Stretching EU Frontiers Toward East: The Consequences For Agricultural Trade Integration (original) (raw)
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Integration of Central Europe in the Common Agricultural Policy of the European Union
The World Economy, 1996
HE process of a country's trade integration into a larger regional unit causes both positive trade-creation and negative tradediversion effects for certain sectors in that country (e.g. Plummer, 1991, for Spain and Portugal). On a short-term basis the structural costs of entry of a new member might be the result of being unequal competitive partners in free trade which leads to the necessary restructuring. However, in the long run the net effect of trade-creation and tradediversion imposed by trade integration should be to improve the allocative efficiency of capital and other resources. Net gains are the improvement of efficiency resulting from tradecreation effects of scale economies and the improvement of productivity in small size economies, because the less efficient factors used and loss making import-competing activities in the country are transformed by relatively competitive sectors under the pressure of more competitive agents of other countries within the integration. A negative tradediversion effect might be the result of abolished, more efficient non-integrated competition from third countries thus substituting less efficient partnerintegration as a result of higher common external protection against third countries (Plummer, 199 1). During the 1990s an important policy discussion and political debate has developed concerning the integration of Central European countries (CECs) into 5. BOJNEC I s LICOS Research Fellow, Katholieke Universiteit Leuven, Belgium. The initial version of this paper was presented as a NAP document at the Third Ministerial Consultation on Agricultural Policy and Reforms in Central and Eastern Europe, Prague, 13-14 November, 1995 (Bojnec, 1995). This research was undertaken with support from the K.U. Leuven and from the European Commission's Phare ACE Programme 1994. The helpful suggestions and comments of Jo Swinnen and of two anonymous referees are gratefully acknowledged. Q Blackwell Publishen Ltd 19%. 108 Cowky Road, Oxford OX4 IJF. UK and 238 Main St&. Cambridge. M A 02142. USA. 447 2. ENLARGEMENT OF THE EUROPEAN UNION: HISTORICAL EXPEWlENCEs Since 1980 the EU has implemented two different approaches, gradual and big-bang, in its enlargement of food and agricultural products in relation to the CAP.
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After almost a decade of preparations, with many delays caused by disagreement about the specifi c conditions under which CEECs will adopt the Common Agricultural Policy, the schedule for the European Union's "Eastern" enlargement has fi nally been set. This article deals with the current status of the enlargement and the outstanding agricultural issues for CEECs following the Copenhagen European Council.
1 Concentration of Agriculture and Competitive Advantages of East-European Countries
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One of the main problems facing all countries at the European agri-food market is achieving agricultural specialization. Such specialization can bring additional advantages with regard to differentiation in the markets. In this paper we seek to identify the sources of competitive advantages of agriculture in Central and EastEuropean countries. The primary purpose of our research is to identify newly emerging patterns of regional specialization within and across these nations, and to examine their effects on agricultural productivity, regional competitive advantages and international trade patterns. We draw on various public data sources to analyze the patterns of geographic concentration. To determine the level of the concentration we use the following group of indicators of regional specialization and geographic concentration: Herfindahl index, the dissimilarity indexes of specialization and concentration, Krugman specialization and dissimilarity indexes, and GINI coefficient of re...
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The competitiveness of agriculture was evaluated based on characteristics describing relations between production factors, their productivity, and the significance of agriculture in international trade. The survey was carried out for 2007 and 2017 using selected cluster analysis methods and principal component analysis (PCA). Findings: In both analyzed years, two groups of countries having similar characteristics describing the competitiveness of agriculture were identified. A clear difference was observed between new and old EU member states in terms of the agricultural sector's competitiveness. The first group characterized by better values adopted for the analysis of variables in 2007 was countries of the so-called "old Union," consisting of 15 member states (excluding Portugal and Greece), and in 2017 this group did not include Austria. An additional value of the survey was that it identified the characteristics that had the largest share in explaining the variability of the analyzed phenomenon, creating grounds for formulating recommendations concerning measures in the European Union's agricultural policy. Practical Implications: Considering the diagnosed factors that, to the largest extent, determined the classification of the countries to a specific group according to the level of agricultural competitiveness, it is possible to formulate recommendations regarding measures undertaken under CAP. They should be oriented at boosting the dynamics of structural changes in the agriculture of new member states. Originality/Value: This paper focuses on a wide range of variables. Groups of countries most similar in terms of agricultural competitiveness were identified, and the characteristics of countries that had the largest influence on the above-mentioned classification were compared and defined.
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The two-way trade flows are classified into four competition categories: successful price competition when trade surplus is at lower export than import price, unsuccessful price competition when trade deficit is at higher export than import price, successful quality competition when trade surplus is at higher export than import price, and unsuccessful quality competition when trade deficit is at lower export than import price. Using a panel dataset of determinants of agro-food trade competition between the five Central European Countries (Czech Republic, Hungary, Poland, Slovakia, and Slovenia) and the European Union, we found the effect of trade balance on trade competition to be more significant than the effect of export-import unit values. Natural, and to a lesser extent human factor endowments increase price and quality competition and reduce unsuccessful price and quality competition. R&D expenditures improve quality competition and reduce price competition. Foreign direct investment reduces unsuccessful price competition and increases unsuccessful quality competition. The size of the economy improves price competition and reduces quality competition. Consumer demands associated with higher level of income per capita increase unsuccessful price and quality competition. ) was considered as a training ground in regional integration for the membership, which together with the Association Agreements between the individual CEFTA-5 countries and the EU and membership in the World Trade Organization provided a basis for freer trade and integration between the CEFTA-5 and the EU-15.
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The effects of the European Union (EU) enlargement on agro-food trade creation and dynamics in comparative trade advantages are analyzed using the EU-27 markets as the benchmark of comparison. Between 2004 and 2007, the EU-15 was enlarged to the EU-27: in 2004 for ten and in 2007 for two new EU member states from different European geographic-trade regions. Level and composition of agro-food trade structures, revealed comparative export advantage index, relative import penetration advantage index and relative trade advantage index are used to identify trade creation and comparative trade advantages. The changes and differences in dynamics in trade creation and comparative trade advantages between four different groups of new EU member states and four different Broad Economic Categories classification agro-food product groups are analyzed based on Eurostat Comext trade dataset using regional and product trade structures, regression framework, Markov transition probability matrices an...
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The paper places the evolution of the Common Agricultural Policy (CAP) of the European Union (EU) in the context of relations of the EU with Central European countries (CECs), identifying possible approaches to the accession of food and agricultural commodities to the CAP. The size of economies, the level of economic development and costs of accession are the main determinants, which will likely cause the agricultural policy adjustment and integration of CECs into the CAP. Political, internal (e.g. budgetary expenditures) and external factors (e.g. the General Agreement on Tariffs and Trade/GATT multilateral rules) may likely be important as well, suggesting that a convergence of agriculture on both sides and a more global approach in an enlarged EU will likely occur.