Institutional harmonization and its costs and benefits in the context of EU cooperation with its neighbors

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• Institutional harmonization and its costs and
  benefits in the context of EU cooperation with
  its neighbors
• Seminar supporting the project EU Eastern
  Neighbourhood Economic Potential and Future
  Development, (ENEPO)
• Implemented within Sixth Framework Program of the
  European Commission
• Dmytro Boyarchuk
• CASE Ukraine
• January, 2009
• The materials express exclusively the views of
  the authors and cannot be identified with the
  official stance of European Commission.

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Agenda

• Concept of institutional harmonisation and its
  applications to European integration
• What institutional harmonisation with the EU may
  mean - lessons from existing arrangements
• Agenda for institutional harmonisation of EU
  Eastern Neighbors
• Institutional harmonization our research

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Concept of institutional harmonisation and its
applications to European integration

• Institutions are an important factor of economic
  growth like labour, capital, natural resources
  etc.
• Institutions are formal rules, informal
  constraints, and enforcement mechanisms that
  provide the basic structure by which human beings
  create order and attempt to reduce uncertainty in
  exchange
• Ukrainian institutions are of poor quality and
  for Ukraine and other CIS countries poor
  institutions are the main impediment for European
  integration

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Concept of institutional harmonisation and its
applications to European integration (continued)

• Ukrainians understand integration as market
  access, labor mobility (simplified visa regime)
  and increase in salaries (to European level).
• For the EU integration means institutional
  harmonization named Europeanization
• All instruments of European integration
  (technical assistance, twinning etc.), first of
  all, target harmonizing institutions with
  European standards

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What institutional harmonisation with the EU may
mean - lessons from existing arrangements

• Institutional harmonisation with the EU can have
  different degree of arrangements. The major
  economic difference among the forms of
  integration is the scope and degree of market
  access. In order to get a wider and deeper market
  access, countries have to do more harmonization.
• Accession to the EU (membership) states give
  each others laws and standards the same validity
  as their own.
• European Economic Area full markets integration
  with the EU without membership (do not adopt
  selected EU acquis)

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What institutional harmonisation with the EU may
mean - lessons from existing arrangements
(continued)

• EU-Switzerland cooperation based on a free
  trade agreement and a range of sectoral
  agreements (cherry-picking)
• EU-Turkey Customs Union full trade
  liberalization accompanied by an application of a
  single external tariff (Customs Union)
• Free trade area (FTA) the depth of
  harmonisation is insignificant

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Agenda for institutional harmonisation of EU
Eastern Neighbors

• European Neighbourhood Policy (ENP) is a search
  of an optimal arrangement for the Eastern
  neighbors of the EU
• ENP Action Plans is the main instrument guiding
  first steps of harmonisation
• Action plans envisage harmonisation across
  sectors, as well as so called horizontal issues
• ENP Action Plan prepare the ground for the
  conclusion of comprehensive Free Trade Agreements
  (FTA)

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Institutional harmonization our research

• The major question of the study measuring the
  costs and benefits of institutional harmonization
  in CIS area in the context of creation of deep
  FTAs
• Studies on European Integration mainly
  concentrate on trade issues
• Numerical estimate of institutional harmonization
  benefits
• Problems of institutional harmonization

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