THE CHANGING FACE OF EUROPE: EU ENLARGEMENT AND IMPLICATIONS FOR TRANSATLANTIC RELATIONS John Van Oudenaren The American Institute for Contemporary German Studies The Johns Hopkins University AICGS POLICY REPORT #6 THE CHANGING FACE OF EUROPE: EU ENLARGEMENT AND IMPLICATIONS FOR TRANSATLANTIC RELATIONS John Van Oudenaren AICGS POLICY REPORT #6 The American Institute for Contemporary German Studies (AICGS) is a center for nonpartisan, advanced research, study, and discourse relating to the Federal Republic of Germany, its politics, economy, culture and society. Founded in 1983, AICGS has been a premier source of research and analysis for the policymaking and policy- advising communities in the public and private sectors. Drawing on an international network of scholars and specialists, the Institute has consistently generated in-depth, nonpartisan assessments of Germany’s policy choices and developments and their impact on the transatlantic dialogue. Affiliated with the Johns Hopkins University, AICGS provides a comprehensive program of public fora, policy studies, research reports, and study groups designed to enrich the political, corporate and scholarly constituencies it serves. Executive Director: Jackson Janes Board of Trustees, Cochair: Fred H. Langhammer Board of Trustees, Cochair: Dr. Eugene A. Sekulow The views expressed in this publication are those of the author(s) alone. They do not necessarily reflect the views of the American Institute for Contemporary German Studies. ©2003 by the American Institute for Contemporary German Studies ISBN 0-941441-72-5 Additional copies of this Policy Report are available for $5.00 to cover postage and handling from the American Institute for Contemporary German Studies, Suite 420, 1400 16th Street, N.W., Washington, D.C. 20036-2217. Telephone 202/332-9312, Fax 202/265- 9531, E-mail: [email protected] Web: http://www.aicgs.org [ii] AICGS POLICY REPORT #6 · 2003 CONTENTS Foreword.................................................................................................v About the Author.....................................................................................vii Executive Summary and Policy Recommendations....................................ix I. INTRODUCTION.............................................................................1 II. REFORM..........................................................................................4 Constitutional Reform...........................................................................4 Previous Attempts........................................................................4 The European Convention..........................................................7 Accession Country Perspectives...................................................13 Policy Reform...................................................................................16 Agriculture................................................................................17 Structural Operations..................................................................20 Other Policy Areas......................................................................22 The Costs and Benefits of Enlargement..............................................22 III. TERMS OF ACCESSION............................................................24 Mechanics...........................................................................................24 Key Issues.......................................................................................29 The Single Market.....................................................................29 Agriculture................................................................................31 Structural Funds..........................................................................35 Free Movement of Labor............................................................36 Justice and Home Affairs............................................................37 Environment.............................................................................39 CFSP........................................................................................40 Cyprus......................................................................................41 AICGS POLICY REPORT #6 · 2003 [iii] Prospects...........................................................................................43 IV. DEALING WITH THE “LEFT-OVERS” AND “LEFT-OUTS”...............................................................45 Bulgaria and Romania.........................................................................46 Turkey................................................................................................47 The Western Balkans..........................................................................50 Ukraine, Moldova, and Belarus........................................................52 Russia and Beyond..............................................................................54 V. IMPLICATIONS FOR U.S. INTERESTS....................................56 Economic Interests...........................................................................56 Trade in Manufactures and Services.........................................56 Trade in Agriculture..................................................................60 Investment................................................................................62 Preferential Agreements............................................................63 The Euro...................................................................................66 Political and Security Interests...........................................................67 Implications for NATO.............................................................67 Global Issues.............................................................................73 Proximity Policy.......................................................................74 VI. DEALING WITH A TRANSFORMED UNION........................77 VII. POLICY RECOMMENDATIONS.............................................82 [iv] AICGS POLICY REPORT #6 · 2003 FOREWORD The international dispute over the Iraq crisis has laid bare new divisions and fissures across the Atlantic and through Europe. While much attention has been focused on differences between the United States, France, and Germany, the letter signed by a group of eight present and future EU members criticizing the Franco-German stance on Iraq and fractious intra-European debate over NATO planning for Turkey’s defense make it clear that Europe does not always speak with one voice. As the Iraq debate underscores, the enlargement of the European Union will have significant implications for the way the EU defines itself and for its relationship with the United States. The enlargement agreed to in Copenhagen in December 2002 is unprecedented in both its size and its scope, bringing into the European Union many of the former communist states of central and eastern Europe as well as Cyprus and Malta, resulting in a Union that will be more diverse than ever. The expansion of the EU will cement ties of the new member states to the West. The diversity of membership in the new EU, however, will also entail numerous challenges and has the potential to tax the already overburdened EU institutions as well as its ability to speak with one voice. In order to understand the complexities of enlargement and its consequences for transatlantic relations, AICGS in 2001 convened a Study Group on “The Changing Face of Europe.” The group met in November 2001 in Washington, D.C., in Brussels in March 2002, and in Berlin in June 2002. A final conference of the project was held in Prague, Czech Republic on December 6, 2002 to consider the prospective results of the negotiations with candidate countries; the external implications of enlargement; the perspectives of the candidate countries; and the impact of enlargement on the United States. The project benefited from the extensive experience and insights of the Study Group’s “core” members, as well as additional participants in the group’s discussions, including EU officials, government officials from Germany and the candidate countries, respected scholars, and journalists. In this Policy Report, Study Group pilot John Van Oudenaren, Chief of the European Division, Library of Congress, addresses these issues and offers concrete policy recommendations for the United States. In addition to this AICGS POLICY REPORT #6 · 2003 [v] report, a volume of expanded and revised background papers by the Study Group members will be published in March 2003. AICGS would like to thank the German Marshall Fund of the United States and the Bundesministerium für Wirtschaft und Technologie, Bereich ERP-Sondervermögen for their generous support of this publication. The author would like to thank the members of the study group for their many contributions to this report: Michael Baun, Fran Burwell, Lily Gardner Feldman, Ulrike Guérot, Kai-Olaf Lang, and, in particular, Keith Crane, who in addition to his own background paper carefully reviewed an earlier draft of this report and made numerous helpful suggestions. Cathleen Fisher Jackson Janes Associate Director Executive Director AICGS AICGS March 2003 [vi] AICGS POLICY REPORT #6 · 2003 ABOUT THE AUTHOR John Van Oudenaren is chief of the European Division at the Library of Congress. Prior to joining the Library, he was a senior researcher at the RAND Corporation. From 1991 to 1995 he served as the director of RAND’s European office in