The European Travel Retail Council (ETRC) has produced a new report for its members that it says provides a comprehensive overview of the latest developments in the EU enlargement process, an issue that could have

major implications for the European duty free and travel retail trade.
The new report entitled ‘EU Enlargement, Next Steps’ looks at the likely implications of the 2004 enlargement of the EU to 25 countries and other issues.
The ETRC said in a statement: ‘Following the rejection of the EU Constitution by French and Dutch voters in referenda in 2005, suggested as being at least partially due to concerns about the pace of enlargement of the Union, the political debate within the EU institutions and the Member States is focused on what direction any future expansion of the Community may take.
‘In October 2003, the ETRC published a report for the duty free and travel retail trade on the likely implications of the 2004 enlargement of the EU to 25 countries.
‘The expansion of the EU in 2004 has had a major impact on the overall business for the European travel retail trade. An immediate consequence was the loss of tax and duty free sales between the new Member States and the original 15.
‘However, there has also been a dramatic increase in air passenger traffic following the accession of the ten new Member states and economic growth in the new EU countries will increase the spending power of travellers from these countries, which should benefit both the travel retail and duty free sectors.’
The ETRC says that this new report will provide the industry with a valuable guide to the EU enlargement process and an insight into the politics influencing the debate on any future expansion of the Union.The report is available to ETRC members on the ‘members only’ page on the ETRC website. Non-members may purchase a copy of the report for ?150 through the contact facility on the website.

For those who are interested, an executive summary appears below:
Over the last 30 years, the EU has expanded from the original six founding countries in 1957 to 25 members today. The last stage of enlargement on 1st May 2004, the ‘fifth phase’, brought eight new countries from Eastern Europe, plus Cyprus and Malta, into a ‘club’ that today represents a population of 455 million. This report presents an insight into the enlargement process, tracks the development of the Community up to the present and looks at the prospects for the future.

There are still a number of outstanding matters that the ten new Member States need to address and the report provides an update of where these countries are in adopting the euro and implementing the Schengen accord. The expansion of the Union to 25 members also has implications for indirect taxation and the report provides an overview of the different topics associated with excise duties and VAT.

The key issue today, however, is where does the Union go from here?

Bulgaria and Romania will join the EU in 2007 or 2008 and Turkey, Croatia and the former Yugoslav Republic of Macedonia have been accepted as EU candidate countries. However, the rejection of the draft EU Constitution in referenda in France and the Netherlands, suggested as being due in part to the agreement to accept Turkey as a candidate country, has re-ignited the political debate on the further enlargement of the Community and, indeed, the definition of what constitutes the Union?s geographical boundaries.

This report provides an insight into the EU Commission?s policy for future enlargement: Consolidation, conditionality, communication. As Olli Rehn, the Commissioner responsible for enlargement, notes: ‘A carefully managed enlargement process is one of the EU?s most powerful and most successful policy tools’.

On the other hand, the current political environment suggests that any further expansion of the EU will not be acceptable without a full debate about the ability of the Union to absorb further members. A new EU treaty or a revitalised Constitution is also necessary before the Union can expand beyond the planned 27 members, following Romania and Bulgaria?s accession, as the governing Nice Treaty does not provide the institutional structure to cope with a larger Community.

This report reviews the current political debate and also looks at the EU?s policy for closer cooperation with other countries not considered as candidates for future EU membership.