A MICRO-STATE MEMBER OF THE EU: THE CASE OF MALTA

1. A MICRO-STATE MEMBER OF THE EU: THE CASE OF MALTA Lino Briguglio, University of Malta Note: This presentation summarises text from two sources: Roderick Pace “Malta and EU Membership: Overcoming ‘Vulnerabilities’, Strengthening ‘Resilience’” European Integration, Vol. 28, No. 1, 33–49, March 2006 The Website of the EC Representation in Malta: http://ec.europa.eu/malta/abc/malta_eu/history/index_en.htm .

2. Layout The presentation is organised as follows: • Background information about Malta • Association Agreement • Malta Applies to Join the EU • EU membership Negotiations • Malta within the EU • Benefits of Membership • Costs of Membership • Concluding considerations

3. 1. MALTA Location of the Maltese Islands

4. MALTA • Population (2008): Just over 410 thousand • Land area: 320 km² • Population density: over 1200 persons per km² • GDP Per capita (2008): US$17,000 (about ¾ of the EU Average) • GDP per capita in PPP: US $24,000 in PPP (ranked 50th in the world) • Highly dependent on imports and exports (about 50% of total final expenditure)

5. MALTA • Structure of the Economy 18% manufactures 54% services (including property income) of which tourism is about 12% 3% agriculture and fishing 5% construction and quarrying 20% government • Economic governance: A liberalized economy, member of the European Union and of the Eurozone • Political governance: Republic based on parliamentary democracy

6. 2. ASSOCIATION AGREEMENT Relations between Malta and the EU date back to the 1960’s when, three years after its independence in 1964, Malta informed the European Economic Community (EEC) that it wished to establish formal relations. Soon thereafter, negotiations were initiated, leading to the signing of the EC-Malta Association Agreement in Valletta on 5th December 1970. The agreement, then only the third of its kind signed by the EC with a third country, entered in to force on 1st April 1971.

7. ASSOCIATION AGREEMENT The Association Agreement formalized the close links between the EU and Malta. Under the Agreement the EU-Malta Association Council was established which brings together representatives of both sides at the highest political level. A Joint Parliamentary Committee was also set up bringing Members of Parliament from Malta and the European Parliament together to discuss matters of mutual interest. The main focus of the Agreement was the gradual removal of barriers to trade, which would eventually allow unhindered access to each other’s markets. The result has been increasingly close trade relations, so that by the 1990s the EU accounted for about 50% of Malta’s exports and about 65% of Malta’s imports.

8. ASSOCIATION AGREEMENT .. cont Though remaining in its first stage, the Association Agreement has been extended over the years. For example in 1976 after the accession of Denmark, Ireland and the UK and again in 1988 after the accession of Spain and Portugal to the EC. Apart from the necessary technical changes brought about by enlargements, the amendments allowed for a significant deepening of relations. The most notable change was the introduction of a package of technical and financial assistance with the 1976 amendment, in the form of a Financial Protocol (1st Financial Protocol: 1978 –1983), which entered into force in November 1978. Financial Protocols provided financial and technical assistance to Malta within specific sectors that enhanced Malta signed four successive protocols allocating Lm 61.6 million (ECU: 138.5m) in financial assistance to Malta.

9. 3. MALTA APPLIES TO JOIN THE EU On 16 July 1990, Malta formally applied for European Community membership. This was followed by the publication of a favourable opinion (“Avis”) by the European Commission in June 1993. However,  following a change of Government in October 1996, Malta's application for EU membership was suspended. Malta was subsequently excluded from the pre-accession strategy and the structured dialogue.

10. MALTA APPLIES TO JOIN THE EU ..cont As a result of another change in government in September 1998 EU accession negotiations recommenced. The European General Affairs Council of October considered positively Malta's request for membership re-activation and "invited the Commission to present an analysis of the evolution of the situation in Malta since the 1993 Opinion"

11. 4. EU MEMBERSHIP NEGOTIATIONS Within a few days, the European Parliament voted a resolution asking the European Council and the Commission to support Malta’s accession "as soon as possible in full respect and procedures of the Treaty". The European Parliament also asked "the Council to include Malta, as soon as possible, as a member of the European Conference".

12. EU MEMBERSHIP NEGOTIATIONS .. cont On 17 February 1999 the European Commission adopted a report updating the 1993 opinion on Malta's application for EU membership. The European Commission recommended that the Council gives the go-ahead to the screening of Malta's legislation with a view to starting negotiations. As from the year 2000, Malta as a candidate country started receiving technical and financial support for the transposition of the Community acquis, for participation in Community Programmes and certain Community agencies and for increasing the Maltese administrative and judicial capacity. On 11 December 1999, in Helsinki, the European Summit decided to start negotiations with Malta together with five other candidate countries (Latvia, Lithuania, Slovakia, Bulgaria and Romania). The official launching of negotiations occurred in February 2000.

13. EU MEMBERSHIP NEGOTIATIONS .. cont In December 2000, at the Nice Summit, it was decided that with regards to representation in the EU that Malta would have one Commissioner in the European Commission, one Minister in the Council of Ministers; five seats in the European Parliament; one Judge in the European Court of Justice; one judge in the European Court of First Instance; one member in the Court of Auditors; five members in the Economic and Social Committee of Regions.  

14. EU MEMBERSHIP NEGOTIATIONS .. cont During the accession negotiations the Maltese government maintained close and regular exchanges of views with sectoral representatives on crucial issues. The government also maintained a strong link with the public at large since the final membership accord had to be approved by the people in a referendum. Hence, the Malta–EU Information Centre (MIC) was set up to disseminate information to the public. Sectoral and public feedback was received through the discussions in the Malta–EU Action and Steering Committee (MEUSAC) chaired by the Minister of Foreign Affairs, in which practically all NGOs and sectoral representatives participated. MEUSAC had the task of preparing Malta’s position papers for the negotiations.

15. EU MEMBERSHIP NEGOTIATIONS .. cont Comparing the number of transitional arrangements and derogations secured by the ten new member states in the negotiations, Malta secured thelargest number (72), the longest transitional arrangements, and some highly important permanent derogations — notably on the acquisition of secondary residencies by EU nationals, restrictions on the free movement of persons and the management of a fishing conservation zone.

16. EU MEMBERSHIP NEGOTIATIONS .. cont The justification for many of the concessions that were made — such as the restrictions on the purchase of property and on the free movement of persons, and the special treatment given to the island of Gozo — was Malta’s small size. Some concessions, however, were linked to, or, in a few cases, were largely a result of, other factors. For example: environmental, conservation and economic arguments all fed into the fishing zone agreement; the declaration on Malta’s neutrality was linked to the manner in which Malta sees itself in world affairs and the need to maintain the national consensus on this issue; the transitional arrangements on the dock yards was driven by a mixture of economic goals and a need to mitigate the negative social implications of unemployment.

17. EU MEMBERSHIP NEGOTIATIONS .. cont During the Copenhagen Summit (December 2002), Malta closed all chapters and negotiations were concluded. Malta held a referendum on EU membership in March 2003 with 53.6% of the voters voting in favor of membership with a turnout of 91% of eligible voters. Malta ratified the EU Accession Treaty in July 2003. In May 2004 the Maltese government signed the Accession Treaty in Athens.  

18. 5. MALTA WITHIN THE EU Within a norm–based EU, the influence which a micro–state like Malta exercises depends on its ability to present a strong case in favour of its demands that respect these norms. It must also show that the costs of the concessions requested are negligible and unimportant for the Union — though they are salient for the micro–state. Thus the handicap of small size can be and must be transformed into a negotiating advantage.

19. MALTA WITHIN THE EU .. cont The EU–Malta negotiations show that ‘presenting a strong case’ in favour of concessions requires a deep knowledge of EU policies, the acquis and its underlying principles, in addition to an equally strong knowledge of the national sector on which the country is negotiating. This can be achieved by building national information sources and by maintaining a strong link with the sector’s national representatives (trade unions, producers’ associations and non-governmental organisations (NGOs)) which, in a small state, is easier to achieve because of the lighter, and less layered, political and administrative systems.

20. ADOPTION OF THE EURO ..cont On 29 April 2005, Malta took the first step towards adopting the Euro when it joined the Exchange Rate Mechanism (ERM) II. Malta adopted the euro in January 2008, following a very successful transitional period characterized by wide consultation with and among stakeholders. The adoption of the euro, in line with the requirements of the growth and stability pact, ushered in better economic governance on the island, improved price transparency and reduced transaction costs for foreign trade and travel.

21. 6. BENEFITS OF MEMBERSHIP The costs and benefits of EU membership for a micro–state can best be compared by reference to the next best alternative. In Malta’s case this is a free trade agreement with the EU within the Euro–Mediterranean Partnership. By participating in the EU institutions Malta can influence the policies and decisions which affect it and thus strengthen its resilience. It can put across its views directly during EU processes, it has direct access to EU services and it operates in a richer information environment.

22. BENEFITS OF MEMBERSHIP ..cont In addition, Malta gained some influence in the EU’s external policies, particularly in the Common Foreign and Security Policy (CFSP) that are crucial for its security and economic stability. Since decisions in the CFSP are based on unanimity, the micro–state’s influence is stronger. Thus, for example, by joining the EU, Malta enjoys more influence in the Euro–Mediterranean Partnership than would have been the case if it had stayed out. This helps Malta to be more effective in dealing with the external environment and in mitigating exogenous shocks emanating from the region.

23. BENEFITS OF MEMBERSHIP ..cont The voting power of micro–states in the EU is small but still disproportional to their population size following the principle of degressive proportionality.In the Council, the micro–state faces three types of votes: a simple majority, which is used for procedural decisions; qualified majority (QMV), employed in many decisions concerning the internal market, economic affairs and trade; and unanimity which is employed in foreign policy, defence, judicial and police cooperation, and taxation. The small state exercises most influence when matters are decided unanimously. In QMV the threshold is set at 232 votes out of 321 (72.27 per cent) with Malta having three votes.

24. BENEFITS OF MEMBERSHIP ..cont A decision taken by QMV also requires a favourable vote from the majority of member states and a member state may also request verification that thequalified majority includes at least 62 per cent of the Union’s total population. Should this not be the case, the decision will not be adopted. In CFSP matters, every state has the right to constructive abstention. (in certain circumstances, it is possible for a country to opt out of supporting a particular action – for example, a joint statement condemning a non-EU country – without blocking it. This process is known as constructive abstention. A country which constructively abstains from a CFSP decision is not bound by it but pledges not to take any unilateral action which might conflict with it). 

25. BENEFITS OF MEMBERSHIP ..cont Also important in this regard is that a country will elect Members of the European Parliament (MEPs), and these have many opportunities to promote and defend national goals in the EP’s committees, where EU policies and legislation are considered. In an attempt to improve the effectiveness of Malta’s input, the Maltese MEPs participate in the work of the House of Representative’s Standing Committee on Foreign and European Affairs.

26. BENEFITS OF MEMBERSHIP ..cont Major benefits were obtained in Malta in the environmental sector, particularly in the crucial area of urban waste recycling. The environmental regulatory framework has been reinforced since Malta joined the EU and this is also important in the context of resilience–building since it serves the purpose of sustainable development, enhances welfare and positively affects the tourist sector, which accounts for around a fifth of GDP.

27. BENEFITS OF MEMBERSHIP ..cont The application of the acquis has also led to the establishment of independent regulatory authorities to ensure the implementation of EU laws in such vital sectors as telecommunications, product standards, the environment, transport and competition. In the initial phase, these authorities suffered from a lack of capacity to achieve their aims and presented new challenges to the ability of Maltese political institutions to construct and oversee them effectively. However, their development under EU requirements is strengthening good governance.

28. BENEFITS OF MEMBERSHIP ..cont Many Maltese NGOs have developed links, both in the run–up to membership and after, with their European counterparts: trade unions, for example, are part of the European Trade Union Congress (ETUC) while business organisations, such as the Malta Federation of Industries and the Malta Chamber of Commerce, are members of their respective European organisations and have also established a Business Bureau in Brussels.

29. BENEFITS OF MEMBERSHIP ..cont NGOs have, furthermore, become increasingly aware of the fact that to achieve their aims they do not necessarily need to lobby compatriots in the institutions: in March 2005, for instance, following a report by the UK Royal Society for the Protection of Birds on hunting in Malta, Maltese conservationists lobbied Robert Evans, a UK Socialist MEP, who then raised the issue in the EP. Maltese NGOs are thus being ‘Europeanised’. Another example of how the Maltese political system as a whole is being Europeanised is at the level of local government, where local councils are increasingly communicating directly with ‘Brussels’ on issues that are of concern to them. For instance, a local council attempted to persuade the Commission to freeze EU funds for a waste recycling plant because the council disagrees with its location.

30. 7. COSTS OF MEMBERSHIP ..cont However, participation in EU processes is costly as, among other things, it involves availability and use of resources, which is a problem for micro–states. This is no more clearly demonstrated than in the extensive committee systems that are associated with EU law–making. These are chaired by a representative of the Commission and include representatives of the member states. The EU’s committee structure thus confronts the micro–state with the daunting task of maintaining contact with an vast array of committees, estimated to number in the region of 1,500.

31. COSTS OF MEMBERSHIP ..cont Membership also involves economic restructuring and adherence to the Stability and Growth Pact, opening of markets. This could lead to loss of employment in industries which find it difficult to compete in a liberalised market (such as the ship building industry in Malta). There are winners and losers in opening up of markets and the losers of course feel the cost of membership much more than the winners.

32. 8. CONCLUDING REMARKS Virtually all European micro–states have either joined the EU or are linked to it by the strong integrative relationship of the EEA. Whilst EU membership does not completely satisfy the security concerns of micro–state — using security in its broader meaning — they do provide a valuable response to the most salient concerns. EU membership has led Malta to tackle its macro–economic fundamentals, restructure its economy, strengthen internal competition through liberalisation, increase efficiency through privatisation, protect its citizens by tightening environmental regulation and management, and open new avenues to its exporters of goods and services, both within the EU and beyond, thus giving incentive to diversification.

33. CONCLUSION .. cont In the EU institutions, the principle of degressive proportionality increases a micro–state’s visibility even if its overall status remains one of weakness — although not helplessness. The EU–Malta negotiations show that a small state’s limited ability to fend for itself can be countered by an efficient use of its resources and by striking alliances with information–rich supranational institutions — most obviously the Commission — and with larger member states.

34. CONCLUSION .. cont The EU offers micro–states opportunities and openings, most of which are not available in a non–membership context, but it is up to the states themselves to make efficient use of them.

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