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European Neighbourhood Policy as a promoter of single market freedoms?

Submitted by on 14 Apr 2011 – 15:10

By Wojciech Paczyński, Fellow at CASE – Center for Social and Economic Research (

In 2003-2004, with the EU expanding towards the east of the continent the Commission came up with the idea of a new policy framework for the Union’s relations with its old and new neighbours. The European Neighbourhood Policy (ENP) came into existence soon thereafter. The primary motivation has been to ensure that the neighbourhood is a stable, and increasingly prosperous region and hence minimise potential risks to peace and security and long-term prosperity of the EU itself. The ENP has never implied prospective EU membership, but contained a potentially attractive promise of a stake in the EU Internal Market.

Let us try to see what are the ENP’s achievements in extending the elements of the three out of four market freedoms to the Union’s eastern neighbourhood, i.e. Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine (ENP6).

The main vehicle facilitating the free movement of goods and services is to be the network of bilateral deep and comprehensive free trade agreements (DCFTA) between the EU and partner countries. However, up till now the progress on this front has been fairly limited. Among the Eastern European countries only Ukraine started negotiations, but after 3 years and some 15 rounds of talks the final deal still appears fairly distant. These are complicated negotiations as the regulatory and other changes required by the EU are quite complex to implement and there are strong sectoral interests on both sides fighting for specific provisions being either included or excluded from the agreement.

In any case, despite unilateral trade preferences granted by the EU to some of the countries, when it comes to the so-called sensitive exports things get more complicated. One illustration can be a recent proud announcement of the EU on a moderate increase of the duty free import quota for Moldovan wines (accounting for some 0.6% of EU wine imports).

The political sensitivity of the issue on the EU side has limited the progress in cooperation mechanisms supporting free movement of people between eastern neighbourhood and the EU. Limited visa facilitation agreements with Ukraine, Moldova and Georgia are among positive developments here, although from the perspective of ENP6 countries these may still fall short of making up for the complications related to the extension of the Schengen Area. Another important achievement is an easier access to funding for student and researchers mobility. For instance, the number of Azerbaijani students at various European universities was recently estimated at around 2000. Only a fraction of that number was directly financed from the EU resources, but the existence of EU-funded schemes matters, e.g. in leveraging funds from other sources.

Overall, therefore, the effects of the ENP in expanding the market freedoms has so far being rather limited. Further progress would be much needed to boost the perceived attractiveness of the European integration option among ENP6 countries. In the short- to medium term, making the visa regime more people-friendly and eventually abolishing the visa requirements would appear not too complicated from practical and administrative perspectives. There is also strong evidence that this would be very well received in the ENP6 countries bringing-in benefits in a range of spheres. The main problem here might be of a political nature given the prevailing EU’s public opinion views on migration in general.

The progress in liberalisation of trade in goods and services will probably be very gradual. DCFTAs will take several years to agree on and then more to fully implement. What matters is that all sides remain interested in the process of reducing barriers to cross-border flows of goods and services. Meaningful progress can be achieved – possibly in the nearer future – in some specific sectoral dimensions, e.g. in energy or transport co-operation.

This is an important time for the ENP. Its on-going strategic review has coincided with revolts in several Southern ENP partner countries. The EU has to face new immediate as well as long-term challenges in its neighbourhood. Let me conclude with just two points. First, the economic dimension of relations with neighbours and the domestic economic situation in the EU neighbourhood has proven to be even more important than we used to think. After all, food prices have played a role in sparking the protests. Second, the need for rapid rethinking of the EU’s strategy towards Mediterranean partners should not lead to forgetting about the eastern neighbourhood. A few months ago, Tunisia, Libya and other countries looked more stable than Belarus.