The Advantages of Lithuania’s Integration into the European Union

The Advantages of Lithuania’s Integration into the European Union

The integration into the European Union is one of the most crucial objectives of the Lithuania’s foreign policy. Beginning with 1989-1990, when the decision of the Baltic States to restore independence manifested itself, the largest Western states became interested in Lithuania, Latvia, and Estonia. One of the most important events of that period happened on December 14, 1990 when the leaders of the Baltic States governments for the first time appealed to tthe European Economic Community of that time asking to allocate them political, economical and cultural help directly and not through the ex-USSR. In 1991, after the events that took place in Lithuania on January 13, the EU strictly condemned the application of forces in the Baltic States, and on August 27, 1991, according to the suggestion of Ministers of Foreign Affairs of France and Germany, by common consent recognised the independence of the Baltic States. In 1992 Lithuania and the EEU signed the Trade, Commercial and Economical Co-operation Agreement and the declaration concerning political dialogue between Lithuania and the EU was taken. From the very beginning of official relations with Lithuania, the EU began to render assistance to Lithuania through tthe PHARE programme. On June 12, 1995 Lithuania, Latvia and Estonia signed the European (Association) Agreements with the EU, in which the objective of the Baltic States to become members of the EU was recognised.

It is impossible to see such an important step as Lithuania’s integration into the European Union in only one perspective. Undoubtedly, this historical fact would have brought both positive and negative results, which are often closely interrelated. Moreover, the integration into the European Union is a long process not confining itself only into signing and validity of the agreement. It includes changes happening both before and after conclusion of the agreement. Therefore it is necessary to talk about the results not only of the integration into tthe EU, but also of the preparation to the membership.

A few types of the positive consequences could be singled out:

1. Economical consequences;

2. Fiscal consequences;

3. Social consequences;

4. Political consequences;

5. Safety consequences;

Economical consequences

The European Unity is the most important united market in the world including about 400 millions of residents. It is necessary to notice that Lithuania is already trading with some EU countries (e.g., in 1998 Lithuania’s export and import into the EU made up 37.98% and 50.16% of all LLithuania’s export and import). By January 1, 1999 direct foreign investments into Lithuania’s economics had made up 1625.30 million USD, 61.23% of which had been the investments from the EU. The greatest part of the direct investments from the EU makes up the investments from Sweden (27.54%), Finland (17.43%) and Germany (13.32%).

Speaking about the economical consequences of the integration into the EU it is necessary to start with the characterisation of the internal market of the EU. This market has no inner borders, therefore merchandise, people, services and capital move freely there.

a. Free movement of merchandise is at the same time abolishment of customs and custom taxes. Moreover, it is common politics of foreign trade and taxes and extermination of non-tariff barriers.

b. The movement of services is the possibility to provide them within the whole area of the internal market.

c. Free movement of capital is the right to invest, buy property and securities; to use profits freely in any state taking part in the united market.

d. Free movement of people is unlimited freedom to live, establish one’s own business and work in any state belonging to the EU.

In order to accomplish all the above-mentioned in Lithuania it is necessary tto abolish the existing barriers that prevent the movement. The abolishment of the barriers would provide the opportunity for Lithuania to make use of the advantages of the united market. We could single out several consequences of the abolishment influencing Lithuanian economics:

• The total volume of trade as well as of production of export goods would rise sharply and this would permit to develop the advantages of the scale economics (i. e. the utmost price for manufactured merchandise would be lower). As a result, the total volume of export and merchandise prices inside the country would become lower.

• There would be fewer cases when the EU applies antidumping or other protectionist actions against the merchandise made in Lithuania. This factor would not only increase the export from Lithuania to other countries, but also would encourage the investments of foreign capital into Lithuanian economics.

• The appearance of new companies inside Lithuania, which would be encouraged by the membership in the EU, would enlarge competition and lead to more rational use and distribution of economic actions (work and capital).

• The appearance of new companies inside Lithuania must put an end to monopoly existing in some areas. Theoretically, it must display in the decrease oof prises for goods and services.

• Well-balanced system of import and export at a level of an individual would mean a big choice of cheaper high-quality goods.

• The membership in the European Union would greatly limit possibilities of Lithuanian government to interfere directly or indirectly into the work of economy and would provide more possibilities for Lithuanian enterprises and users.

• In any case, Lithuania is influenced by decisions of the EU, while Lithuania cannot have any influence on the EU. Only after having become a member, Lithuania would have a possibility to influence decisions and politics of the EU.

The main benefit, which Lithuania could derive from the integration into the EU, would be the appearance of new markets, demonopolization, rise of effectiveness, increase of supply of goods and services. Thus, users would derive the greatest benefit.

Fiscal benefit

Fiscal expenses are connected with the EU budget dues and distribution of its expenditure. To a certain country, i. e. to Lithuania, this means a sum difference between the EU budget dues and obtained profit.

After having become a member of the European Union Lithuania would have to pay into the EU budget 1% of VAT collected in the state, all the customs taxes

collected in Lithuania as well as 1.27% of GOP (Gross Output Plan).

Payments from the EU budget are distributed as help provided for less economically developed regions. The level of economical development is determined according to GOP of individual regions. Thus help is provided ...