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. Last Updated: 07/27/2016

All Aboard the Good Ship Europe?

Visit the Ukrainian town of Rakhiv, resting in the foothills of the Carpathians a few kilometers from the border with Romania, and some of the rhetoric accompanying the enlargement of the European Union takes on a different perspective. Just outside the town, a small roadside monument marks the spot identified by the Vienna Geographical Society in 1911 as the center of the European continent. The Viennese calculation has not gone unchallenged, as competing sites across Slovakia, Poland and Lithuania can testify. Yet it is still worth thinking of Rakhiv when hearing how EU enlargement heralds the "unification of an artificially divided continent."

Ukraine will not be joining the European Union in 2004, or in 2007, or at any foreseeable moment after that. With the exception of the three Baltic states, the EU has been resolutely noncommittal about extending membership into former Soviet territory. This is despite the fact that, as plausibly "European states," Ukraine, Russia, Belarus and Moldova are formally eligible for consideration as members.

If membership is not on the table, what exactly can the EU offer its future neighbors? Can any objective short of membership harness the dynamism and positive incentives that characterized the process of enlargement, and avoid the emergence of new dividing lines in Europe?

The answer, says European Commission President Romano Prodi, is a vision of the EU offering its neighbors "everything but institutions." Prodi sees the emergence of a "ring of friends" across Eastern Europe and the Mediterranean, bound together by shared values, open markets and borders, and enhanced cooperation in such areas as research, transport, energy, conflict prevention and law enforcement.

The inspiration comes in part from the experience of the EU with the countries of the European Free Trade Association. Since the creation of the European Economic Area in 1994, three of the four EFTA countries -- Norway, Iceland and Liechtenstein -- have benefited from participation in the European single market and in EU programs while remaining outside the Union itself. Together with Switzerland, also an EFTA member but with separate ties to Brussels, the countries of EFTA confirm the possibility of life in Europe outside the EU. Perhaps the residents of Rakhiv will one day enjoy the same rights to travel, work and trade in Europe as those currently enjoyed by the citizens of Reykjavik.

Perhaps. The Commission says the long-term goal for the EU's relationship with the wider Europe would be an arrangement resembling the European Economic Area. But in order for this to happen, countries like Ukraine would need not only to pursue a determined process of political and economic transformation. They would also have to grapple with the challenges arising from this particular model of international cooperation. As EFTA's experience shows, sharing a common space with the EU necessitates some delicate and complex living arrangements.

A starting point is the EU's insistence that cooperation be based on the EU's own rules, which govern the free movement of goods, services, capital and people throughout the European single market. These rules run to tens of thousands of pages, and it is not obvious which should be considered the most important. In relation to the wider Europe, the EU appears to prioritize the free movement of goods, building on the disciplines of the World Trade Organization. But judging from the reaction from Russia, with whom the EU has been discussing the idea of a European economic space since 2001, Moscow's pick of the freedoms at the heart of the single market is free movement of people and visa-free travel.

The process of harmonizing legislation will also not be driven, as it was in the countries of Central Europe, by the explicit promise of membership. It is therefore more likely to be gradual and partial, encouraged over time by the growth of sectors and firms with a stake in the single market. In the absence of an overriding political objective, there will be greater resistance to those parts of EU legislation that are expensive to implement, such as environmental directives that require large capital investment.

The operation of any arrangement resembling the current European Economic Area would be a significant step beyond such a selective approach. A common economic area relies on the principle of nondiscrimination across the entire market; any request for exceptional treatment threatens to upset the overall balance of burdens and benefits. While negotiating the terms of their participation in the single market, EFTA states came to realize that they could no longer choose only those rules that appeared the most attractive or advantageous.

They also had to be ready for mechanisms to ensure that these rules are implemented and applied in a uniform way. EFTA states that participants in the European Economic Area are subject to the same level of scrutiny as EU member states when it comes to putting their commitments into practice, including identical enforcement of the rules on competition and state aid.

The offer of "everything but institutions" to the wider Europe therefore comes with weighty obligations attached. But there are, self-evidently, no common institutions foreseen to decide the nature of these obligations, and this is where the prospects for a broad and highly integrated pan-European economic area start to look even more opaque.

From an early stage in the discussions with EFTA in the late 1980s, the European Community has set great store by maintaining the autonomy and integrity of its own decision-making process. There are working groups and expert meetings where the participating EFTA states can influence the shape of new EU decisions, particularly when proposals for legislation are being drafted. But the EFTA influence does not extend to the EU Council or into the European Parliament, where single market legislation is ultimately adopted.

This was not the least of the reasons why the negotiation of the European Economic Area coincided with a series of applications from EFTA to join the EC. Seven EFTA states began the negotiations on the European Economic Area. By September 1992, six of them -- all except Iceland -- had applied for EC membership. Austria, Finland and Sweden did depart EFTA for the European Union as a result, but unsuccessful referenda prevented any others from following suit. Switzerland's voters rejected the option of joining the European Economic Area, and so Norway, Iceland and Liechtenstein remained as the sole EFTA participants.

That the European Economic Area continues to work well nine years later is testament to the common interest of all sides in the efficient functioning of the single market. It also bears witness to the pragmatism of the EFTA participants, which accept that the idiosyncrasies of the arrangement are -- at least in part -- a consequence of their own political decision not to take on EU membership itself.

Yet for all the apparent ease of its operation, the task of creating and sustaining a common economic space with the EU is a highly demanding one. In many ways, with broad coverage of EU rules along with mechanisms to ensure their application, it is comparable to the requirements of membership itself. Attaining this level of integration would be a considerable accomplishment for any of the EU's future neighbors. The countries of the southern Mediterranean might see this as the closest they will get to the EU. But the East Europeans might well wonder why they cannot share EU institutions as well.

Tim Gould, an officer at the EFTA Secretariat in Brussels, previously worked for the European Commission Delegation in Ukraine. He contributed this comment to The Wall Street Journal.