EVALUATING COSTS AND BENEFITS OF ROMANIA’S INTEGRATION

INTO THE EUROPEAN UNION

Romania’s as well as the other candidate states’ accession is conditioned by the need to conform to the requirements (conditions) imposed by the four accession criteria:

1. Political criteria – to ensure the state of law;

2. Economic criteria – existence of a functional market economy which should allow the candidate state to cope with the competitive pressures and the market forces within the EU;

3. Legislative criteria - to assume the acquis communautaire in force at the date of accession;

4. Administrative criteria – to ensure the stability of institutions and the ability to assume the obligations resulting from the European Union member quality.

Beyond the necessity of coping with the juridical and administrative requirements, it is obvious that the conformation with the accession criteria and, by implication, the accession of Romania to the European Union, implies a series of transformations at economic and political level. It is obvious that the institutional, economic and social adjustments induced by the adoption of the community norms and policies are cost generators. Taking into account the manner in which accession criteria are formulated, the administrative criterion respectively (the state’s ability to cope with the requirements of being an EU member), and the manner in which the accession negotiations are progressing (negotiations on the eventual transition periods following the factual accession, allocated for the implementation of the acquis communautaire), most of the costs associated with the

accomplishment of the Copenhagen criteria will concentrate in the period prior to 2007 (the envisage date for attaining the EU member status).

The main cost categories directly associated with the accession to the European Union may be grouped as follows:

1. Costs related to the adoption of the European norms and policies (acquis communautaire), in this category being included: costs generated by the institutional building, by the formation of human resources in these structures, costs associated with assuming community objectives of economic  policy nature (which, depending on the area’s characteristics and/or the time period, may imply high costs on short term, evident in the areas where the short term priorities of the two partners, Romania and the EU, are different) etc. Most of these costs will concentrate in the period prior to the factual accession.

2. Costs related to the conformation with and implementation of the standards defined by the European norms and policies – there is an attempt to quantify the efforts required for the compliance with the community provisions in the areas subject of the acquis communautaire. These costs may arise at institutional level (public authorities) and microeconomic level as well. This category includes costs associated with specific areas like: modernization of the transportation infrastructure, labour and social security standards, consumer protection, quality standards, environment standards etc.

3. Costs of assuming the status of European Union member. These costs will materialize after the accession to the European Union and include the contributions to the community budget, the participation to the community institutions etc. In a small part, these costs may be also marked out prior to the factual accession and comprise Romania’s co-financing contributions to the European Union programmes where it is part (ex. Phare, SAPARD, ISPA, Leonardo da Vinci, FP6 program etc.).

4. Costs related to the modernisation of the Romanian economy. The costs included in this category are directly related to the modernisation of the production capacities and the enhancement of the Romanian products and services competitiveness in order to face the competitive pressures inside the European Union. To a great extent, these costs are situated, in terms of time periods, prior to the accession date. This cost category includes costs strictly related to the modernisation of the production capacities in the economy sectors (enhancement of the technological level, the quality of products and services etc.). The costs associated with the modernisation of production equipment, in order to ensure the compliance with the production, environment, safety and other standards imposed by the European Union are not included here.

Most of the costs derive from the existing differences between the institutional structures, the priorities and the content of the economic policies at Romania’s level, on the one hand, and the defining elements of the community model, on the other hand. Also, from a sector perspective, the greatest part of these costs derives from the low development level of a sector as compared to the EU one, which makes the acquis communautaire to seriously affect the sector’s competitiveness and to raise the alignment costs through the liquidation of certain companies or sectors which are not able to financially support the transposition of the acquis communautaire.

The main benefits of Romania’s accession to the European Union can be classified as follows:

1. Supplementation and diversification of the financial resources. The European Union member status ensures Romania’s access to the structural funds and to the cohesion funds. The volume (and implicitly the derived effects) of these fund transfers to Romania can not be currently assessed, the national financial distribution of the structural funds being subject of the new 2007 – 2013 programming period. Part of these benefits can be set off before the accession’s date and it reveals the quantum and positive effects of the input of funds through the pre-accession financial instruments or other instruments and programs developed by the EU for the candidate countries.

2. Benefits resulting from the member status. These benefits will arise following the EU accession and are the result of the participation to the single market and the economic and monetary union, of the better support of the national interests through the participation in the EU institutions etc.

3. Acceleration of reforms and support for the transition through the provision of fundamental elements for the definition of the national economic policies. The transition from a made to order economy to the market economy has no historical precedent. Under such circumstances, during the whole transition period the EU supplied Romania with a model for the elaboration of its economic policies (in view of the accession criteria and the integration will, in most cases this meant the assumption of the respective community objectives and policies in their whole, or the duplication of certain member states’ policies). These benefits are difficult to estimate and may take the shape of an abridgement of the transition period. From the methodological point of view, it is difficult to make a clear difference between the effects of integration and the ones of the transition process. To have a more clear picture of the costs and benefits of analysis, the impact analysis of Romania’s integration process must be performed separately for the preaccession and post-accession periods.

//European Institute of Romania, Romania Journal of European Affairs, Vol. 4, no. 4, December 2004

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