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- WSJ.com Pass the Check October 29, 2002 REVIEW & OUTLOOK Pass the Check As the EU's 15 national leaders tucked into their minced scallops and sipped French wine at their summit last week, an unflattering consensus seemed to emerge -- while no one wants to be seen as opposing enlargement of the EU, nobody wants to get stuck with the bill for it, either. So the EU's leading lights spent much of their trip to Brussels playing pass the check. In this game, almost everyone has a pet subsidy or cash cow to preserve. For Jacques Chirac, it is France's multibillion-euro share of the Common Agricultural Policy. For the Spanish and Portuguese, it is the EU's structural funds. Germany's hang up is a bit different; as the EU's paymaster, it wants to keep a lid on how much it shells out to support the project of European unity. Of these complaints, the French attachment to agricultural welfare is surely the most appalling, with the desire to hang on to structural funds with more justifiable uses elsewhere coming a close (but less expensive) second. It's natural that no one at this dinner party wanted to pay more than their fair share for enlarging the table. But the EU-15's recent brinkmanship over squeezing the portions of the 10 accession countries risks souring the project. At last week's meeting, the Dutch succeeded in strengthening two so-called safeguard provisions in the enlargement agreement. One of those safeguards allows existing EU members to petition the European Commission to protect domestic industries being "unfairly" hurt by competition from the new members. Such a safeguard, which would allow the commission to block or restrict access to the single market by the new members, would last for three years from the time of accession. Amusingly, euroskeptic forces in Poland, Hungary and elsewhere also fear unfair competition after EU enlargement, and have made hay of the fear that opening their markets to the west will destroy domestic industries. Presumably, however, a "safeguard" that undermines the very idea of a single market does not cut both ways. The accession countries already face misguided curbs on their citizens' seeking jobs within the EU-15 for as long as seven years after joining the club. Extending the safeguard provision only reinforces the perception that the newest round of candidates will be second-class citizens. This is a charge to which Spain, of all current members, should be sensitive. Spain too faced job-market restrictions when it joined the EU, though of much shorter duration. But Spain too has asked for its share of the pie, seeking guarantees that its development aid won't be jeopardized by enlargement. EU regional development aid is supposed to be allocated to the poorest regions in the bloc; the admission of 10 countries, many of them well-off less than Spain, would, other things being equal, disqualify much of Spain from the aid. That's not easy to sell domestically, we're sure, but it also happens to be the way these things are supposed to work. If a country gets money earmarked for relatively poor regions, and stops being relatively poor, it stops getting the money. On CAP, not everyone at the summit was amused that Mr. Chirac and German Chancellor Gerhard Schroeder tried to cut a side deal to preserve the farm subsidies before the meeting. British Prime Minister Tony Blair, for one, vowed to keep fighting for CAP reform, a stance that apparently prompted Mr. Chirac to accuse Mr. Blair of being "badly brought up." EU Farm Commissioner Franz Fischler, however, pointed out Monday that the deal failed to answer the basic question of how to pay for CAP; he predicted a 5 billion funding shortfall for the subsidy program. British historian Paul Johnson once described the original EU bargain as a deal according to which Germany paid for French farms and France bought German industrial goods. The tradeoff in the current round of expansion may not be so obvious to the French and German leaders, but the dynamic isn't much different from what it was in the past. Ideally, of course, the EU would simply abolish the various redistributionist schemes that are causing most of the tension. But if enlargement had to wait for that day, it might never happen. At the very least, some perspective is in order. Both the accession countries and the current members will give things up; some will have to raise tariffs and taxes in exchange for access to the EU market; all will adopt burdensome regulatory regimes mandated by Brussels. The EU-15 will pay for regional and development aid, and in exchange will have freer access to new markets. What's more, they will discharge a historic duty to reunite a Europe that was divided for decades by communist totalitarianism. The remaining negotiations won't be easy. But the European worthies who are bickering over who picks up the tab would do well to remember that expansion is not a wholly altruistic gesture. There are prices to be paid by the accession countries but there are economic rewards for everyone, as the existing single market already has demonstrated so well. The 15 need to understand that they are making an investment in a better future for Europe. It is very small-minded not to be willing to pay a fair share. URL for this article: http://online.wsj.com/article/0,,SB1035844004658175871.djm,00.html Updated October 29, 2002 Copyright 2002 Dow Jones & Company, Inc. All Rights Reserved Printing, distribution, and use of this material is governed by your Subscription agreement and Copyright laws. For information about subscribing go to http://www.wsj.com

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