Abstract
On 1 May 2004 the European Union’s biggest Enlargement ever materialised when ten countries joined the EU. The new member states—Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia—brought 75 million new citizens into the Union which now comprises a population of 455 million. In spite of the historical importance of EU enlargement, it seems to have raised relatively little interest beyond Europe. This paper tries to narrow the research gap by discussing the most significant implications of EU enlargement for Europe–Asia relations in the areas of general inter-regional (political) links, trade and investment.
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Bulgaria, the former Czechoslovakia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovenia.
In this article EU15 refers to the EU members prior to the recent enlargement, while EU10 refers to the new members, which joined the EU on 1 May 2004. The old EU15 members are: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and United Kingdom; while the new EU10 members are: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic, and Slovenia. EU25 stands for the whole EU since enlargement. EC is the abbreviation for European Commission.
EU: Belgium, Czech Republic, Denmark, France, Germany, Hungary, Poland and the UK. East Asia: China, Malaysia, Philippines, Singapore, South Korea and Vietnam. All interviews were conducted by Jörn Dosch, except interviews in the Czech Republic and Hungary (conducted by Jesús Bores Lazo) and interviews in the Philippines (conducted together with Jesús Bores Lazo and Caesar B. Cororaton).
Author interview on 31 May 2006 in Warsaw.
Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand.
European Union (2004). “ASEM 5 Summit in Hanoi, Vietnam, 7–9th October 2004.” http://www.europa.eu.int/comm/external_relations/asem/asem_summits/asem5/news/ip04_1178.htm.
Bangkok Post, 12 October 2004.
The cease-fire agreement between North and South Korea gives the NNSC the functions of supervision, observation, inspection and investigation.
Kyodo News Agency, Tokyo, 3 April 2006: “Japan, Poland agree to cooperate over North Korea, UN reforms.”
Author interview on 29 May 2006 in Warsaw.
Lubos N (2004). “Czech Republic.” In: Filippini C et al. (eds) EU Enlargement and its impact on Vietnam. National Political Publishing House, Hanoi, pp 134–161 (p. 151).
Kunnamas N (2004). Thai Agricultural Exports to the EU. Research Paper, University of Leeds, UK, p. 5.
The following five points draw heavily on the comprehensive analysis by Cardani AM (2004) “The enlargement of the European Union and South East Asia.” In Filippini C et al. (eds) EU Enlargement and its Impact on Vietnam. National Political Publishing House, Hanoi, pp 30–53.
The concept of trade creation and trade diversion are used to analyse the impact of advanced economic integration (such as a customs union) on trade. As a result of the introduction of a common external tariff (CET), trade with non-member (=third countries) will result in either a trade creation effect or a trade diversion effect. A trade creation effect occurs when the imposition of a CET does not distort trade with non-member countries. In this context, a range of products produced with the customs union will be replaced by cheaper equivalent products from non-member countries. A trade diversion effect, on the other hand, occurs when cheaper external imports being replaced by more expensive partner equivalent as a consequence of CET’s imposition on non-member countries. A trade diversion effect, therefore, refers to higher levels of trade generated within a customs union than outside it. See Dent CM (1997). The European economy: the global context. Routledge, London, p 30.
Novy 2004 (footnote 16): 152.
COM (85) 310, http://www.eurunion.org/legislat/standard/standard.htm.
Interviews in June 2004 in Brussels.
Source for all data: European Commission, DG Trade.
Data source: Central Statistical Office, Poland.
The Czech Republic’s total trade with the Asia–Pacific region increased by 13.4% from 7,933 million US$ to 6,994 million US$ in 2004 (compared to 2003) and by a 10.8% to 8,784 million US$ in 2005. All data: Ministry of Industry and Trade of the Czech Republic: http://www.czechtrade.cz/Global.
EU statistics on foreign direct investment (FDI) are based on the following definition: FDI is the category of international investment that reflects the objective of obtaining a lasting interest by an investor in one economy in an enterprise resident in another economy. The lasting interest implies that a long-term relationship exists between the investor and the enterprise, and that the investor has a significant influence on the way the enterprise is managed. Such an interest is formally deemed to exist when a direct investor owns 10% or more of the ordinary shares or voting power on the board of directors (for an incorporated enterprise) or the equivalent (for an unincorporated enterprise).
Most of the EU10 states have flexible labour laws and much lower levels of unionisation than EU15. Corporate tax rates are on average 10% lower in the new member states than in EU15.
Altomonte C, Guagliano C (2003). “Comparative study of FDI in Central and Eastern Europe and the Mediterraneian.” Econ Syst 21(2):223–246.
International Herald Tribune, 24 April 2005.
For a more detailed discussion see Pelkmans/Casey (2003; footnote 2).
Wiersma JM (2003). Wider Europe—PES Position Paper, September, http://www.europeanforum.net/reports_article/71; Barnes IG (2003). “The new neighbours and proximity policy of the enlarged European Union.” Manage Law 45(5–6):91–113.
Data for Luxembourg include Special Purpose Entities (SPEs)—business interests formed solely in order to accomplish some specific task or tasks, for example securitizations, risk sharing and competitive reasons—which account for approximately 85–90% of Luxembourg’s FDI inflows and outflows.
Sharp Corporation, Press Release, 13 April 2006: “Sharp announces plans to construct LCD module plant in Poland”; http://www.sharp-world.com/corporate/news/060413.html.
Quoted in The Financial Express, 7 March 2006: “India tops Asian peers in FDI in 2005, says S&P.”
However, an investment by Estonia in China is classified as confidential by Eurostat.
Eurostat, Statistics in Focus, Economy and Finance, 13/2006: “EU foreign direct investment in 2004” (April 2006), p. 2.
Services activities mainly consist of trade, hotels and restaurants, transport, telecommunication, financial intermediation, business services (business and management consulting, advertising, computer activities and research and development) and real estate services (ibid).
ibid.
HSBC Bank plc, the UK arm of the HSBC group, has been among the main British investors so far and plans further expansion. HSBC targets to employ 2,000 staff in its Philippine service centre by 2008.
Interview in August 2004 in Manila.
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Various earlier versions of this paper were presented between October 2005 and May 2006 at the “First KIECA International Conference On Trade, Investment, Logistics, and e-Biz” in Kunsan, South Korea; the Asia Europe Foundation (ASEF) in Singapore; and the Warsaw School of Economics in Warsaw, Poland. I am most grateful for the very useful feedback I received on these occasions.
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Dosch, J. The impact of EU-Enlargement on relations between Europe and East Asia. AEJ 5, 33–50 (2007). https://doi.org/10.1007/s10308-006-0095-x
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DOI: https://doi.org/10.1007/s10308-006-0095-x