Poland's accession to the European Union led to a strengthening of the country's international position. As a member state, Poland gained new opportunities and instruments for expressing its interests. Among other things, it was thanks to Poland's efforts that the European Union supported democratic changes in Ukraine and also turned more broadly toward that country. Poland consistently strengthened its representation in EU institutions. Many months of efforts to locate the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the EU in Poland were successfully completed, and it began operations on 1 May of this year.
Accession to the EU brought many positive and beneficial phenomena for the Polish economy and Polish society. At the same time, certain phenomena of a negative nature were also noted, but their spread and scale do not undermine the generally positive result of the first year of membership. Nevertheless, the first conclusions from Poland's experience in the European Union should be drawn taking into account certain limitations. The analysis of the impact of membership is limited by several significant methodological conditions, which include in particular: the short and specifically timed period under study (from May 2004 to April 2005), incomplete and often unavailable statistical data, the interpenetration of phenomena, or the mandatory existence in some areas of transitional periods. However, the data presented below cover a longer period - until November 2005.
Undoubtedly, many of the fears expressed before accession did not materialize, in particular: the flooding of the Polish market with cheap food products from the EU, the mass collapse of small and medium-sized enterprises, the deterioration of the situation of farmers, or the buying up of real estate by foreigners. Instead, the predictions of experts and research institutes on these issues came true. The experience of the first year of membership confirms the likelihood of many forecasts contained in the "Summary of Benefits and Costs Associated with Poland's Accession to the EU" published in 2003 by the Office of the Committee for European Integration. At the same time, phenomena were noted, often of a one-time nature, that were not taken into account several months earlier, such as, for example, the faster-than-expected pace of price equalization for many products or the mass import into Poland of used cars.
Many phenomena related to EU accession were accompanied by a "first four months effect" in the form of a pre-accession boom. Fears about the development of the situation after 1 May, on the part of both consumers and producers, regarding the possible evolution of prices for conducting economic activity, difficulties related to obtaining European tax identification numbers, new reporting, a possible increase in the VAT rate, or compliance with EU norms and standards, triggered increased activity on the part of these entities, especially in March and April 2004.
The Polish economy coped well with entry into the Internal Market, despite negative external accession conditions, such as the low growth dynamics of major trading partners or rising oil prices. However, in this case it is difficult to clearly isolate the "EU effect" and give an unambiguous answer to the question: what part of the economic recovery is due to changes related to Poland's membership in the EU, and what part is due to factors unrelated to it. Undoubtedly, EU accession contributed to economic growth this year. GDP growth in 2004 was 5.3%. This growth has not yet significantly affected the situation on the Polish labor market - at the end of 2004 the official unemployment rate fell to 19.1%. Today (as of September 2005) it stands at about 17.6%. Given that forecasts for further rates of economic development place our country significantly above the EU average, a gradual increase in the number of jobs and a decline in the unemployment rate should be expected.
It is precisely to accession to the European Union, and earlier to the prospect of this accession, that we owe the growth of trust in Poland and its perception as a country with stable and predictable conditions for conducting economic activity. Signs of trust include in particular: increased inflow of foreign capital (foreign direct investment amounted to USD 7.86 billion last year, i.e. the most in the previous 4 years and 23% more than a year earlier), growing confidence on the part of financial markets with the subsequent inflow of portfolio capital (approximately USD 11 billion and USD 14 billion in the first half of 2005) became noticeable in particular on the Warsaw Stock Exchange, the improvement of the rating outlook by international rating agencies Veritas and Standard & Poor's, or the increase in the number of visits to our country by foreigners (by approximately 17%).
One of the effects of growing trust in Poland on the part of foreign investors is the strengthening of the Polish currency (other reasons unrelated to EU accession can also be cited). The average monthly exchange rates of the zloty against the euro and the US dollar of the National Bank of Poland (NBP) fell from the level of 4.76 PLN/EUR and 3.96 PLN/USD respectively in April 2004 to the level of 3.9 PLN/EUR and 3.2 PLN/USD in October of this year. However, the appreciation of the zloty has not so far become a barrier to the expansion of Polish exports, as confirmed by trade balance data. During the first year of EU membership, the position of Polish foreign trade looked very attractive. Dynamic export growth was in 2004 one of the main factors of economic growth, as well as a limitation of the trade deficit. The highest turnover dynamics were noted before EU accession - in January-April 2004, exports grew compared to the corresponding period of 2003 by 44.3%, and in May-December by 35% (imports by 39.7% and 24.8% respectively). Positive trends in Polish trade continued in 2005. In January-August 2005, exports increased by approximately 25% compared to the corresponding period of 2004. At the same time, imports grew by more than 15%. The trade balance with EU member states was positive and amounted to over USD 1.3 billion. The negative trade balance indicator was primarily the result of a significant deficit in trade turnover with developing countries (over USD 6 billion).
The forecast regarding the deterioration of the trade balance after Poland's accession to the EU and the collapse of many Polish enterprises due to increased competitive pressure did not come true. Growth in exports of goods regarding which the greatest fears were expressed before accession, i.e. dairy and meat products, was noted. The growth in exports of consumer agricultural products proves that Polish enterprises are able to cope with the conditions of participation in the Internal Market and can offer attractive products. After 1 May 2004, the growth rate of exports of consumer agricultural products reached 60% in the case of the EU-15 countries and 50% for the EU-9. The "EU effect" in the sphere of trade in consumer agricultural products was noted by producers who export products to third-country markets (including Russia and Ukraine) and receive EU export subsidies.
Despite the fears expressed before EU accession (in particular in connection with the introduction of visas), Poland's trade relations with its eastern neighbors did not deteriorate. In 2004, exports of Polish goods to Russia grew by almost 89% relative to the 2003 level. Russia consolidated its seventh place among the largest consumers of Polish goods. Exports to Ukraine also grew by approximately 30%. In 2004, the level of Polish investment in these countries increased, their sum amounted to over PLN 100 million (approx. PLN 50 million in Russia, and approximately PLN 60 million in Ukraine).
The export boom in the agri-food sector combined with limited supply possibilities led to a rapid equalization of prices for consumer agricultural products in Poland and the EU. Inflation growth jumped from 2.2% in April last year to 4.4-4.6% during the following months of 2004, and then fell in 2005 to the level of 1.8%. During the first four months of 2004, society's expectations of rising inflation resulted in a "consumer boom," especially for groups of goods whose price increases, in connection with EU accession, were most feared (e.g., in the automotive sector or food products). The largest price jump occurred in May and June 2004, as a result of the rapid growth in demand for Polish consumer agricultural products noted after 1 May by foreign consumers, which, given limited supply possibilities, caused strong inflationary pressure.
The price convergence experienced by consumers occurred so quickly and on such a scale that this year one should rather expect stabilization of price growth, and in some cases - their decline. The higher inflation level for the year was influenced not only by factors related to EU accession, but also by general trends in the world economy, including rising prices for raw materials, primarily oil. The increase in food prices is beneficial from the point of view of farmers and agricultural producers, while at the same time significantly affecting the situation of all citizens as consumers. Instead, consumers positively noted the decline in prices for television and radio equipment, footwear, or clothing.
The first period of membership confirmed that Poland would be a net beneficiary of the EU budget - the balance of settlements between Poland and the EU budget amounted at the end of last year to almost EUR 1.5 billion (over PLN 6.5 billion) net in Poland's favor. According to preliminary estimates, almost twice as large inflows of EU funds in 2005 should lead to a significant increase in the positive balance in financial settlements between Poland and the EU.
It should be emphasized that there is very great (and constantly growing) interest on the part of potential beneficiaries in using the European Union's structural funds, which is expressed in the large number of submitted applications for additional project financing. By the end of August 2005, under the sectoral operational programs as well as the EQUAL Community Initiative Programme, applications for additional financing were submitted for a total amount of requested assistance from EU funds that exceeded the EU fund allocation for 2004 by 400% and the allocation envisaged for the entire program period (2004-2006) by 130%.
The past year was a testing period for the provisions on submitting and reviewing applications for the allocation of EU financial assistance. The system of direct subsidies for farmers performed well, with which some smaller countries had unequivocally more problems than Poland. We will be able to assess the use of EU financial assistance, i.e. the ability to absorb it, only after a few years. The stimulating impact of assistance for agriculture in the form of a modernization boom in the Polish countryside has become noticeable. Many entities from the small and medium-sized business sector, which until now, despite the developed economic situation, had refrained from investing (growth in Polish investment amounted to 5.3% overall last year, and 1% and 3.8% during the first two quarters of this year), declare their readiness to begin investing with the involvement of structural funds.
The scale of labor migration to the countries that fully opened their labor markets to citizens of the new member states on 1 May (Ireland, Sweden, and the United Kingdom) was limited in 2004 and did not cause destabilization in the local labor markets of these countries. This corresponds to forecasts that indicated significantly lower mobility of the labor factor than of capital. It is believed that in 2004 the growth in legal employment of Poles amounted to: in Ireland - 40 thousand, Sweden - 10 thousand, the United Kingdom - 100 thousand. Many of these persons had been in these states before 1 May and used Poland's accession to the EU to legalize their stay and employment. For comparison: in 2004, on the basis of bilateral agreements, 307.5 thousand Polish citizens were legally employed in Germany, including 306.8 thousand - for seasonal work. Fears of "social tourism" and "brain drain" proved unfounded.
With EU accession, the main (formal) obstacles that hindered student mobility disappeared. The increase from 2004 in the financial allocation for Poland for the implementation of the EU programs Socrates, Leonardo da Vinci, and Youth (the budget grew by more than EUR 12 billion) allowed for an increase in the number of participants in these programs. In addition, Polish pupils and students gained the right to begin their education on the same rights and conditions as pupils/students of the given country, which in many cases means in particular a reduction in the cost of education or access to a wider range of services.
"EU effects" are related not only to the perception of Poland as an EU member, but also to the abolition of passport control or the liberalization of passenger air transport, which is beneficial for all citizens. The intensification of passenger traffic is favored by nationwide factors, i.e. the high standard of services (not only in the tourism sector), as well as the still competitive price level for Western tourists. The largest group of foreigners using services during their stay in Poland are Germans. Sanatorium tourism is of great interest among German clients. EU accession is currently being used more by small and medium-sized enterprises located in the western voivodeships. In recent months, even the turnover of markets located near the Polish-German border has grown by several dozen percent.
The assessment of the first months of membership reflects the high level of its public support, which amounted to over 70% during the first months of membership. Particularly noteworthy is the fact of growing trust among farmers from approx. 20% in January 2004 to 67% in May of this year. The change in farmers' attitude toward EU accession was caused by the positive impact of membership on the situation in the agricultural sector (in particular, rising prices, export growth, especially in the dairy and meat sectors, the introduction of direct subsidies - 1.4 million applicants received PLN 7.5 billion by the end of March of this year, as well as other support measures).