Enlargement is the main challenge for the European Union
1. Enlargement is the main challenge for the European Union. How will this affect the political and economic future of the European Union?
In May 2004 the European Union will welcome 10 new member states: Slovenia, Latvia, Czech Republic, Poland, Malta, Slovak Republic, Hungary, Estonia, Cyprus and Lithuania. And the next enlargement is already planned for 2007. The three applicant countries for will join the EU in 2007 are Bulgaria, Rumania and Turkey. (www.manfred-jahreis.de). This means that the EU will be the biggest domestic market in the world. (www.randzio-plath.de) With around 455 million habitants and will be even bigger than the NAFTA (North Atlantic Free Trade Area) who is at the moment the biggest free trade area on the world with 413 million habitants. (www.sachsen.de)
This enlargement has many advantages for the new countries but also for the EU. For new Member States membership offers the chance of political stability (important as many of the new Member States are young democracies), an enlargement of the market, a lower risk of war as economic stability usually means less threat of uprisings or coup dretals. An important political advantage is that as the new countries are neighbouring to Russia and Ukraine that means that the EU will get nearer to these two important countries and this is a good way to cooperate with them. (www.tucnak.fsv) Another advantage for the enlargement is that XXXX European Citizens will use the Euro and means that the Euro will become of the strongest currencies all over the world.
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Even if there are a lot of advantages there are also disadvantages by enlarging the EU. It starts already with the specific problems of the new countries, they have to fulfil the guidelines of the European Union regarding technical, social, political and economic aspects and they have also to manage the convergence criteria of Maastrich (inflation rate no more than 1.5 percentage points above that of the three best-performing Member States; a government deficit which does not exceed 3% of GDP; a ratio of public debt to GDP which does not exceed 60%; currency variations within the normal fluctuation margins of the ERM for at least two years; a long-term interest rate (12-month average) not more than 2 percentage points above that of the three best-performing Member States. (www.euro-conversion-tools.com)
This may be very difficult for some countries to meet. Some examples of the areas that the new countries don't fulfil are. (www.mdr.de)
- Liberalness: Recognition of the career diplomas, education in the health service
- Agriculture and fishing: Control of the quality of goods and animals
- Competition: allowance of the states changing the different structures
- Transport: security in the shipping transport, handicaps in the road transport
- Taxes: problems with the value added tax
- Customs house: automatisation of the systems
- Social policy: equality of men and women, legislation of work (www.economist.com)
There are also other difficult tasks to resolve: One of the most difficult tasks from the economic point of view is the economic stage of development of the new countries comparing to the "old" ones. (www.bpb.de) But regarding the opinion of economists this is not a long-term problem and they expect a fast development of the new countries with the economic help of the EU. This happened when the likes of Ireland joined in 1973. As consequence of the enlargement countries like Spain, Portugal and Greece wont receive so many benefit payments and that the new countries are the receiver of this money.
These three countries will have to report a drop in their agriculture due to the cheaper costs of producing in the new countries. A possible solution for this problem for these countries could be to improve the quality of their goods and to make more efficient their productions and this way find new buyers. Another task to resolve is the possible growth of organise crime.
The citizens of the EU are also expecting much emigration from the new to the "old" EU countries and that the people from the new countries are willing to work for lower salaries but this problem could be solved by setting minimum wages. However as it happened already in the case of Spain, Ireland and other countries as soon as the economic situation of the countries improves people generally tend to return (or not leave in the first place when the economic situation of these countries improves). The emigration has also the advantage that people learn new ways of doing things and new languages.
There is also another major current problem in the European Union related with Member
States. Politicians are trying to create a European Constitution and there is much debate over how smaller countries and new Member States will be represented. This relates to the argument that so many Member States will make European Decision Making institutions such as the Commission impossible. (Class notes) This 'problem' came-to-a-head in Brussels on the 12th and 13th of December when the European Countries failed to agree on member States voting rights and put the proposed Constitution on the back burner.
Even if there are many difficulties by enlarging the European Union the enlargement and the growth is the only way to reach the equality of all the European countries and citizens and to reduce the economic differences between East and West Europe. This Union may be a good way for all 25 Member States to trade and co-operate with each other and to protect Europe future. (News TVE)
2. The Competition Policy is one of the main tenets of the European Union, why? Explain the areas covered by the EU Competition Policy, adding at least one instance of all the areas.
The main reason of the importance of the European Competition Policy is that competition is the central power for the creation and preservation of the European home markets a fundamental objective of the EU. A properly functioning Competition Policy is required to allow customers to buy the largest selection of goods at the best and fairest price level and this is only possible if there is a control of the companies. The European Commission on Competition Policy whose president is Mario Monti and the European Court of Justice are responsible for the controlling business practices regarding Competition. The four main areas of the Competition Policy are: Antitrust and cartels, merger control, liberalisation and state aid. (www.eubusiness.com)
Antitrust and cartels: This means that companies which are in a dominant position in the market are not allowed to abuse this situation and keep their competitors out of the market. It is also forbidden for companies to collude with each other and to fix prices or production quotas for example. However if the customers have a benefit the European Commission and the European Court of Justice are able to allow some practices, which in the norm are forbidden. A recent example approved in 2002 was that car-dealers are now allowed to sell more than only one brand and to and leave repair and maintenance to other firms. (www.europa.eu.int)
Merger control: Due to protect the small firms to not be squeezed out of a market by big companies two companies are not allowed to merge or one take over another if the new firm would have a dominant position in the market. It regards all the mergers and take-overs of firms with more than a turnover of 250 Euros in Europe or more than 5 billion Euros turnover worldwide and with a market quote of more than 40%. All these have to been approved by the European Commission care less where the firms have their headquarters.
Companies can ask for a revision to the European Court of Justice if they don't agree with the decisions of the European Commission. An example for a not allowed merger was General Electric and Honeywell. (www.europa.eu.int)
Liberalisation: Liberalisation means to introduce competition into traditionally monopolistic markets such as telecommunications, energy and transports. And this is one of the major goals of the competition policy of the European Union. The reason for liberalisation is to offer consumers a free choice of goods and services and this allows them not to have to pay the typically monopolistic high price levels and not to accept the poor quality of services offered, an example being the poor service offered by Spanish company Telefonica. Nevertheless there are sectors where monopolies can be justified, for example the postal deliveries in small villages. This sectors use to be areas that are basic rights and it handles on public goods. An example for liberalisation are the telecommunications which used to be a monopoly all over Europe for many years and which have been liberalised some years ago. (In Spain the consumers have now the choice between Telefonica, Vodafone and Amena in the mobile telecommunications). The increased availability of cheap airfares from new companies can also be a result of the liberalisation of the air sector. (http://europa.eu.int)
State aid: It is generally not allowed to the governments to give aid to companies, which have no chance to be profitable on their own because it disrupts the normal competitive forces. What does the European Union mean by state aids? State grants, interests relief, tax relief, state guarantee or holding and provision by the state of goods and services on preferential terms. Aid for development and research, for regional development and for small and medium size companies are allowable because it is an object for the European Union that they grow and they get more competitive. Example: The BBC licence fees asked to the government of the UK to run 9 new digital services have not been seen as state aid by the European Commission. (www.europa.eu.int)
However the Competition Policy and Mario Monti have recently come in for some criticism because the Europe's Court of first instance overruled Commission decisions prohibiting a series of mergers between European Companies. (www.wilmer.com)
To conclude Competition Policy is a very important policy to ensure fair competition for all European Companies, the best choice at the best prices for all. It forces companies to innovate and offer the best product/price combination or risk going out of business.
3. In what manner can a European Citizen protect their rights as regards Competition Policy? What is the complaints procedure?
European Citizen have the possibilities offered by the European Union to be informed on their rights. There are some contact points offered as EURES (Labour Market Network in the EEA), where people can find information on working and living conditions, ECI (European Consumer Infocentres), national contact points for citizens and the European Ombudsman who is responsible for investigating complaints about bad administration by institutions of the European Community.
First of explaining the complaints procedure it is important to say that European Citizens cannot complain on an European base if the competition policy doesn't trade in two or more Member States. If this would be the case citizens have to complain on the national competition policy "tribunal de defensa de la competencia" in the case of Spain. If a citizen wants to complain on the competition policy he can do it by writing a letter to the European Commission. If he doesn't agree with the answer of the Commission the citizen can write a second letter to the European Ombudsman. The letter has to be in a language of one of the Member States and the complaint has to be done within two years of the date when you got to know the facts on which your complaint is based. Another condition is that the complaint can't be actually before a court or already been settled by a court. In internet we can find a complaint form, this form can be sent by e-mail or by current letter to the European Ombudsman.
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