Thematic event "The cost of staying out of the Schengen area – the impact on Bulgaria and Romania" took place today (24.09.2024) in Sofia. The forum was organized by the Bulgarian Industrial Association (BIA) in partnership with the European Economic and Social Committee (EESC), as part of the preparation of an opinion on the same topic, rapporteur on which is Maria Mincheva – Vice-President of BIA and member of the EESC.
The EESC's opinion focuses on the economic dimensions of Schengen on the EU internal market, the lost profits and direct losses associated with the continued land border controls for Bulgaria and Romania, resulting in restrictions on trade and tourism, reduced competitiveness and increased business costs, political and social costs and negative environmental impacts.
The discussion was attended today by the members of the working group on the preparation of the EESC opinion, ambassadors of the EU Member States, members of the European Parliament and the National Assembly, representatives of the Ministries of Tourism, Transport, Economy, Finance, Foreign Affairs, Home Affairs, business stakeholders from Bulgaria and Romania, the Presidents of the Economic and Social Council of Bulgaria and Romania, representatives of the Bulgarian Academy of Sciences. Moderators of the event were Hristo Nikolov, host of the "Business Start" show of Bloomberg TV Bulgaria, and Lachezar Bogdanov - chief economist of the Institute for Market Economics.
In his opening remarks at the opening of the forum, BIA President Dobri Mitrev emphasized that since 2011, Bulgaria and Romania have been meeting the technical requirements for accession to the Schengen area. "And this is not what Bulgaria and Romania claim, but consistent assessments of the European Commission. But today we have not gathered to talk about politics. Today we have gathered to talk about business. For competitiveness. About the right of companies and citizens to fully exercise the four fundamental freedoms on which the internal market is built – the free movement of goods, services, capital and people. Because the Schengen Agreement is directly related to the functioning of the Internal Market. The time has come for the topic to be closed and for our two countries to receive a specific date for a full-fledged Schengen – by air, water and land," said Dobri Mitrev and added: "The more borders, the less economic growth, less sustainability, less tourism."
According to the vice president of the Romanian business association Concordia, Calin Ile, "the membership of Bulgaria and Romania in Schengen is not limited only to economic advantages, but to taking our well-deserved place in the European family." According to him, Europe's economic sustainability requires Bulgaria and Romania to be fully integrated. "The Black Sea coast plays an important role in the EU's supply chain. The economic considerations are more than clear. This is not just about Romania and Bulgaria, but about realising the full potential of the European market. The fact that we insist on Schengen membership is not only an economic issue, but also a historical one – the last remnants of distinctions in our Union must be overcome," Kalin Ile said. He expressed hope that full membership will become a fact by the end of this year. Similar expectations were expressed by the other participants in the forum, emphasizing the support of the Hungarian Presidency, in whose six-month mandate one of the priorities is precisely the accession of Bulgaria and Romania to the Schengen area and on land.
The first discussion panel dedicated to the European dimensions of the topic was attended by the Chairman of the Foreign Policy Committee at the 50th National Assembly of the Republic of Bulgaria Boyko Borissov, the Head of the Representation of the European Commission in Bulgaria Yordanka Chobanova, the Ambassadors of Hungary and Romania to Bulgaria – H. E. Miklós Boros and H. E. Brundusa Predescu, the representative of Bulgaria in the European Parliament Andrey Novakov, and the rapporteur of the EESC opinion and member of the EESC's Employers' Group, Maria Mincheva (Vice-President of BIA).
"We are connected vessels with Romania. God has ordained us to be neighbors and to help each other," said the Chairman of the Foreign Policy Committee at the 50th National Assembly Boyko Borissov and thanked the representatives of the Austrian business in Bulgaria who had an active position in support of Bulgaria's full membership in Schengen. "When the Schengen issue was being resolved, the Austrian business wrote a letter to the government in Austria, in which the interests of Bulgaria and Austria coincided. Bulgarians wanted faster transport. The Austrian business also wanted this," Borissov said and added: "I know what you want to hear. You won't hear it from me. If there is no stable government and clear political responsibility, we will continue to talk and look for those to blame. I can't promise anything. The business will unfortunately pay for what we have created in the last 4 years."
According to the Head of the European Commission Representation in Bulgaria, Yordanka Chobanova, "First of all, Schengen is trust – trust and belonging to the largest area for free movement. Secondly, Schengen is an economy. Thirdly, Schengen is security. Schengen, according to its design, is the backbone of the EU. Schengen, together with the Eurozone, are the foundations of European integration. In other words, here we are talking about trust and symbolism. With Bulgaria and Romania, the Schengen area is getting stronger. We all stand up together and help and fight exactly these challenges related to migration and the economy, which we could not cope with individually. We all benefit from the membership of Bulgaria and Romania. This is a strong catalyst for economic growth."
"This year, on March 31, thanks to the efforts made by many diplomats, Bulgaria and Romania were granted membership in the Schengen area – we are now fully integrated into the bodies of the Schengen system, we issue Schengen visas to third-country nationals. On 10 October, Commissioner Johansson and the Minister of the Interior of Hungary will propose to the Council that land border checks should also be abolished. The expectations and firm support of the EC on this issue remain and we believe that by the end of this year the decision will be made," said Yordanka Chobanova. According to her, through the accession of Bulgaria and Romania to Schengen, the funds that the EU currently spends on maintaining internal borders will be redirected to strengthening the external borders and thus improving the security of the Union. "The EC is close to Bulgaria and Romania, we hope for a solution this year and with this the EU will become even stronger," Ms. Chobanova said.
Support for the full membership of Bulgaria and Romania was also expressed by the Ambassador of Hungary to Bulgaria – H. E. Miklos Boros. He recalled that Hungary has been a member of the Schengen area since 2007, but the economic crisis of 2008-2009 did not allow the results of this membership to be felt visibly. However, Mr. Boros stressed that as a result of this membership, Hungary has visibly increased trade and foreign investments and, in general, there is a higher competitiveness of Hungarian companies. "The simplification of transport schemes without border controls has contributed to the development of important sectors of our economy. Last but not least, this also affected the Hungarian infrastructure – with the new capital and companies that entered Hungary, there was pressure on the government to develop the infrastructure, to build new logistics centers. Thus, the results became visible to the citizens of Hungary," the Hungarian ambassador said.
"Bulgaria and Romania have only one way forward – the completion of full integration into the internal market," said the Ambassador of Romania to Bulgaria – H. E. Brundusa Predescu. She stressed that 80% of the trade and production of the two countries is oriented towards the EU, so it is normal for this process to be completed as soon as possible. "From a political point of view, the Hungarian Presidency will end by the end of this year and we hope that the procedure for full membership of Bulgaria and Romania will be completed by then," Ms. Predescu said. "Let's be very clear – we are joining together. We are ready. We work together, politicians, diplomats, and business are together. We should not compete with each other and talk about which country is ahead and which works better. All inspections make assessments of both countries at the same time. More recently, there were such and the result was again that Bulgaria and Romania have their place in Schengen," the diplomat said.
According to Bulgarian MEP Andrey Novakov, "the queues at the borders between Bulgaria and Romania are not a Bulgarian or Romanian problem. On Danube Bridge 2 near Vidin, you will see a German truck full of Greek goods, with a Polish driver for an Italian customer – this is a European problem." He noted that each truck loses 200 euros a day from waiting at the border. Novakov also commented on the recently emerged idea of creating the so-called. Balkan Schengen. In this regard, the MEP noted: "All ideas to split are counterproductive – together we entered the EU, together we applied for Schengen and the Eurozone, together we must continue!"
Maria Mincheva, Vice-President of BIA and rapporteur for the EESC opinion , noted in her speech that out of all 27 Member States, only 4 are not members of Schengen. Two of them, Bulgaria and Romania, are the only ones that are part of continental Europe. Ireland and Cyprus are islands, and Ireland does not really want to join. Schengen is used informally as a post-accession condition for EU membership. "Therefore, before we start the new enlargement process, we need to end this problem. We should not continue to prove our right to be members 17 years after our accession to the EU," she said. This situation encourages euroscepticism and reduces citizens' trust in the EU. It also negatively affects investment decisions in relation to countries that are not members of Schengen and the Eurozone, i.e. they remain outside the core of the EU. Especially in the current turbulent environment, more integration is needed in Europe, not additional restrictions.
The Vice-President of BIA stressed that "trucks continue to be the backbone of the supply chain in the EU, transporting 77% of the goods to the domestic market. At the same time, transport companies have additional costs of 5-20% just for having to wait at the borders. This money goes into the prices of products and this pushes inflation up."
"It is very important for business that politicians do their job so that the economy can develop. We want to see the kind of labour mobility that we see, for example, between France and Germany. Between Romania and Hungary it is not possible, between Bulgaria and Greece it is not possible, between Bulgaria and Romania it is difficult, so our people go to other countries. Bulgaria and Romania are the two countries with the highest exports of labor to the other EU member states," Maria Mincheva said.
The second discussion panel presented the point of view of the stakeholders – business and trade unions. It was attended by Emil Angelov - CEO and Deputy Chairman of the Management Board of Glavbolgarstroy Holding, Oleg Roibu - Chief Legal Adviser of the Romanian-based company eMAG Group, Stefka Boykova-Angelova - Vice President of the Transport Federation at the Confederation of Labor "Podkrepa", Romeo Medan - Deputy Chairman of the National Union of Road Carriers from Romania (UNTRR), Lisa Rilashiati – representative of the Austrian Chamber of Commerce, and Emil Dandolov – Chairman of the National Organization of Customs Agents (NOMA, member of BIA).
According to Emil Angelov from Glavbolgarstroy, the practical aspects of the non-accession of Bulgaria and Romania to Schengen are in three main groups. The most visible are trade barriers and delays at land borders. "If we look at Bulgaria's trade turnover with the EU, we will see that between 80 and 85% pass through land transport, 10-15% is by rail. So this trade goes through the borders in question, where it encounters delays due to customs processing. A truck delayed at the border, especially if the equipment is key, can have catastrophic consequences for a project," Angelov said. The other group of problems is the missed economic benefits, which are most visible in tourism. The third problem is foreign direct investment, which bypasses our countries because of the restrictions. "In an economy that is moving more and more rapidly, transport delays in terms of supply chain are key. The inclusion of Bulgaria and Romania in Schengen would increase the GDP of both countries by 1% each," Angelov predicted. "Last year we had sites related to gas infrastructure, and we have imported about 120 trucks with high-tech equipment. The stay of a truck at the border costs between 1200 and 1500 euros for 24 hours. Last year, some of these trucks stayed at the border for more than 24 hours," Emir Angelov said. He was adamant that the cost of not being in Schengen has a clear financial dimension for the business and it can be valued by every participant in the business processes in the country.
The representative of eMAG Group Oleg Roibu emphasized the high degree of Internet connectivity in Bulgaria and Romania (over 90%) compared to the other Member States. "Our business is not just about trading products – we also offer our marketplace platform to other companies that sell in the region. In total, over 4400 Bulgarian companies sell through our platform, and over 1600 of them sell outside Bulgaria, which means that more than 9000 orders are processed daily. This is the place of the Schengen issue, because these orders must be delivered from Bulgaria, Romania or Hungary. Therefore, it is important for us to have an infrastructure that allows the transportation of these orders. The lack of Schengen adds one day to the delivery time. Going through customs means 12 hours extra. Our analysis and calculations show that over 300,000 euros a year costs us this delay, but on the other hand, as a company you fail to offer the customer, for example, a loyalty program that guarantees him faster delivery," explained Oleg Roibu.
"The delay in Bulgaria's entry into the land Schengen area worries us greatly," said the Vice President of the Transport Federation at the Confederation of Labor "Podkrepa" Stefka Boykova-Angelova. She noted that the work of Bulgarian drivers is synonymous with poor working conditions. "More than 1 million people cross the land borders. trucks through outdated infrastructure. There are kilometer-long queues. In buffer parking lots, where drivers are forced to wait, sanitary conditions are under all criticism. Drivers are forced to pay fines because of the delays. All this leads to a high turnover in the industry. Workers do not find justified all the work they do, which leads to a deterioration in their health. Sometimes we also have a violation of labor legislation. I hope that with the entry into land Schengen will reduce the losses from downtime, fuel, etc.", said the representative of the trade unions.
"Bulgaria and Romania are at the top of the ranking in terms of the number of drivers. We cover 56% of imports and 66% of exports. The other part of this trade is from foreign carriers," said UNTRR Deputy Chairman Romeo Medan. "Since 2011, we have had a green light due to the technical requirements met, but to this day we continue to generate losses. 11 billion We have lost so far due to the queues at the borders with Bulgaria and Hungary. Crossing the Bulgarian border sometimes takes three days. Waiting at the Bulgarian and Hungarian border in 2023 cost 2.5 billion euros. euros, and in 2020-2021 it was 2.4 billion. euro. Thousands of trucks are crossing the border. They are all waiting in queues and, given the EU's ambitious goals under the Green Deal, this represents a serious obstacle. The social dimensions are also huge – drivers wait for days to go home without food, without water, etc. The status of non-members of the Schengen area accumulates costs along the supply chain and reduces competitiveness," Romeo Medan said, adding: "Our countries paid dearly to join the EU and Schengen – we closed production, we closed factories. This has affected society and now changing the rules cannot but negatively affect the unity at European level."
"Bulgaria and Romania are our main trading partners. We have 15 billion. active FDI in Bulgaria and Romania", said the representative of the Austrian Chamber of Commerce Lisa Rilashiati and added: "According to the national banks of Romania and Bulgaria, we are the largest investor in these two countries. So, what do Austrian companies that trade in this region need? It is the same thing that local companies need. Participation in the single internal market is of the utmost importance. Business needs open borders. This affects the supply chain. We have branches here and they should be able to work fully. Transport must be able to reliably determine the delivery period, so it is more than clear to companies that a strong European economy can only benefit from the consolidation of the European internal market." Lisa Rilashiati expressed hope that the borders will be opened soon and the business hopes for a positive solution to this problem. At the same time, she stressed that there is a lot of pressure from migrants in Austria, and elections are coming up and the topic of migration is among the main topics in the campaign. "Migration statistics do not change. The government is not changing, and we continue to support open borders, but we still remain aware that there are many problems that Austria has to deal with," Rilashiati added.
According to Emil Dandolov – Chairman of NOMA, the first thing to be done is the introduction of electronic CMR. "Secondly, I would like to mention the measure introduced by the NRA on the occasion of goods with high financial risk – they must be declared at the border before entering the country, which makes it difficult for companies that transport such goods. This measure should be abolished for goods produced on the territory of the EU," Dandolov said. He stressed that at the end of last year, NOMA submitted an official proposal to the Bulgarian institutions for the introduction of the so-called. Green corridors – approved economic operators to pass customs control within 5-10 minutes. "We are 95% ready and here we meet the assistance of the state, so we hope to be able to boast of the "green corridors" by the end of the year," said Emil Dandolov.
The third discussion panel was attended by representatives of academia and civil society from Bulgaria and Romania, including: the President of the Bulgarian Economic and Social Council (ESC) Zornitsa Rusinova, the President of the Romanian Economic and Social Council Bogdan Simion, Prof. Dr. Daniela Bobeva-Filipova from the Institute for Economic Research at the Bulgarian Academy of Sciences, and Antoan Atanasov from the Bulgarian National Association "Active Consumers".
In her exposé, the President of the Bulgarian ESC, Zornitsa Rusinova, recalled that last year there was an EESC declaration that fully supports the membership of the two countries in Schengen and this is a strong sign to the countries on whose decision the accession of our two countries to the Schengen area depends. According to Zornitsa Rusinova, "the topic concerns not only trade turnover, transport, delays, administrative burden, etc., but concerns practically every single person, because this hinders the free movement of people. Entry into Schengen will also improve labor migration. It would give young people the opportunity to attend universities, for example, in Ruse, and live on the other side of the border. In other words, we are talking not only about economic, but also about social and cultural exchange. The entire administrative burden, the losses of the business are paid by the consumers in the end."
According to the President of the Romanian ESC, Bogdan Simeon, the non-admission of Bulgaria and Romania to Schengen has an impact not only on the right to free movement, but also on the right to education, healthcare, and work. "All fundamental European rights are affected by the difficulties around Schengen, so it is difficult to explain to the public why, since we have already met the technical criteria in 2011, in 2024 we still do not benefit from free movement. For this reason, citizens vote against the EU and representatives of more extreme parties manage to enter the national or European Parliament and exert influence," said Mr. Simeon and added: "We have built a wonderful society with the other countries, but in this situation some citizens get frustrated and you know what this can lead to."
Prof. Daniela Bobeva-Filipova from the Institute for Economic Research at the Bulgarian Academy of Sciences thanked for the efforts of the employers' organizations to support the governments of Bulgaria and Romania in their dialogue with the European Commission and the other EU Member States. She presented the results of a study that the Institute of Economic Research at the Bulgarian Academy of Sciences has commissioned by the Ministry of Economy in order to establish the lost economic benefits and direct losses from the lack of full membership of our country in Schengen. The study covers four aspects: 1. Real losses, measured in time and money (both for businesses and citizens); 2. Potential losses for different sectors; 3. Environmental losses; 4. Fiscal effects. "We should not perceive Schengen as 'Bulgaria and Romania are losing' – the EU is losing because we are talking about an international context. It is good to have a common methodology, because now there is a new challenge – there are votes for Hungary to be taken out of Schengen. If we have a common methodology, there will be argumentation according to which decisions will be made," said Daniela Bobeva-Filipova. According to her, "there is very little effect in terms of time and money from the introduction of air Schengen. The high positive expectations did not take place, at least for now."
According to Antoan Atanasov from the Bulgarian National Association "Active Consumers", entering Schengen will unlock the potential for cross-border shopping and so small businesses (especially in the border areas) will gain a lot, but consumers will also benefit from a greater selection of goods and services at more affordable prices. "In addition, people will be able to benefit from medical services and education on the other side of the border. In the EU, almost 2 million. people cross the border to work in another country. This can also happen in Bulgaria, especially in the border regions," Atanasov said.
"For so many years we have been trying to solve various problems, but this year we decided that due to our inclusion in the maritime and air Schengen, more publicity should be given about the economic cost of the lack of a land Schengen", said Maria Mincheva (BIA) at the end of the discussion. According to her, "the politicization of this debate hinders the debate itself. Europeans fail to understand what they are losing. It seems that we are moving towards closing borders (this was very well seen during covid), but in fact there should be much more integration, because this means more business and more access for people to goods."
"We see that Mario Draghi's report, on the basis of which the parameters of the work of the new Commission will be set, is actually aimed and based on certain economies, but not on all member states. That is why it is important to intensify the conversation about the Schengen issue right now. We want to separate the topic of Schengen from the topic of migration and see it in a broader scope, to see what its economic and social dimensions are. We want to rely on data when making decisions, to assess the impact of one or another regulatory change," Maria Mincheva said. She announced that a similar discussion will be organized within the European Parliament so that the messages of the business become more audible. "We should not talk only about migrants and restrictions, but about goods and opportunities," Maria Mincheva said.
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