Implications for the EU and candidate countries: Trade and investment

The accession of countries from Central and Eastern Europe will have a deep impact on the trade and investment relations for both the accessing countries and the EU15. This process has already started with the conclusion of the Association Agreements between the future Member States and the current Union. During the 1990s the trade and investment flows across the European continent have been increasing. This has been implied by studies which have been carried out. However, the implications are differing per country and per sector.

There are a high number of publications which deal with the trade and investment effects of the eastern enlargement. Some studies deal with the general implications for Europe as a whole, the CEECs as a group or the Union. Other studies are more focussing on specific country cases. In the section the former will be emphasized.

The Eastward Enlargement of the Eurozone Trade and ICM, J. Caétano, A. Galego, E. Vaz, C. Vieira, I. Vieira, 2002, Working Paper No., Ezoneplus, Berlin

This study is an overall assessment of the implications of enlargement for trade and investment flows. The authors consider the enlargement an opportunity as well as a risk. This is especially true for CEECs since these countries face the highest risks and the possibly largest benefits in the enlargement process. The risks are prevalent in the transition period and will affect different industries in diverse ways. The conclusion emphasizes the role of ICM and trade in the transition of the CEECs. It has been contributing to the creation of specialisation patterns. The authors claim that countries which have undergone radical reforms have attracted more ICM and made more progress in economic terms. In the short term some countries will have difficulties with the raise in competitive pressures from within the EU and outside the EU. The later is related to the decrease in external tariff barriers.    

The document is available here.

The trade impact of the integration of the Central and Eastern European Countries on the European Union, C. Martín, J. Turrión, 2001, Working Paper No. 11, European Economy Group, Madrid

This paper analyses the trade patterns of the Central and Eastern European Countries (CEECs) and the EU. The experience since the conclusion of the European Association Agreements between the candidate countries and the Union is applied to study the trade effects of accession. The conclusion underlines two facts. First, it emphasizes the role which foreign investment is performing in the import and export activities of the recipient country. Furthermore, it concludes that the trade relations between the CEECs and the EU have strengthened, but the candidates have experienced higher increases in imports than in exports.

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How Accession to the European Union Has Affected External Trade and Foreign Direct Investment in Central European Economies, B. Kaminski, 2000, Working Paper, Washington DC.

This paper discusses the effects for the Central and Eastern European Countries (CEECs) of the Association Agreements with the European Union and the prospects of accession. Special attention is given to the trade and investment flows. According to the article the CEECs have benefited from the renewed relations with the European Union. The benefit was especially high for the countries which have experienced radical economic reforms.

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Economic Integration between the EU and the CEECs: A Sectoral Study, F. Di Mauro, 2000 CEPS, Brussels

The author analyses data on International Capital Markets in order to answer two questions. The first question is whether ICM is substituting exports and therewith harming employment in home countries. The second question relates to the potential diversion of ICM from countries within the EU like Spain or Portugal towards countries in Central and Eastern Europe. In the conclusion the author finds that the answer to both questions is no. Rather than replacing exports the data used by the author indicate that there is a stimulating effect upon exports. The author also concludes that there are limited chances of investment diversion. This is based on the fact that intra-EU15 ICM is services related whereas ICM towards countries in Central and Eastern Europe is manufacturing related.

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