01 Dec 2005

Economic Regimes for Export: Extending the EU’s Norms of Economic Governance into the Neighbourhood

Gergana Noutcheva / Michael Emerson

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With its new European Neighbourhood Policy (ENP), the European Union has begun to develop a further ring in a widening set of economic policy regimes that gravitate around it. There are now no less than six rings to this system. We observe that the EU economic regime has extended its outreach to all categories of countries but the degree of acceptance of EU economic norms and the speed of adoption of EU economic rules is diminishing in the areas further away from the EU core. In the immediate vicinity, the EFTA ring, a high level of economic standards existed prior to the countries’ full inclusion in the single market and the mechanisms of acquis enforcement have been modelled on the EU’s internal rules and procedures. In the outer rings of lower economic standards, the EU has been more successful in encouraging convergence on its economic norms in countries to which it has extended the membership perspective. The promise of full integration in the EU has legitimised the EU’s external governance through conditionality to steer the course of economic transition in the candidates and potential candidates. In the ENP ring, the EU has excluded the mega-incentive of accession as member state and this has decreased the possibilities for exerting strong leverage over the ENP partners. The evolving EU economic relationship with the Southern and Eastern neighbours is less hierarchical in nature and more based on mutual agreement and cooperation. In the outmost ring occupied by Russia, we see the EU reaching the geographical limits of its economic influence. Generally, the EU gravitational pull is getting weaker in the more distant periphery and the EU instruments are shifting from more traditional methods of hierarchical governance to softer modes of horizontal cooperation.