Stakes rise in enlargement talks

Date: 20/05/1999

As the six leading candidates reach the half-way mark in the long process of negotiating entry to the EU, existing member states are taking an increasingly hard line in key areas such as state aid and single market rules. Simon Taylor reports

HUNGARY'S insistence that foreigners will not be able to buy farmland until ten years after the country becomes a full member of the EU has provided the first real sign of the arguments to come over enlargement.

Budapest's bid to prevent its farmland from being snapped up by bargain-hunting western firms and speculators comes as Union governments display an increasingly tough attitude towards candidate countries' requests for special terms of entry.

As this week's session with the chief negotiators from the six leading applicant countries demonstrated, the EU's willingness to accept the applicants' bids for concessions is diminishing as the areas being discussed become more important.

When the negotiating process with the six leading applicants began last November, it was comparatively easy to make progress on relatively minor issues such as science and research or culture policy. EU officials nevertheless insist that even those chapters which have been "provisionally closed", such as audio-visual policy, may have to be reopened if there are further changes in legislation by the time new entrants join.

And as the focus shifted this week to key areas of economic legislation which underpin the Union's single market - rules on competition and state aid, customs tariffs and trade agreements - EU governments raised a whole host of objections to the applicant countries' requests for exemptions from some Union rules or delays before they have to fall into line.

The areas at the centre of controversy are ones which involve sectors crucial to the applicants as they try to cope with the social impact of restructuring their heavy industries to meet the competitive challenges of being part of the EU economic zone.

They are also sectors in which existing member states are determined that their domestic industries will not be undermined because factories in the new member countries enjoy state support.

In the discussions on state aid, for example, both Poland and the Czech Republic have asked for a special clause in their accession treaties which would allow them to protect industries if cutting off support would have a serious social impact on the sector concerned.

Warsaw argues that the extra burden it faces in closing the economic gap between it and current EU members justifies special treatment. Union governments are adamant, however, that the existing state aid rules already take into account differing levels of economic development and no extra concessions are necessary.

Union negotiators have also expressed concern about Poland's request for Special Economic Zones (SEZs) to enjoy a derogation from normal state aid rules until 2017. In addition, they stress that the steel sector is not covered by Poland's commitments to control state aids.

Concern has also been voiced by Union negotiators over the failure of some applicants to tackle large state monopolies in the energy sector, and Slovenia has been told that the special treatment given to its textiles and footwear industries must end.

In the field of company law, the issue of ensuring intellectual property rights has thrown up problems over trademarks and patent protection for new medicines.

While the EU accepts that companies in the applicant states which currently hold trademarks should have a chance to defend these against the owners of Union-wide brand protection, EU governments are urging candidate countries to try to keep the number of possible disputes after accession to a minimum.

On medicines, EU negotiators have stressed to applicants that they must ensure new products get patent protection for a full five years after the usual 20 years, known as the "supplementary protection certificate" or SPC.

The Union is also insisting that all the applicants' external tariffs must be brought into line with EU levels when they join the bloc.

This too poses problems for the candidate countries, most of which have special zero-tariff arrangements with neighbouring states. Hungary, for example, has been told that there can be no delay before it applies full Union tariffs on imports of certain raw materials for processing, including fuel and building materials.

Cyprus is likely to be the only one of the six leading candidates to close the customs union chapter provisionally at the next ministerial negotiating session in June.

Budapest's bid to protect its farmland against foreign acquisition marks an important stage in the long drawn-out negotiations over the terms on which new countries will join the EU.

Hungary's declaration on farmland, part of its offer on the free movement of capital, was one of four new position papers submitted to the Union, which means that Budapest has now passed the half-way mark, having presented papers on 19 of the 31 separate chapters into which the mammoth body of EU legislation is divided. The other applicants are expected to submit their position papers over the next month.

On 21-22 June, EU foreign ministers and their counterparts from the six leading candidates for membership will meet to try to close negotiations on the first 15 chapters. By the end of July, the Union will have completed the 'screening process' through which it examines how close applicant countries' existing legislation is to EU norms.

Some candidates are planning to present position papers on all the remaining areas by the end of the year, setting the stage for negotiations to move into a more intensive phase under the Portuguese presidency from next January.

As negotiators from the applicant countries point out, the real hard-bargaining will only begin once there is a "critical mass" of subjects on the table to argue over. As in any negotiation, parties can only start making concessions when they can see areas where these can be balanced out with gains.

Big battles are expected over environmental rules, with the applicant countries needing huge sums of money to catch up with EU standards; agriculture, where the candidates will fight for their farmers to get the same levels of aid as their colleagues in the Union; and, most importantly, the free movement of labour.

EU member states such as Germany and Austria which border the applicant countries are expected to call for long delays before central and east European workers can seek employment in the west, something which the applicants will only agree to in return for significant trade-offs in other areas.

Meanwhile, gaps are starting to open up between the performances of different applicants.

Although negotiations are still at a relatively early stage, this has not stopped the EU's chief negotiator Klaus van der Pas from warning Poland that its slow progress in some areas threatens its hopes of joining the Union in 2003.

Van Der Pas highlighted Warsaw's failure to cut aid to ailing heavy industries, sluggish progress on privatisation and the need for more legislation to bring Poland into line with the EU as the main stumbling blocks.

The head of the Union's enlargement task force pointed out that at the negotiating session in April, Poland only closed one chapter - on the uncontroversial subject of statistics - compared with the three finalised by the Czech Republic, although Warsaw is expected to catch up soon.

Polish officials reject this approach as a way of gauging a country's progress towards membership.

They claim that Poland sometimes needs longer to prepare its positions and make the necessary legislative changes because it takes a more thorough approach to complying with EU rules than some of the other candidates.

While the Polish assessment of its own performance is debatable, the EU could face a major political headache if the gap between the performance of the different candidates widens.

If, for example, Warsaw continued to lag behind the others in the early part of the next decade, the Union would face a difficult choice. Could it realistically invite other states to join without Poland when Germany (and possibly France) would not contemplate enlargement without its big eastern neighbour? Or would other applicant countries agree to wait until Poland caught up? Those are the sorts of questions which EU politicians dread having to answer.

Major feature. As the six leading candidates reach the half-way mark in the long process of negotiating entry to the EU, existing Member States are taking an increasingly hard line in key areas such as state aid and single market rules.