Hong Kong sellers may well be interested in the latest progress report published by the European Commission on 14 October 2009, in which it sets out the status and plans for the future enlargement of the European Union. The document also includes a summary of the progress made over the last twelve months by each candidate and potential candidate country. As well as indicating which markets are opening up to the EU, in particular with regard to allowing the free movement of goods and services, this information will be interesting to traders who will benefit from harmonised rules and procedures which are being instituted in these emerging markets.
While the European Commission has found that the enlargement countries and therefore enlargement projects have been impacted by the global economic recession, financing has been provided by the EU to help alleviate the impact of the crisis.
In the report, the European Commission backs opening EU accession negotiations with the Former Yugoslav Republic of Macedonia (FYROM) which has been an applicant for EU membership since December 2005. In the progress report, the Commission states that the country meets the five so-called “Copenhagen criteria”. The criteria require that a state have the institutions to preserve democratic governance and human rights, have a functioning market economy, and accept the obligations and intent of the EU. It therefore recommends that negotiations move forward. Accordingly, FYROM’s status has changed from a “potential candidate country” to a “candidate country” for EU accession purposes. Although accession is likely to take some years, this country’s prospects of becoming an EU member have visibly increased.
The progress report also provides a useful update on the other candidates, i.e., Croatia and Turkey, and potential candidates for EU membership, namely, Albania, Bosnia & Herzegovina, Montenegro, Serbia, Kosovo and Iceland.
EU accession negotiations began with Croatia on 3 October 2005 and are considered to be progressing well. Croatia is deemed to be a functioning market economy which should be able to cope with competitive pressures and market forces within the EU, despite having been hit by the global crisis. The Commission considers that if Croatia meets all outstanding conditions, the accession negotiations could be concluded in 2010, after which it could rapidly become the EU’s newest member.
EU accession negotiations with Turkey began on 3 October 2005 and have moved forward, albeit more slowly than with other candidate countries. The Commission has stated that it is now for Turkey to step up its efforts in meeting the conditions for accession, notably in relation to ironing out its political difficulties with Cyprus.
Albania signed a Stabilisation and Association Agreement (SAA) with the EU in June 2006, which entered into force in 2009. A potential candidate country for EU membership, Albania’s SAA is a first step towards membership – opening up access to some or all EU markets or to financial or technical assistance in exchange for commitments to political, economic, trade, or human rights reform. Progress on political commitments is seen to be strong and Albania officially applied to be a candidate country in April 2009. However, full candidate status is still not imminent, as the country needs to make political progress and to strengthen its market to ensure it can cope with the competitive pressure and market forces which are at play within the EU. Traders may be interested to note that Albania is already aligning its legislation, policies and capacity with European standards. However, the Commission has noted that these laws and policies are not necessarily being implemented as yet.
Bosnia & Herzegovina are deemed to have made little progress toward converting their “potential candidate” status for EU membership to “candidate” status: with the Commission expressing particular concerns with regard to the country’s political climate. What may be of interest to Hong Kong traders is that some progress has been made in the field of customs.
As for Montenegro, the overall picture of EU-Montenegro relations is positive. Montenegro applied for membership in December 2008 and is a potential candidate country. In April 2009, the Council invited the Commission to submit its Opinion on Montenegro's application. The Opinion is set to be released in autumn 2010. With regard to its market status – one of the benchmarks which will interest traders – Montenegro is viewed as having made progress towards establishing a functioning market economy and in aligning its legislation with European standards.
According to the progress report, Serbia has also made good progress towards converting its status to a “candidate country”, achieving relative political stability. However, a damaged economy and concerns regarding Serbia’s failure to recognise Kosovo may potentially delay its recognition as a full “candidate” for EU accession. Kosovo itself is seen as having made little progress towards establishing a functioning market economy. Substantial reforms and major investments are considered necessary to enable Kosovo's economy to cope over the long term with competitive pressure and market forces within the EU, and to ensure that the political situation remains stable.
Following the impact of the financial crisis, Iceland officially applied for membership of the EU in July 2009. Already a member of the European Economic Area, Iceland is expected to quickly fulfil the criteria to become a full candidate country.
The progress report is an important tool for future planning on emerging markets for Hong Kong sellers, while setting out clearly how closely aligned the legislation and markets in potential candidate and candidate countries are with EU Member States. The full report on the EU’s 2009 enlargement strategy can be accessed at:
http://ec.europa.eu/enlargement/pdf/key_documents/2009/strategy_paper_2009_en.pdf
