New Member States' Trading Potential Following EMU Accession: A Gravity Approach

The purpose of this paper is to look at implications of the EMU accession on international trade flows of the new member states with members of the enlarged EU. I begin with the evaluation of an early impact of the EMU on trade based on a gravity model. The results are then employed in the calculation of potential levels of trade of the Central and East European countries. The results show a high degree of trade integration between most of the new member states and the EU except for Latvia, Lithuania and Poland. In trade among the new member states, potential trade flows by far exceed actual levels for all countries except the Czech Republic and Slovakia.international trade, gravity model, currency union, Eastern Europe

Exchange Rate: Shock Generator or Shock Absorber?

The paper re-assesses the impact of exchange rate regimes on macroeconomic performance. We test for the relationship between de jure and de facto exchange rate classifications on the one hand, and inflation, output growth and output volatility on the other. We find that, once high-inflation outliers are excluded from the sample, only hard exchange rate pegs are associated with lower inflation compared to the floating regime. There is no significant relationship between output growth and exchange rate regimes, confirming results from previous studies. De jure pegged regimes (broadly defined) are correlated with higher output volatility, but this relationship is reversed for the de facto classification. The last result points to a potential endogeneity problem present when the de facto classification is used in testing for the relationship between exchange rate behavior and macroeconomic performance.exchange rate regimes, inflation, output volatility

General Equilibrium Analysis of Albania's Integration with the EU and South Eastern Europe

The aim of this paper is to provide a framework for the analysis of implications of various trade policy options for Albania. We study the impact of implementation of the Stablization and Association Agreement, free trade agreements with South-East European neighbors and reduction of the MFN tariffs. We employ a computable general equilibrium (CGE) model, which allows for evaluation of the likely impact of trade agreements on trade, output, factor rewards, tariff revenue and welfare. Our simulations indicate that Albania has a lot to gain from further integration with its neighbors and the EU. However, the benefits from regional integration can only be realized as long as Albania gains better access for its exports on regional markets. Liberalization of trade with all trading partners allows for a permanent increase of Albanian GDP by 1% on a recurring annual basis and an increase of wages by 3.4% relative to their 2000 level.trade liberalization, SAA, computable general equilibrium

Prospects for Future Euro-Mediterranean Trade

Initiatives and agreements between EU and Mediterranean countries aimed at establishing a free trade area. Indeed there has been a liberalization of trade in the last 10 years creating new trade flows, but trade integration still has to be developed further in order to make substantial differences for the Mediterranean countries.Mediterranean region, trade liberalisation, EU Free Trade Agreements

EU Enlargement: Benefits of the Single Market Expansion for Current and New Member States

This paper evaluates the implications of Eastern EU enlargement with the use of a computable general equilibrium model. The focus is on accession to the Single Market, with explicit modeling of the removal of border costs and costs of producing to different national standards. The results indicate significant welfare gains for the CEECs (volume of GDP increases by 1.4-2.4%) and modest gains for the EU. The steady state scenarios, which allow for the capital stock adjustment in response to higher return to capital, more than double the static welfare gains.computable general equilibrium, EU enlargement, single market

EU accession and Poland's external trade policy

No description supplie

Deep Integration with the EU and its Likely Impact on Selected ENP Countries and Russia

Deep Integration with the EU and its Likely Impact on Selected ENP Countries and Russia Abstract: The aim of this study is to estimate the impact of the removal of NTBs in trade between the EU and its selected CIS partners: Russia, Ukraine, Georgia, Armenia and Azerbaijan (CIS5). The report includes a discussion of methodologies of measurement of non-tariff barriers and the impact of their removal, including a review of previous studies focusing on CEE and CIS regions. Further, we employ a computable general equilibrium model encompassing the following three pillars of trade facilitation: legislative and regulatory approximation, reform of customs rules and procedures and liberalization of the access of foreign providers of services. We conclude that a reduction of NTBs and improved access to the EU market would bring significant benefits to the CIS5 countries in terms of welfare gains, GDP growth, increases in real wages and expansion of international trade. The possible welfare implications of deep integration with the EU range from 5.8% of GDP in Ukraine to sizeable expected gains in Armenia (3.1%), Russia (2.8%), Azerbaijan (1.8%) and Georgia (1.7%).Institutional harmonization, European integration, European Neighborhood Policy, ENP, non-tariff barriers, NTBs, Computable General Equilibrium, CGE model

Modeling Economic, Social and Environmental Implications of a Free Trade Agreement Between the European Union and The Russian Federation

The EU-Russia Partnership and Cooperation Agreement, which entered into force in 1997 foresees the possible establishment of a free trade area (FTA) between the parties. The aim of our study is to evaluate the possible economic, social and environmental impact of such a free trade agreement between the European Union and Russia. The results of the analysis indicate that an EU-Russia FTA will be beneficial to the Russian Federation and the EU27. Some sectors are expected to contract in the medium term, but their importance in total output is small. Over the long run, the majority of sectors in Russia are expected to expand, while only a few sectors in the EU27 are expected to register negligible decreases in output. We estimate that welfare losses from the environmental damages would be very small for Russia (possibly even smaller due to the implementation of greener technologies), and negligible for the EU. Despite some significant negative medium-term social implications in selected sectors in Russia, the overall increase in economic activity and wages, coupled with likely domestic policies aiming at easing the impact of transitional unemployment, are expected to allow for the overall reduction in poverty rates. Overall, the results show that significant welfare gains (2.24% of GDP for Russia) would accrue from the deep FTA scenario involving a significant reduction of NTBs along with additional flanking measures, particularly on competition, IPR protection and corruption, which would help re-branding of Russia as a safe and attractive investment location. Also a number of countries such as Finland, Ireland, Netherlands, Denmark, Estonia, Slovakia, Slovenia and Sweden are expected to see their welfare increase by around 0.5% of GDP.free trade agreement, WTO accession, European Union, Russian Federation, labor market, environment, NTBs, CGE

Non-tariff barriers in Ukrainian export to the EU

The economic relations between the EU and Ukraine have intensified in recent years. Following the 2004 enlargement, Ukraine became the direct neighbour of the EU. At the same time, the country has been developing rapidly and both local production capacities and demand for foreign produce have been increasing. Ukraine also become more open to external partners. All this is reflected in the gradual effective trade integration with the EU; i.e. in growing bilateral trade flows. The overall EU tariffs for Ukrainian products are rather low and other tradition protection measures apply to selective sectors only. Moreover they are expected to disappear gradually within the next few years, following Ukraine WTO entry and expected establishment of the free trade area in manufacturing goods between the EU and Ukraine. However, there exist other so called 'non-tariff’ barriers to trade that protect and will protect the EU market. For a relatively poorer country these barriers may turn to be prohibitive. This is probably the cause that there is general perception about Ukrainian export to the EU still being below its potential. The goal of this report is to explore whether the non-tariff barriers impede Ukrainian export to the EU and to what extent. This report is published about the time when the free trade agreement between the EU and Ukraine is negotiated. The authors hope that the findings will turn useful for designing the extent of this agreement and contribute to the discussion about it by showing the extent of non-tariff barriers faced currently by Ukrainian exporters. The report starts from the overview of Ukraine trade policy (chapter 1), with the special emphasis put on economic relations between the EU and Ukraine. Evolution of bilateral trade flows is discussed next (chapter 2). This is supplemented with the brief discussion of recently conducted surveys on barriers hampering Ukrainian exports (chapter 3). The experience of some current EU members from Central and Eastern Europe, which together with gradual phasing out of tariff and traditional protection measures in the 1990s faced growing non-tariff barriers to trade with the EU, seems to be relevant for Ukraine. Chapter 4 reviews the exposure of CEECs exports to the EU’s non-tariff barriers, and describes how the countries were changing its trade-related legislation towards the EU laws in order to tackle these barriers. Chapter 4 also shows the extent of the EU’s technical barriers to trade in different sectors and how well CEE enterprises were prepared to meet them, once the EU commodity markets opened up completely for the new EU members in 2004. Results of the survey on non-tariff barriers to trade that are faced by Ukrainian exporters to the EU are presented in chapter 5. This is the main empirical contribution and the focus of this paper. The survey covered such areas as certification of origin, customs procedures and technical standards. Finally, chapter 6 concludes with policy recommendations. The authors are grateful for the assistance received from the State Committee of Ukraine for Technical Regulation and Consumer Policy and Association of Light Industry Producers of Ukraine. This publication was made possible due to the financial support provided by the 2006 Foreign Aid Programme of the Ministry of Foreign Affairs of Poland.Ukraine, EU neighbourhood, trade, non-tariff barriers to trade (NTBs), technical barriers to trade (TBTs)