Workshop on "EU Enlargement: Regulatory Convergence in Non-acceding Countries"
(Athens, Greece, 7-8 November 2003)
Statement by Mrs. Brigita Schmögnerová,
Mr. Chairman, Ladies and Gentlemen,
It is a pleasure to have an opportunity to address the workshop on "EU Enlargement: Regulatory Convergence in Non-acceding Countries", particularly because it has been organized with the strong support of the Government of Greece. I would like to thank Professor Constantine Stephanou with whom I had the pleasure and honour to collaborate more closely in the time of the Greek Presidency when he was given the responsibility to coordinate EU Member States policy in the UNECE. I can assure you, Professor Stephanou, that it was a unique experience demonstrating that efficient coordination of the EU Member States within international bodies is possible if properly organized and under excellent leadership as in your case. I would like to take this opportunity to thank you for taking ownership of this workshop and for your efforts to make it happen.
Ladies and Gentlemen,
Enlargement and "Beyond enlargement" Project
During the last decade, the UNECE region has faced many far-reaching changes - and next year will bring the most significant one: EU enlargement by ten new member countries. In less than 7 months the map of Europe will be redrawn and the EU external borders will be greatly expanded towards the South and the East.
The enlarged Union, with its population of more than 450 million inhabitants and its GDP of almost 10,000 billion Euros, will undoubtedly be a driving force in the development of stability and prosperity throughout the European region.
There are many question marks about the challenges, opportunities and implications this historical enlargement brings to the entire region, and particularly to the countries in Eastern Europe, the Caucasus, Central Asia and the Western Balkans.
To address major issues regarding the new shape of relations between the enlarged EU and its future neighbouring countries, and other non-acceding countries within the UNECE region, we have initiated a discussion on "Beyond enlargement: economic cooperation and integration in a wider Europe" through a series of workshops.
This series of workshops, which is being supported by the EU, is designed to help limit the prospect of new divisions arising in the region and to look at the new shape of relations between the enlarged EU and non-acceding countries. The current workshop on "EU enlargement : Regulatory Convergence in non-acceding countries" is part of the series under the project "Beyond EU enlargement". Under this project we have so far organized sectoral workshops on the impact of EU enlargement on non-acceding countries, and economic cooperation and integration in the region after enlargement in the sectors of energy, trade, business and FDI, and environment. Late November a workshop on post-EU enlargement in the transport sector will be organized in cooperation with the ECMT (European Conference of Ministers of Transport), the EC and the EIB (European Investment Bank). We will continue the discussion in the joint UNECE-OSCE high level workshop on the economic dimension of security in post-enlargement Europe in February next year, and in May 2004 on new challenges for trade and enterprise development.
The objective is - as noted - to promote a better understanding that there is a need for coordinated efforts to prevent new divides in the UNECE region after EU enlargement. All main stakeholders - the EU, governments of non-acceding States, the business sector and NGOs, and relevant international organizations - have to play a role.
EU's role includes (1) the continuation of its integration efforts towards South-East Europe through the Stabilization and Association Process (SAP). An important step forward was made at the Thessaloniki Summit in June 2003, where the EU offered the Western Balkan countries the new European Partnerships, giving them the prospect of accession to EU after they fulfil the necessary obligations.
Furthermore, the EU supports the transition process towards market economies and democratic societies in 13 countries of Eastern Europe, Caucasus and Central Asia through bilateral Partnership and Cooperation Agreements (PCA). In addition bilateral negotiations between EU and Russia under the CEES (Common European Space) outline new dimensions of cooperation between the new partners.
In March 2003, the EU defined its neighbourhood policy in "Communication in a Wider Europe" which will bring closer to the EU those countries which will become new neighbours due to having borders with the enlarged Europe, namely Russia, the Western Newly Independent States and southern Mediterranean countries.
UNECE's role in Post-enlargement Europe
In post-enlargement Europe a unique role can be played by UNECE. Why?
- UNECE is a multilateral platform for promoting economic cooperation in its region. UNECE has played this important role for over 50 years through well targeted initiatives aimed at greater economic development and integration.
- UNECE provides equal participation in the decision-making process to every UNECE member State including non-acceding countries. In view of the existing governance in other organisations like BWI, WTO it ensures a model of governance that gives more opportunities to less advanced countries to have a say.
- As such it is recognised as a non-partisan and trustworthy organization on the side of non-acceding countries.
- UNECE has a long and well recognised expertise in developing norms, standards, conventions and other binding and non-binding legislation in trade, transport, energy and environment. UNECE instruments in fact provide the basis for many EU policies and legislation and make a significant contribution to the success of the EU's Customs Union and Single Market. Recently the EU adopted three legislative proposals towards full application of the 1998 Aarhus Convention on environmental democracy developed in the UNECE. Vice versa, many UNECE initiatives are in fact led by EU Member States and EU policies, and some impact of the existing EU legislative framework on the UNECE legislative work is already visible.
- The UNECE legislative framework is indispensable for further enhancement of trade and economic cooperation. In order to strengthen economic cooperation with the enlarged EU, there is a need for non-acceding countries to adopt and implement standards and legislation that are not necessarily identical but in compliance with the acquis communautaire. The UNECE might be helpful in developing such norms, standards and regulatory instruments using its existing experience and expertise.
Importance of regulatory convergence
Why is regulatory convergence important?
Firstly, implementing common rules and standards will assist economic operators of non-acceding countries to compete in the EU market and international markets when they move away from their domestic markets.
Their success or failure will often depend on how familiar they will be with the regulations and standards in export markets. In those areas where differences exist between the standards applied in the non-acceding countries and those applied in the EU, trade with the EU will be difficult for companies from non-acceding countries. Therefore PCA and SAA assume legislative and regulatory convergence, although they do not set out a time frame.
Secondly, trade liberalization and the adoption of common rules and standards are the fundamental components not only for creating greater market integration between the enlarged EU and non-acceding countries, but also for creating greater trade and market integration among the non-acceding countries themselves.
Let me point out a very recent example - the agreement on the creation of a Single Economic Zone, which was signed by the presidents of the Russian Federation, Ukraine, Belarus and Kazakhstan at the CIS Summit in Yalta in September. Apart from the fact that this agreement provoked some conflicting reactions and even criticism on the side of the Commissioner for EU enlargement, I would just like to underline that this agreement foresees, among other objectives, the convergence and harmonisation of relevant economic and trade-related legislation leading to the free movement of goods, services, capital and labour.
Agreement framework for regulatory convergence
The importance of regulatory convergence is more increasingly recognized by non-acceding countries in the context of their future participation in globalised markets. So, the driving force behind regulatory convergence is not only the EU enlargement and existing bilateral agreements with the EU, but also their ambitions to compete in the global markets which are institutionally linked to their WTO membership.
The existing agreement framework for regulatory convergence therefore includes PCA and SAA concluded with the EU, regulatory obligations derived from their WTO accession process or membership and from membership in other international organizations, including UNECE.
The regulatory convergence process is a dynamic one, it is clearly a "moving target". Although "overregulation" should be avoided and different stakeholders' views taken into consideration it is clear that the regulatory framework for international economic cooperation will continue to change and respond to new challenges (e.g. new norms and standards in e-economy). This makes the process of regulatory convergence for less advanced countries more difficult.
An agreement framework for regulatory convergence should therefore take into consideration the time and speed and costs of regulatory convergence. Regulatory convergence is a time-consuming process which in the case of acceding countries has lasted 10 and more years. The costs of regulatory convergence include costs linked to the adoption of new legislative frameworks and the building of new regulatory institutions.
An optimised speed of adoption of new legislative framework, norms, standards, etc. should take into consideration the potential negative implications of too rapid/ too much postponed adoption of new legislative framework. Too rapid an adoption might generate costs - for example from undesirable bankruptcies, increased unemployment and other social and economic losses, but too much postponement - if not accompanied by necessary structural reforms - may lead to further losses in competitiveness and even greater undesirable negative consequences.
Where harmonization of technical regulations and standards is not immediately possible, Governments and national bodies should try to create a simple and transparent framework for adopting and applying their national technical regulations and standards and keeping foreign companies informed of how to meet these requirements.
Mutual confidence can be increased and the cost of trading reduced through the mutual recognition of national conformity assessment bodies in accordance with the requirements of an importing country.
One approach to minimizing regulatory convergence costs and responding to the challenge of a "moving target" is Recommendation "L" on Standardization Policies, also referred to as the "International Model for Technical Harmonization" which was based originally on a proposal from the European Union, and has been well received by a large number of our member States.
This Recommendation is based on two principles:
- That "Common regulatory objectives" should form the basis of technical regulations and should be based on mutually agreed safety and other legitimate requirements (such as those related to safety, the environment, etc.). This, in turn, means that regulators should not harmonize existing regulations but rather should try to agree on, for instance, what safety levels they would like to achieve (i.e. on their common regulatory objectives) and then agree on what relevant standards could be used for this purpose.
- The need to base national technical regulations on international standards or, in their absence, on applicable regional or national standards. Such an approach would create a level playing field for companies. Thus a company that is manufacturing a product according to a standard referenced in a regulation would be able to demonstrate automatically its compliance with such a regulation.
The telecommunications sector was the first to show interest in the application of Recommendation L and the first steps towards implementation are being taken in order to harmonize technical regulations on certain telecom products. In the respective expert community, this effort is know as the "UNECE Telecom Initiative".
I am very pleased to note, therefore, that mechanisms suggested in the "International Model" are not only theoretical but are already being applied in one of our subregional projects.
On the basis of the International Model, the CIS countries have prepared a draft agreement on harmonization of technical regulations within the CIS. This draft agreement was prepared in cooperation with the CIS Interstate Council for Standardization, Certification and Metrology (which unites the standardization agencies from the 12 countries of the former Soviet Union).
The implementation of such an agreement would not only contribute to development of trade between the CIS countries but also provide a useful and practical showcase for regional cooperation, which could also serve as an example for regulatory cooperation in our other subregions.
The harmonization of regulatory measures, such as technical regulations, standards and product specifications, stimulates markets and creates common understandings between market operators, and thus facilitates trade.
For non-acceding countries it is crucial to adopt international standards so as to make their products competitive, thus increasing their export capacity and their participation in global trade.
Regulatory measures, their convergence, and the possibilities for linking them to regional and international standards, have therefore become one of the central issues for UNECE discussions about a wider Europe.
Through its intergovernmental mechanisms and its advisory services, the UNECE offers its experience and expertise to its member States, and particularly to non-acceding countries, to assist them in adopting the necessary international standards for trade.
Thank you for your attention