Western Balkans and the European Single Market: how to “reap the benefits” and not “suffer the consequences”?
Joining the Single Market: What’s in it for the Western Balkans?
The European Single Market offers businesses unlimited access to over 500 million consumers, enables them to exploit economies of scale and leads to improved efficiency. It is designed to remove all non-tariff barriers, promote trade and increase fair competition between companies, ultimately leading to greater choice of goods and services, better quality and lower prices for consumers. Competition and pressure from other markets encourages companies to restructure and reorganize in order to improve competitiveness and minimize costs. In addition, the Single Market facilitates trans-national joint ventures and technological alliances, accelerates the gains from trade and specialization between countries.
The free movement of workers as one of the advantages of the Single Market aims to contribute to better and more efficient allocation of human resources and reducing the mismatch between labor demand and supply within the national labor markets. It also has practical impact on cutting red-tape and facilitating procedures for businesses wishing to operate abroad. Nevertheless, in order for companies and countries to benefit from the Single Market and not succumb to the more developed and more experienced competitors, they need to possess a certain level of preparedness.
How ready are Western Balkan countries to become part of the Single Market?
One of the basic EU accession criteria, defined in Copenhagen in 1993, is the existence of a “functioning market economy and the capacity to cope with competition and market forces in the EU”. These economic criteria remain crucial today. However, all Western Balkan countries are only moderately prepared to cope with competitive pressures and market forces within the EU. Further progress needs to be made, especially in areas such as the fight against the shadow economy, improvement of the business environment, contract enforcement, employability and employment, research and development and digitalization. The last area increasingly gains importance on the EU agenda to the extent that currently many actions in the legislation pipeline are aimed to complete the creation of the European Digital Single Market.
Where is the place of the business community in the policy-making process?
These are also some of the pressing issues raised by the Western Balkan business community and their representative organizations. This points to the need to include the business community as important stakeholder in the policy-making process – both as an interested party that needs to be well informed and kept abreast of all the new developments and as a source of information regarding the current readiness of the domestic economy to join the EU. Additional efforts need to be made to strengthen the capacities of companies to analyze the possible impact of the Single Market in order to design alternative scenarios and prepare. In addition, they need to be able to engage in various EU initiatives and programs in order to establish cooperation with their EU counterparts and make use of the potential advantages of the Single Market.
The alignment with the EU legislation implies profound legal and structural changes which will certainly have an impact for the business community and the entire society. They will probably also bring additional costs and may have redistributive effects. In order to mitigate possible negative influences and contribute to smooth adjustments, all the reforms need to be conducted in a transparent and inclusive manner, with the business community, social partners and civil society at the decision-making table.