Should negotiations with the remaining applicants be opened in 2000?

8. Accession negotiations are already in progress with Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia (the so-called "first wave States"). Recognising the strong political imperative to accelerate enlargement, we welcome the Commission's proposal that negotiations should now be opened with Bulgaria, Latvia, Lithuania, Malta, Romania, and Slovakia. We considered whether widening the field like this would carry the same danger of raising false hopes as the (misleadingly named) "regatta approach" which had been previously rejected. But we think there is a crucial difference. It has always been the case that the negotiations on each chapter (that is, subject area) would be closed separately at the pace of individual applicants, but chapters have hitherto been opened with all the applicants at the same time. Under the new approach, chapters would be opened with individual States only when they were judged to be ready. This would make it quite explicit from the start that each applicant country would proceed at its own pace, with the speed of negotiations as well as the ultimate date of accession depending on the individual situation of each country. (Paragraphs 66-72)

9. In particular, although we recognise the danger of disappointment if negotiations do not proceed as fast as they might wish, we understand the political need to send a positive message to Bulgaria and Romania by including them in the list. We did not take detailed evidence on the positions of Turkey and Cyprus, but we appreciate the sensitivity of their situations and we wish the Commission well in its attempts to resolve them. (Paragraphs 73-76)

10. On the basis of what we have been told, both by the first wave applicant States and by the Commission, we see no reason to believe that opening up the field should of itself slow down the progress of accession of the first wave States, provided that the Commission is well enough staffed to cope with so many different sets of negotiations. (Paragraphs 77-79)

Should there be a timetable for negotiations?

11. In considering the desirability of a timetable, there are strong arguments on both sides. It can certainly be argued that failure to agree a timetable now that it has been explicitly proposed would be seen as sending a negative signal to the applicant States. Yet on the other hand raising expectations may prove dangerous in the long-term unless some realistic timetable can be agreed. There is therefore a difficult dilemma: is it more dangerous to set a date knowing that it could be subject to delays on a number of fronts, or to refuse to do so for the same reason and thereby appear less than totally committed to enlargement?

12. We do not think that there is any realistic prospect of setting a formally agreed timetable, either for the closure of individual chapters or for the overall completion of negotiations. This does not mean that targetting should be abandoned, but it should be seen as aspirational, because there are too many uncertainties for the EU to commit itself to targets being met. What is important is that targets should not be missed simply because of a lack of readiness on the part of the EU itself. (Paragraphs 80-86)

Has the EU modified its policies enough to be ready to accept new members?

13. We believe that the decisions taken at Berlin on the future of the Structural and Cohesion Funds are "accession-friendly". However, we remain convinced that more radical reform of the CAP is needed, and we hope—and expect—that the forthcoming WTO negotiations will bring renewed pressure for this. (Paragraphs 87-91)

Has the EU made adequate financial provision for enlargement?

14. We have always been concerned that enlargement might be jeopardised by the failure of existing Member States to make sufficient funding available. We remain of the view that the own resources ceiling is adequate, at least for the time being. But we are less convinced that the new financial perspective will provide sufficient resources, and we urge that it should be reviewed before 2006 if necessary so that adequate provision can be made in annual budgets for the costs of enlargement. (Paragraphs 92-96)

Can EU institutional reform take place in time?

15. We intend to undertake a full enquiry shortly into matters arising from the need for institutional reform, and we do not wish to pre-empt the results of that. However, we have taken a first look at the issues insofar as they relate to the readiness of the EU to accept new members.

16. We would not wish at this stage to express a view on what should be included on the IGC agenda, but only to emphasise the danger that agreement might not be reached in time, and the absolute political imperative that it should be. Currently, we fear that the most likely outcome is that the pace of enlargement will be constrained by failure to agree on the detail of institutional reform. This would be seriously damaging to the confidence of the applicants. (Paragraphs 97-102)

Will the first wave CEE applicants achieve their target dates?

17. We recognise the magnitude of the effort which all the first wave Central and Eastern European countries are making to transform not only their economies but also their political, administrative and social structures. As the Polish Secretary of State at the Minister of Foreign Affairs said, "the people are making the changes, not the administration and not the Government but the people". We also welcome the support that is being offered both through EU funds and by individual Member States. But however hard the applicants try, it is clear that they cannot realistically hope to achieve everything at the same time. Even in Hungary, generally recognised as the best performing among the applicant States, there is still a lot of difficult work ahead. In particular, we share the Commission's concern that the applicants must develop their administrative and judicial capacity to ensure that the acquis is properly implemented and enforced. Although we recognise the need to keep up momentum, we think that the target dates being quoted both by the applicants and by the Commission may well be over-optimistic. We consider that it might be better for that to be explicitly recognised now. (Paragraphs 103-112)

Will transition periods be needed?

18. If transition periods are agreed, the applicants will not have to implement the whole of the acquis immediately. The realism of the target dates for the first wave applicants obviously depends crucially on the outcome of negotiations on transition periods, and this is likely to set a precedent for the approach to negotiations with the remaining applicants.

19. We accept that the applicants are receiving both financial help and technical assistance to help them meet the acquis before they join the EU. Nevertheless, we are concerned at what seems to be a hardening in the Government's attitude towards transition periods. We take this to be simply a negotiating position, since it seems incompatible with the Government's enthusiasm for enlargement. After all, as the Foreign and Commonwealth Office noted in its evidence to us, the Prime Minister said in Romania in May 1999 that "Britain wants the EU to enlarge and to do so soon". It seemed clear from the evidence we received that without adequate transition periods very few applicants could accede "soon", and some would be unable to do so at any time in the foreseeable future. (Paragraphs 113-119)

20. The Commission is now proposing that transition periods could be acceptable in areas not directly affecting the functioning of the internal market and requiring huge investment. It is clear that the obligation to match EU environmental standards will impose enormous demands in terms of both financial and human resources which none of the applicant States will be in a position to meet for some years. Appropriate transition periods therefore seem inevitable here, as they do in the energy sector, and following years of neglect massive expenditure will obviously also be needed to bring other aspects of the infrastructure up to the standards in the present Member States. (Paragraphs 120-123)

21. We can see that transition periods may also be needed in those parts of the acquis which clearly do raise Single Market issues. For agriculture, it is clear that little progress can be made until the EU grasps the nettle of further CAP reform; until that happens, applicants can reasonably seek transition periods on the grounds that their domestic agricultural products should be protected against subsidised imports from existing Member States. Changes in the agricultural support system may be forced on the EU in the course of the WTO negotiations, but we doubt if any change will happen by 2002. So unless applicants are allowed transition periods to protect domestic production, it seems that only those prepared to accept the CAP as it stands could conclude negotiations in accordance with their target dates. (Paragraphs 124-129)

22. We think that although the right to purchase land and the abolition of state aids to industry are clearly Single Market issues, it should be possible to find reasonable compromises over transition periods. (Paragraphs 130-132)

23. We consider that transition periods will probably be needed in the area of freedom of movement of persons, if only to allay concerns in existing Member States. We note that there are precedents for this. (Paragraphs 133-137)

24. Looking at the whole issue of transition periods, we accept that it would be unwise for the existing Member States to adopt an over-generous attitude at this stage in the negotiations. Nevertheless, we continue to believe that their attitude must be realistic: it is simply not sensible to pretend that no transition periods will be needed. After all, transition periods have been a part of the accession negotiations before every previous enlargement, and it has been accepted that both the European Union and the new Member States might need time to adjust in certain sectors. We recognise that with the completion of the Single Market and the removal of border controls it is now more difficult to permit any special temporary arrangements, but we think that it is important not to appear to be making accession harder for the new applicants than it was when some of the present Member States joined.

25. We welcome the distinction proposed by the Commission between areas which are essential to the Single Market and those which are not, but we note that it would not solve the whole problem. There are some cases where we think that the demand for transition periods may be legitimate even though they relate to the Single Market. And there are others, like the Common Agricultural Policy, where transition periods may be needed because of the failure of Member States to face up to the real need for reform. (Paragraphs 138-139)

What will happen if the first wave applicants' target dates are not achieved?

26. The reactions of our witnesses gave us a strong indication of the danger of arousing expectations which will not be satisfied if momentum is lost. We attach particular importance to the need to ensure that this does not happen as a result of existing Member States failing to do their part. (Paragraphs 140-146)

Could perceptions and attitudes delay the accession process?

27. That the applicants should be kept informed of what is going on within the EU seems a modest request. But we would go further. It does not seem unreasonable to suggest that applicants might usefully be involved in discussions—if not in decisions—on matters which will have a major effect on them when they join. We urge the Government to press for this, perhaps even by seeking observer status for them at the IGC. (Paragraphs 147-156)

28. Another example of attitudes which may make accession difficult for the applicants to swallow is the requirement that they should break off their relationships with other States which will not be acceding to the EU (or at least not yet).It would create a particularly unfortunate impression in the difficult situation of the Balkans if the EU were to require that applicant States should sever their existing economic and political relations with neighbouring States. We would urge that proper accommodation should be found. (Paragraphs 157-159)

29. We agree that the EU must find ways of getting across the message of the potential benefits of enlargement. We are not convinced by the applicant States' suggestions that an information campaign mounted by the Commission would by itself have the desired effect. But we believe that if governments in the existing Member States do favour enlargement, then they must translate that political will into action as well as words. (Paragraphs 160-165)

Difficult choices

30. We have consistently supported enlargement of the European Union to bring in the countries of Central and Eastern Europe since it first became possible as a result of the political changes in those States. We believe that after the recent events in the Balkans it is now even more important to seize the moment—the term "political imperative" is, for once, not out of place.

31. We recognise that the need to conform to the standards adopted by the existing Member States presents the applicant States with genuine difficulties, which are not merely economic but political and social as well. But the ultimate decision on whether and when applicants join the European Union depends not only on the readiness of the applicants to enter but also—and just as importantly—on the readiness of the Union to receive them.

32. It is the responsibility of the existing Member States to ensure that the European Union has the appropriate structures and policies in place to permit enlargement. This in particular calls for timely agreement on appropriate institutional changes at an IGC, and for the necessary reform of the Common Agricultural Policy. In addition, since the acquis is a dynamic rather than a static entity, applicants must be kept abreast of how it is developing so that they know what they are likely to be buying in to.

33. If there is a political wish among existing Member States to accelerate enlargement, they must face the crucial question of whether applicants should be allowed to join before they have not only adopted, but also implemented, the whole of the acquis communautaire. There is no point in pretending that this question will not arise. Member States must come to grips with the fact that the price of accelerated enlargement may well be the acceptance of what would amount to a two tier EU membership for several years to come. We think this is a price which the European Union can and should pay, though we emphasise that such a decision should not be allowed to remove the pressure for new Members to play their full part as soon as possible. If they want the right political outcome, governments—including our own—must err on the side of generosity rather than restrictiveness. (Paragraphs 166-169)