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Potential Benefits And Problems Of Enlarging The European Union To Include Eastern European Countries

4294 words - 18 pages

This essay will be analysing the potential benefits and problems of enlarging the European Union to include Eastern European countries. This will involve discussing the likely impact that enlargement would have on existing members and the Eastern European countries which will be joining. This will also concern the effect on issues such as common agriculture policy (CAP), services and migration between countries.The potential benefits and problems of enlarging the EU are likely to come from many directions. Ranging from the beneficial outcomes of increasing economies of scale, to the potential danger that poorer EU nations will have to receive large budgets from existing EU nations.Evidence ...view middle of the document...

This created the start of a common market.As more countries saw the benefit of joining the European Economic Community, there was further enlargement during the 1980's. Greece joined in 1981 whilst Spain and Portugal joined in 1986. This helped shift the political balance in the community and increased the relative importance of agriculture. The 1980's also saw the signing of possibly the most important act since the Treaty of Rome. The single European Act (SEA) of 1985, which came into force in 1987, committed member nations took the second step towards the creation of a genuine common market. In 1995, three more countries joined the union, Austria, Finland and Sweden taking the total of member nations to 15.With new members joining, it is unlikely for the EU to become a completed product anytime soon (total economic integration). However, it has evolved since the treaty of Rome. Most studies concentrate on the integration of the EU and its process, this leads us to believe the importance of each of these stages. The two main areas of development is the integration of markets and policies, this refers to the elimination of all barriers to trade and factor movements (labour and capital).Free trade is where all quotas and tariffs are abolished. The economic rational for free trade can be explained by the theory of comparative advantage . David recardo's workings of the early 19th century showed that it could be mutually beneficial for countries to specialise and trade. This would allow an opportunity cost in the terms of production in which the specific country specialises in. Hence, this shows why free trade can be beneficial, e.g. allows higher total production and thus higher welfare. This is more likely to occur if tariffs and quotas are abolished.Another key component of integration is harmonization of key areas of policy involving coordination of policies on business and competition regulation, environmental policies, taxation, and fiscal and monetary policies. The stages of integration for the EU are continuing they can be defined as below.The first stage of Economic integration can be classed as the 'Free Trade Area'. This is where member countries abolish all tariffs, quotas, and other trade restrictions among member nations. Each country can also set its own tariffs and quotas on goods from non-member nations. Also goods entering the free trade area are stamped with a certificate of origin.The second stage of economic integration is classed as the 'Customs Union'. This is where a common external tariff is placed upon goods from non-member nations, hence making these less competitive.A 'common market' or customs union as discussed above is defined as being a group of countries between which there is a free trade in products and factors of production, and which imposes a common external tariff on imported goods from outside the market. Factors of production being:* Land, there should be free trade in natural resources. In Europe, for...

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