EU Enlargement

The accession of eight Central and Eastern European countries to the European Union in 2004 will bring some important benefits. The new members will gain from reduced barriers to trade and investment. By 2010, the movement of labour will also be freed. But accession to the EU is neither a necessary nor a sufficient condition for economic growth. The combined effects of market access and economic liberalisation, not EU membership, optimise economic growth. Unfortunately, the incoming EU members had to choose between the common market on the one hand and economic liberty on the other. Instead of concluding free-trade agreements with the EU, the Central and Eastern European countries were cajoled into an increasingly centralised superstate, in which most of their comparative advantages will be legislated out of existence. As a result, economic growth in Central and Eastern Europe will continue to be suboptimal. The loss of potential future economic growth will be only partly offset by the Central and Eastern European countriesu0092 access to the European single market. Following the collapse of communism, the Central and Eastern European countries searched for a quick way to prosperity, and EU accession seemed like a rational step forward. Unfortunately, the geopolitical aim of the European elites to rival the United States enjoys clear precedence over the developmental needs of the Central and Eastern European countries. Compliance with centralised EU regulations in three areas u0096 labour, agriculture and the environment u0096 will impose the most significant costs on the Central and Eastern European countries. Western European labour regulations will make many workers in the less-productive Central and Eastern European countries less competitive; agricultural subsidies will favour current EU members over future ones; and stringent environmental regulations will impose a cost of up to 120 billion euros on Central and Eastern European countries. Accession members should be wary of future EU initiatives, such as