U.S. business warms up for accession
Accession translates into Poland trying to maintain transatlantic ties with the superpower, while pursuing the inevitable 'Europeanization' of its institutions - all when it has made abundantly clear to Brussels that its own national identity within the EU is essential.
The financial markets have more or less already factored in the benefits Poland will reap from its new membership in the common market, even as the high profile bickering over what the final draft of the EU Constitution will look like remains unsettling.
And as the Leszek Miller administration parleys with Brussels and the country gears up for the election of 54 citizens to the European Parliament, issues surrounding the Polish-U.S. relationship still loom large.
Most U.S. business pros and politicians are - and have been - sanguine on EU membership. And rightly so: membership will stamp Poland with better political and legal structure and provide it with funds to build out its insufficient legal structure - the current negative status of which has caused the country to lose billions of euros in foreign direct investment to its neighbors Slovakia and the Czech Republic.
"We have [always] been supportive of EU accession," says Tony Housh, a board member of the American Chamber of Commerce in Poland. "The accession of Poland in particular for U.S. business is very much a plus for a few reasons."
Among other positive reasons U.S. businesspeople point out are the fact that the European Commission will force Poland to better regulate its institutions, quicken its sluggish judicial system and, hopefully, stamp out the corruption that has hindered much political and economic progress.
On top of that, most U.S. companies operating here already have ample experience navigating the corridors of Brussels - something from which Polish counterparts could benefit.
Regardless of its EU experience, American business is here to stay and will probably expand if recent signals from Washington mean anything.
The U.S. is the third largest foreign direct investor in the country, pouring in zł.34.6 billion ($8.9 billion) by June 30 of last year. All the other single-country foreign direct investors in the top 10 (see chart) are EU members.
In this light, Housh points out that one of the more important benefits is the expected full application of the common external tariff, which would make Polish-U.S. trade not only cheaper, but also more uniform.
Trade with Poland after accession has been on the agenda of several high-ranking U.S. officials who have visited Warsaw. At the end of last year, U.S. Secretary of Commerce Donald Evans descended on Warsaw and held talks with Polish officials on issues concerning to the U.S.-Polish economic relationship.
"This shows a definite desire to improve and increase trade relationships," says David Fuller, partner at PricewaterhouseCoopers.
The U.S. commerce secretary delved into topics of intellectual property rights, regulatory issues, the pharmaceuticals sector, taxes, judicial reform, FDI issues, the F-16 offset deal, and Iraqi reconstruction. Probably, excluding the American offsets, EU membership would have a direct effect on all the issues Evans discussed.
The market also anticipates that American FDI and trade will be largely improved by its medium-sized companies. This is because hallmark names such as Microsoft and General Electric are already firmly in Poland. The next step includes the smaller ones.
"If you take a lot of the mid-market U.S. companies that are not necessarily household names but may do several billion dollars a year ... they might say: 'we want to put up a manufacturing facility,'" says Housh.
Mid-market companies might be lured by a larger common market in potentially lucrative Europe.
"They might have a number of [more] places to shop," Housh says, noting especially that Poland, with a population of roughly 38 million, has a low employment cost base.
The cost effectiveness of operating in Poland is most notably evidenced by the group of companies, such as Philips and GE, which are opening up new offshore operations in the country.
Yet accession is not completely a blue-sky scenario for the USA - either economically or politically. After May 1, there will be some double standards for U.S.- and EU-domiciled companies. At present, foreign companies are not allowed to own more than 33 percent of a radio or television company. But as an EU member it will be American companies that will not be able to gain majority ownership in the country's attractive media assets.
What is more, American companies will be beset with more challenges in land acquisition in this country - something that could hamstring their plans for acquisitions and privatizations.
"It can be an issue if there're two companies bidding, trying to acquire a company or participate in a privatization," says Housh. "A successful bid [for a U.S. company] to buy is going to be contingent on getting the ministry of internal affairs [land] permission in Poland." That could be a sluggish process compared to when an EU company is selected. He explains that if this were the case, matters of price could be relegated in favor of time, to complete the offering.
But U.S. business pros explain that everything comes down to how the Poles apply the law.
On the flipside, as Americans contemplate the challenges they might meet in the business world - however small - some Poles are contemplating the challenges they meet daily as the political and economic ally of the USA Ireneusz Wrześniewski, deputy director at the Polish Chamber of Commerce, has been less than pleased with Polish-U.S. relations. He complains that Poland supports America in everything it does, most notably in the war in Iraq, for which it went against two EU powers, France and Germany.
The upshot of this support he complains has just been words. "We only have nice words and smiles," he says. In other words, he means Poland has not received any economic benefits.
In this context he likens Poland to the neglected child of the parent - the USA.
"And Poland is the child who's walking around in the winter with no shoes," Wrześniewski adds.
He complains that the F-16 offsets project, "is not running as smoothly as expected." He adds that Poland has received too few Iraqi business contracts: "After the Iraq war there was a lot of expectation and nothing coming."
And, he says, the USA forces Poles to apply for visas before they can cross the border. Poland, on the other hand, does not require entry visas for Americans.
He realizes that while visas seem like a small issue, this does have implications for Polish businesspeople. Namely, some feel that they're not necessarily welcome in the States.
Wrześniewski, like others, expects this - or at least this feeling of slight indignation for the USA - to change.
"Well, it can't get worse," he rationalizes, at first.
There is some expectation that Poland will have even more clout with the USA after it enters the EU, because it will be a part of the 25-member bloc. Therefore, with its size it will, as an American ally, have a greater say when voting in Brussels. And along with other pro-American EU heavyweights the UK and Spain, the USA will look to Poland to push its policies in Brussels - where it conducts lobbying in its own right.
Konrad Szymański, editor in chief at the International Policy Review, looks at things from an almost purely political perspective.
"There's going to be a Europeanization of political life in Poland," Szymański says.
"As we can see in the last 15 months we are much more pro-Atlantic than pro-European. We are pro-European as far as it harmonizes with the transatlantic solidarity."
He acknowledges the rationale behind the Polish government's stance, but notes that it's subject to change.
"The standards of that solidarity are defined by the Americans because they are stronger and they're spending much more and they have the political will to combat the world. But the process of the Europeanization of Polish politics will bring quite new challenges for American policy. Americans don't currently treat these problems seriously."
He explains that as Poland becomes further enmeshed in the European political machine, it will move that much farther away from the USA. This will happen because of the different nature of the EU political parties, which by and large are less pro-American than the whole of the Polish parliament.
But whatever you want to call the country's new political climate, Americans are eager that the two countries will still be the same allies they were throughout last year. Poland's size, itself a business lure, has U.S. business leaders confident that it can be a U.S. ally in Brussels.
"Poland's a big enough player in the EU to make a lot of noise at the table," Housh says. "Being one of the half-dozen big kids in the club may be important for those outside the common market. Poland's big enough to have a seat at the poker table."
But as businesspeople point out, size is not everything; while Poland-based American companies appear ready for membership, the question still lingers over whether Poland itself is ready.
The financial markets have more or less already factored in the benefits Poland will reap from its new membership in the common market, even as the high profile bickering over what the final draft of the EU Constitution will look like remains unsettling.
And as the Leszek Miller administration parleys with Brussels and the country gears up for the election of 54 citizens to the European Parliament, issues surrounding the Polish-U.S. relationship still loom large.
Most U.S. business pros and politicians are - and have been - sanguine on EU membership. And rightly so: membership will stamp Poland with better political and legal structure and provide it with funds to build out its insufficient legal structure - the current negative status of which has caused the country to lose billions of euros in foreign direct investment to its neighbors Slovakia and the Czech Republic.
"We have [always] been supportive of EU accession," says Tony Housh, a board member of the American Chamber of Commerce in Poland. "The accession of Poland in particular for U.S. business is very much a plus for a few reasons."
Among other positive reasons U.S. businesspeople point out are the fact that the European Commission will force Poland to better regulate its institutions, quicken its sluggish judicial system and, hopefully, stamp out the corruption that has hindered much political and economic progress.
On top of that, most U.S. companies operating here already have ample experience navigating the corridors of Brussels - something from which Polish counterparts could benefit.
Regardless of its EU experience, American business is here to stay and will probably expand if recent signals from Washington mean anything.
The U.S. is the third largest foreign direct investor in the country, pouring in zł.34.6 billion ($8.9 billion) by June 30 of last year. All the other single-country foreign direct investors in the top 10 (see chart) are EU members.
In this light, Housh points out that one of the more important benefits is the expected full application of the common external tariff, which would make Polish-U.S. trade not only cheaper, but also more uniform.
Trade with Poland after accession has been on the agenda of several high-ranking U.S. officials who have visited Warsaw. At the end of last year, U.S. Secretary of Commerce Donald Evans descended on Warsaw and held talks with Polish officials on issues concerning to the U.S.-Polish economic relationship.
"This shows a definite desire to improve and increase trade relationships," says David Fuller, partner at PricewaterhouseCoopers.
The U.S. commerce secretary delved into topics of intellectual property rights, regulatory issues, the pharmaceuticals sector, taxes, judicial reform, FDI issues, the F-16 offset deal, and Iraqi reconstruction. Probably, excluding the American offsets, EU membership would have a direct effect on all the issues Evans discussed.
The market also anticipates that American FDI and trade will be largely improved by its medium-sized companies. This is because hallmark names such as Microsoft and General Electric are already firmly in Poland. The next step includes the smaller ones.
"If you take a lot of the mid-market U.S. companies that are not necessarily household names but may do several billion dollars a year ... they might say: 'we want to put up a manufacturing facility,'" says Housh.
Mid-market companies might be lured by a larger common market in potentially lucrative Europe.
"They might have a number of [more] places to shop," Housh says, noting especially that Poland, with a population of roughly 38 million, has a low employment cost base.
The cost effectiveness of operating in Poland is most notably evidenced by the group of companies, such as Philips and GE, which are opening up new offshore operations in the country.
Yet accession is not completely a blue-sky scenario for the USA - either economically or politically. After May 1, there will be some double standards for U.S.- and EU-domiciled companies. At present, foreign companies are not allowed to own more than 33 percent of a radio or television company. But as an EU member it will be American companies that will not be able to gain majority ownership in the country's attractive media assets.
What is more, American companies will be beset with more challenges in land acquisition in this country - something that could hamstring their plans for acquisitions and privatizations.
"It can be an issue if there're two companies bidding, trying to acquire a company or participate in a privatization," says Housh. "A successful bid [for a U.S. company] to buy is going to be contingent on getting the ministry of internal affairs [land] permission in Poland." That could be a sluggish process compared to when an EU company is selected. He explains that if this were the case, matters of price could be relegated in favor of time, to complete the offering.
But U.S. business pros explain that everything comes down to how the Poles apply the law.
On the flipside, as Americans contemplate the challenges they might meet in the business world - however small - some Poles are contemplating the challenges they meet daily as the political and economic ally of the USA Ireneusz Wrześniewski, deputy director at the Polish Chamber of Commerce, has been less than pleased with Polish-U.S. relations. He complains that Poland supports America in everything it does, most notably in the war in Iraq, for which it went against two EU powers, France and Germany.
The upshot of this support he complains has just been words. "We only have nice words and smiles," he says. In other words, he means Poland has not received any economic benefits.
In this context he likens Poland to the neglected child of the parent - the USA.
"And Poland is the child who's walking around in the winter with no shoes," Wrześniewski adds.
He complains that the F-16 offsets project, "is not running as smoothly as expected." He adds that Poland has received too few Iraqi business contracts: "After the Iraq war there was a lot of expectation and nothing coming."
And, he says, the USA forces Poles to apply for visas before they can cross the border. Poland, on the other hand, does not require entry visas for Americans.
He realizes that while visas seem like a small issue, this does have implications for Polish businesspeople. Namely, some feel that they're not necessarily welcome in the States.
Wrześniewski, like others, expects this - or at least this feeling of slight indignation for the USA - to change.
"Well, it can't get worse," he rationalizes, at first.
There is some expectation that Poland will have even more clout with the USA after it enters the EU, because it will be a part of the 25-member bloc. Therefore, with its size it will, as an American ally, have a greater say when voting in Brussels. And along with other pro-American EU heavyweights the UK and Spain, the USA will look to Poland to push its policies in Brussels - where it conducts lobbying in its own right.
Konrad Szymański, editor in chief at the International Policy Review, looks at things from an almost purely political perspective.
"There's going to be a Europeanization of political life in Poland," Szymański says.
"As we can see in the last 15 months we are much more pro-Atlantic than pro-European. We are pro-European as far as it harmonizes with the transatlantic solidarity."
He acknowledges the rationale behind the Polish government's stance, but notes that it's subject to change.
"The standards of that solidarity are defined by the Americans because they are stronger and they're spending much more and they have the political will to combat the world. But the process of the Europeanization of Polish politics will bring quite new challenges for American policy. Americans don't currently treat these problems seriously."
He explains that as Poland becomes further enmeshed in the European political machine, it will move that much farther away from the USA. This will happen because of the different nature of the EU political parties, which by and large are less pro-American than the whole of the Polish parliament.
But whatever you want to call the country's new political climate, Americans are eager that the two countries will still be the same allies they were throughout last year. Poland's size, itself a business lure, has U.S. business leaders confident that it can be a U.S. ally in Brussels.
"Poland's a big enough player in the EU to make a lot of noise at the table," Housh says. "Being one of the half-dozen big kids in the club may be important for those outside the common market. Poland's big enough to have a seat at the poker table."
But as businesspeople point out, size is not everything; while Poland-based American companies appear ready for membership, the question still lingers over whether Poland itself is ready.
