Harmonization's grand finale?
Starting this week, the Business Journal will feature a twice-monthly column which will analyze the necessary changes to business practices, laws and institutions that will have to take place as Poland assumes its place in the European Union.
Magdalena Burnat-Mikosz is head of EU Advisory Services at Ernst & Young in WarsawWhen Poles went to the polls last month to vote on joining the European Union, it had been almost a decade since the EU laid down the fundamental conditions to be met by prospective members. The Accession Treaty, signed on April 16, 2003 at the summit of the European Council in Athens, was the end of a process that began on March 31, 1998, when Poland's negotiations for EU entry were officially opened. Poland and other candidate countries were faced with a number of requirements that they had to meet in order to join the 15 current EU member states. Among the criteria were political concerns, such as the existence of democratic institutions and the observance of human rights, as well as economic criteria, meaning an efficient market economy and the ability to compete in the EU's common market, as well as being able to fulfill its membership obligations.
The association period
Efforts have been made over the last decade to systematically bridge the gap between Poland and the EU: on the one hand, through the boosting of economic co-operation, including trade; on the other, through the process of harmonizing Polish legislation with the entire body of European Communities (EC) law, the so-called acquis communautaire.
The Europe Agreement governed areas of co-operation between Poland and the EU, including those that were most important from an economic perspective, such as mutual trade (including the creation of a free trade zone for manufactured goods), as well as the movement of services, persons, capital and the creation of enterprises. Concurrent with this the process of assimilating rules governing competition and the harmonization of laws began. The harmonization of laws concerned, among other things, economic, financial and cultural co-operation.
Poland started the trade liberalization process by reducing its customs rates. However, different rules were applied to trading agricultural products and foodstuffs than the ones that applied to manufactured goods. The process of trade liberalization in manufactured goods was much more dynamic. The Europe Agreement provided for the creation of a free trade zone, meaning the lifting of all border barriers, such as customs duties, quantitative quotas and other similar barriers. Trade in agricultural products, meanwhile, was subject to limited and selective liberalization. This did not involve all products and consisted of a partial reduction of trade barriers.
The level of economic ties between Poland and the EU varied in terms of the free movement of persons and services, the setting up of enterprises and the movement of capital. Here, the Europe Agreement provided for a reduction of restrictions and a gradual preparation of the Polish economy for future integration. In practice - in the case of Polish employees' access to the EU market, for example - the Europe Agreement only laid down a formal and legal framework, leaving the decisions on the scope of access to individual member states.
The Europe Agreement created a framework that made for faster harmonization with EU requirements. A strengthened pre-accession strategy, centered around financial aid, guaranteed Poland EU assistance. In some areas, such as competition policy, and in particular the rules of granting public aid or the liberalization of trade in agricultural products, the accession conditions were being agreed on up until the last day of negotiations. The harmonization of Polish laws is still underway.
The end of the negotiation process
The EU developed instruments, in the form of periodic reports, to find out in which areas Poland would not be able to implement EC regulations by the accession date. As it turned out, Poland was not able to apply the entire body of EC law in all 30 negotiation areas. In the case of 43 issues, in which the changes would involve excessive harmonization costs, Poland was allowed to apply provisional solutions. The areas concerned included environmental protection, agriculture, energy, free movement of goods, capital, and workplace safety.
The extent and rate of harmonizing individual sectors of the economy (agriculture and the food industry, for example), as well as horizontal provisions (labor law, health and workplace safety standards, to name a few), will largely depend on the outcome of negotiations. It will also depend to a large extent on whether Poland's institutions are ready to implement the changes. It is worth noting that the new member states will be among those whose legislation is closest to the EU's ideal. The existing EU member states have implemented on average 2.1 percent of the acquis. Here the Scandinavians lead the way, with France and Italy lagging behind. Around 1,500 cases have been referred to the European Court of Justice concerning the failure of member states to implement EC regulations.
The end of negotiations should not, however, be treated as the end of the integration process. Poland is joining a dynamic organization. Negotiations will now be a permanent element of functioning within the EU, and Poland will voice its opinions on every issue that is the subject of EC regulations. This presents a formidable challenge for entrepreneurs who need to keep abreast of changes in EC legislation and insist on having their interests protected.
