assistance. And it is perhaps wise to retain the exchange rate for a while as an instrument in the pocket to cope with competitive pressures. However, I have also to underline that the present budgetary performance of future Member States is not bad at all and they are pursuing a clear policy of budgetary consolidation with some remarkable results. When Central Europe adopts the Euro later in the decade, average European inflation will probably increase very marginally. This is because the underlying Central European real appreciation will be driven solely by higher inflation (rather than partly by nominal appreciation); much as has been seen in Ireland. The inclusion of currencies from high-productivity countries could perhaps slightly boost the underlying value of the Euro, but the impact will not be very important regarding the relative economic weight of the acceding countries in comparison with the actual EU Members States. Given their development and the size of the countries Poland and Hungary will remain very interesting markets for strategic investments. On the other side I expect not a very dramatic change as regards the Central European equity markets for exactly the same reason. At the moment they are extremely thin. A great deal of the growth in Central and Eastern Europe will continue to be generated in foreign-owned businesses. I am strongly convinced that the development of the candidate countries' financial markets as a result of enlargement dynamics is an asset for the business, which should be explored by the Europeans. Expanding capital markets under EU regulations and supervision rules are expected to attract more foreign inflows. This will lead to higher diversification of financial products and improved liquidity conditions, which will foster financing opportunities for business. However, much is now in your hands, in the hands of the European financial and business community, to fully exploit the opportunities enlargement offers to us. Tıpkı Avrupa'nın entegrasyon sürecinin başında olduğu gibi, bu dönemde de barış, istikrar ve refahı amaçlayan Avrupa kıtasının büyük bir parçasını birleştirmek üzereyiz. Bu amaçlara ulaşmanın tek yöntemi entegrasyondur. Siyasi genişleme 1 Mayıs 2004'te gerçekleşecek ancak genişleme konusundaki stratejik kararın en önemli etkileri ortaya çıktı bile; artık Avrupa 14 yıl öncesine kıyasla daha güvenli ve daha iyi bir yer. Romanya ve Bulgaristan da 2007'de üye olduktan sonra AB'ye 100 milyon yeni kişi katılmış olacak. Genişleme sonrasında AB Meksika, ABD ve Kanada'nın hepsinden daha büyük olacak ve dünyanın en büyük ekonomik gücü haline gelecek. Bu nedenle, AB kurumlarını güçlendirmek ve politikalarını 21. yüzyılın zorluklarına göre ayarlamak zorundayız. Öncelikle ve en önemlisi, siyasi entegrasyonu daha geliştirmeliyiz. Genişleme, farklı gelişmişlik düzeyinde olan ve farklı yapıları olan ekonomilerin, sistemlerini tamamen değiştirecek biçimde bir araya getirilmesini gerektiriyor. Genel olarak, üye olacak ve aday ülkelerde kamu sektörünün ve tarımın gayri safi yurtiçi hasılaya oranı AB'ninkinden oldukça yüksek. Ayrıca teknoloji, verimlilik, sermaye ve insan gücü stoğu açısından mevcut ve aday üyeler arasında büyük farklar var. Genişleme sonrasında AB'deki gelir farkı daha da açılacak ve genel olarak Avrupa ortalamalarını tutturma süreci belki yirmi otuz yıl gibi uzun bir süre gerektirecek. Genişleme ve özellikle AB pazarının büyümesi, tek tip kuralların ve standartların geçerli olduğu daha adil bir ortamın oluşmasına neden olacak. Bu da yatırımcıların ve şirketlerin doğuya yönelmesini destekleyecek. Bazı sektörlerde daha çok rekabet olması fiyatların düşmesi sonucunu da doğurabilir. Bu durum hem talebi artıracak, hem de daha verimli çalışılmasını sağlayacak ve böylece büyüme ve istihdam potansiyeli artacaktır. Genişleme odaklı bakış açısı sayesinde, mevcut üyeler ve aday üyeler arasında oldukça yüksek bir ekonomik entegrasyon düzeyine şimdiden ulaşılmıştır. Imzalanan anlaşmalar sonrasında, bütün tarifeler ve niceliksel sınırlar ortadan kalkmış ve endüstriyel ürünlerde karşılıklı serbest ticaret başlatılmıştır. Söz konusu anlaşmalarda aynı zamanda hizmetlerin ve sermayenin serbest dolaşımı yönünde adımların yanı sıra, ortaklarımızın ekonomiyle ilgili mevzuatlarını AB'ninkilere yaklaştırma taahhütleri de vardır. Bu dönüşüm ve ekonomik entegrasyon sürecinin bir başka itici gücü de bu ülkelere doğrudan yabancı sermaye akışı olmuştur. Bütün Orta ve Doğu Avrupa ülkeleri için yıllık yabancı sermaye akışı yaklaşık $ 20 milyar düzeyindedir. Yabancı sermaye bu süreçte eski sermaye hissesi yönteminin yerine geçmekte ve yeni teknoloji ve işletme becerilerinin kazanılmasını sağlamaktadır. Bu ekonomik entegrasyonu sağlayan ana unsur piyasa güçleri olmasına rağmen, yıllık üyelik öncesi yardım programının bir parçası olarak, Orta ve Doğu Avrupa aday ülkelerine 2000'den beri Euro 3.12 milyar verilmiştir. Kıbrıs, Malta ve Türkiye de farklı düzenlemeler kapsamında üyelik öncesi yardıma hak kazanmışlardır. Söz konusu yardımlar, Phare Programı ve ISPA ve SAPARD adlı araçlar sayesinde yapılmıştır. Bu yardımlar, AB üyeliği için gerekli şartları karşılamak ve yatırımlara destek vermek amacıyla verilmiştir. |