NINE countries from Europe (CEECs) have Eastern and Central applied for full membership of the European Union. It has already been agreed that they will be allowed to join, provided some standard preconditions are met. Concerns about Europe's long term security and stability are fundamental to the EU's positive attitude to these countries

A pre-accession strategy is in place. EU funding is being used to assist the CEECs to prepare for membership. The accession negotiations are expected to be conducted in phases, with the first grouping, of countries aiming to join around the year 2000.

Unlike previous enlargements of the EU, the pending expansion to the East is widely expected to have profound ramifications for business politics and the economies of Europe.

Gross domestic product per capita in the CEECs is about 30 per cent of the EU average. Their combined GDP is less than that of the Netherlands.

They represent 29 per cent of the population and 33 per cent of the 15 EU members. Most forecasts predict future CEEC economic growth of around 2.5 per cent per annum which would be on a par with EU levels.

The main challenges facing the CEEC countries are to manage successfully the changeover to a market driven economy and to put in place the necessary legal regulatory and administrative framework while sustaining economic growth.

This task is daunting. The poor economic situation of most of the countries and in development potential must be considered in any analysis of the likely impact of enlargement.

Ireland has a very healthy balance with the CEECs with export growth of over 50 per cent in 1994. The scale of this trade is modest but has development potential in a market with 110 million people. Trade growth of around 8 per cent per annum would be a reasonable prospect.

Because there will be free trade in almost all industrial products by the end of 1997 the accession is unlikely to result in any sudden change in the level of trade. In the short term exports from the CEECs will not threaten the Irish domestic market or Irish exports to the EU. But after the year 2000 competition will intensify as the CEECs begin to exploit their comparative advantages.

Some manufacturing sectors in Ireland textiles, clothing and engineering are already experiencing competition from low cost imports from the CEEC producers. This competition is expected to intensify so improving the competitiveness should be a high priority for Government.

The net effects on Ireland of growth in agricultural trade between the CEECs and the EU are difficult to predict because of the interdependence of a number of relatively complex variables and the lack of any clear direction of future, EU policy. But the CEECs can expect to get minimum benefits only from the Common Agricultural Policy until at least 210.

Ireland will lose some investment to the CEECs, but the scale of this leakage is difficult to predict. Irish companies will increasingly invest in the CEECs as the investment, political and economic climate of these countries improves. The consequences of the enlargement are just one variable in the changing nature of the foreign direct investment market.

It is difficult to predict the impact of enlargement on employment in Ireland. The Danish Confederation of Industry has estimated that 2.9 per cent of employment in Danish manufacturing industry will shift from the less competitive sectors of the economy to the more competitive industries. This would be the equivalent of 7,000 jobs in Ireland.

Ireland gets £2.8 billion gross or £1.9 million net from the EU. While it will probably be another 10 years before the CEECs become full beneficiaries of EU funding programmes, guarantees about the level of EU transfers to Ireland over the 1999 to 2005 period should be sought.

Ireland's political visibility and, consequently, its ability to influence policy at EU level will suffer as a consequence of enlargement. Changes to EU institutions and decision making procedures may not be in Ireland's national interests.

On balance, enlargement should have a positive effect on the Irish economy. In the short term it is difficult to envisage any major effects on Irish growth or employment levels directly attributable to the enlargement process.

In the medium to longer term the extent of any effects will largely be decided by reforms to EU policy which are difficult to predict at this stage.