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 European Union Enlargement
April 2007  

The European Union has grown in size from the six founding Member States in the early 1950s, to the 25 current Member States. There were four successive enlargements within that period, with the largest occurring on 1 May 2004. On that date, 10 new Member States joined2.

In order to join the European Union, a country needs to fulfil the economic and political conditions generally known as the Copenhagen Criteria (after the Copenhagen summit in June 1993). These criteria require that the candidate country must have achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union; and the ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union. In addition, each already-existing Member State and the European Parliament have to agree.

Enlargement: Bulgaria and Romania

Further enlargement is scheduled for 2007, with the addition of two candidate States, namely Bulgaria and Romania. The European Commission's last yearly monitoring report for both countries, issued on 25 October 2005, points out that while much has been done, there is still room for further progress.

Enlargement: Croatia

Croatia is likewise a candidate country. Its entry negotiations began on 20 October 2005, and the European Commission projects that it is likely to become a Member between 2008 and 2010. After Slovenia, Croatia is said to have recovered with the fewest problems from the break-up of the former Yugoslavia and so expects that it will become the second former Yugoslav state to become a Member. It has a stable market economy and - according to the Commission - better statistical indicators than some of the countries that joined in 2004.

Enlargement: Turkey

As for Turkey, after a wait of 42 years, on 3 October 2005 that country was finally given the go-ahead to begin the formal process of becoming a Member State of the EU. The Turkish negotiations, which began on 20 October 2005, are expected to take about 10 years. It is likely that Turkish citizens will also face, thereafter, a transitional period similar to that which some EU States have imposed on those of the new Members (since 1 May 2004), that will restrict their ability to work elsewhere in the EU.

Hong Kong businesses interested in an enlarged EU market should keep an eye on the progress of talks particularly with Turkey, as the latter's accession will have a significant impact on EU trade policies and relations with third countries. For instance, Turkey would have enormous influence in the decision-making process for legislation (directives, regulations and framework policies, which could have an impact on trade): its weighting structure within the Council would put it on a par with the largest existing Member States, e.g., Germany.

Although most Hong Kong traders will have, by now, adjusted to the most recent enlargement by 10 new countries, the Commission's reckoning for enlargement with Turkey is that such a situation will be quite different. Turkey's enlargement would be different from previous enlargements because of the combined impact of Turkey's population, size, geographical location, and economic, security and military potential.

Even though the economic impact of accession would be relatively small in the short term, in the long term it would increase due to the importance of the Turkish market and the rapid growth expected in that country.

As for tariffs on goods commonly entering Europe from Hong Kong and the Chinese mainland, an enlargement involving Turkey will not change very much for traders. Its customs union with the EU means that Turkey has already been required to align its tariffs to those of the EU. As for anti-dumping or other trade protection proceedings, should the accession of Turkey take place, it will have to participate in proceedings initiated by the EU. Moreover, any measures applied independently of the EU will terminate, while the EU's ongoing measures will have to be taken on by Turkey and applied to imports, e.g., from mainland China, entering that country.

Further Enlargement: Other Countries

Other contenders for candidacy are the following: Bosnia and Herzegovina, Serbia and Montenegro, the Former Yugoslav Republic of Macedonia, and Albania. These states are currently not formal candidate countries, but only "potential candidate countries".

After them, Belarus, Moldova, Kazakhstan and Ukraine are all "candidate hopefuls". It is estimated, however, that they will probably remain outside the EU, at least for a significant amount of time.

These are as follows: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.