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1 May: tenth anniversary of the EU's 2004 enlargement

Posted by Nick Prag at 01 May 2014, 20:00 CET |
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1 May was a day to reflect on how important the EU's largest expansion, the accession of ten new Member States in 2004, has been to the European Union.

The major enlargement of the European Union to former communist countries brought an end to the cold war, a new stability and a reunited Europe after years of artificial division.

For the new members, it was a powerful instrument of transformation and a strong incentive for reforms. The EU helped countries to implement democratic and economic reforms, improve the rule of law and also to build bridges with their neighbours, overcoming the legacy of the past. Enlargement made it possible for old and new Member States to grow in stability and security, and also contribute to greater prosperity in difficult times.

For the old members, it helped the EU become the largest player on the global trading scene, and the largest source and destination of the foreign direct investment. It is likely that the economic crisis would have impacted old and new members worse without enlargement.

The European Commission lists the strategic benefits of enlargement, including:

  • increased prosperity, with EU GDP in 2012 was 23% of world GDP, amounting to EUR 13 trillion.
  • higher standards, helping to improve people's lives through cooperation in areas such as energy, transport, rule of law, migration, food safety, environmental protection and climate change.
  • a safer Europe, with the promtion of democratic values and fundamental freedoms, consolidating the rule of law across aspirant countries- greater influence in today's multi-polar world, helping Europe to shape the world around us.

On the economic front, enlargement made the European Union into the world's biggest single market. Extending the internal market opened trade and financial flows, and it gave increased opportunities to firms in the EU and in the incoming countries.

The facts speak for themselves: trade between old and new Member States grew almost threefold in less than 10 years preceding the 2004 and 2007 enlargements, and fivefold among the new members themselves.

The economic dynamism of the new members generated three million new jobs in just six years from 2002 to 2008. And growth in the acceding countries contributed to growth in the old Member States through increased investment opportunities and demand for their products - contributing 0.5 percentage points to cumulative growth of EU-15 in 2000-2008.

Foreign direct investment from the rest of the world to the EU doubled as a percentage of GDP since accession (from 15.2% of GDP in 2004 to 30.5% of GDP in 2012) with the enlarged EU attracting 20% of global FDI. The EU15 FDI stock in EU12 reached EUR 564 billion in 2012, 357% up from 2007.

A larger and united Europe, now with 28 members, enables us to better face key issues such as the consequences of globalisation, the financial crisis or climate change.

It has also made us more prosperous, despite the economic crisis, boosting growth and improved living standards in the acceding countries, and providing new export and investment opportunities for the 15 established members. Growth in the acceding countries contributed to growth in ''old'' Member States through increased investment opportunities and demand for their products.

Other facts: German exports to the 12 countries that joined since 2004 have almost doubled since then; UK exports grew by approximately 50%; for the Netherlands enlargement generated additional income of EUR 11bn; Austria's annual GDP increased by 0.4% thanks to enlargement since 2004.

The process of EU enlargement is not finished. Another 7-8 countries, including Turkey, Serbia and Montenegro are knocking on the Union doors at a time when it would be natural that some in the EU started to have doubts.

By promoting stability and cooperation in the regions on the EU's doorstep, the Commission says ongoing enlargement is in the interest of the EU and its citizens. It creates an environment conducive to economic growth and investment; it encourages compliance with high EU standards; it helps tackle issues such as the fight against organised crime and corruption, and it strengthens justice, security and fundamental rights.

Past enlargement has been a benefit to citizens and businesses on both sides. Future enlargement should continue to be so.

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Nick Prag

Nick Prag

Nick Prag is founder and managing editor of EUbusiness.com. Prior to EUbusiness, he was senior editor at Europe Online SA in Luxembourg, where he played a major part in the launch of Europe Online International.