European Enlargement and Single Market Accession: A Mistreated Issue

Philippidis, G.; Carrington, A.

doi:2005.20.3.543

The Journal of Economic Integration 2005 September;20(3) :543-566.
DOI: https://doi.org/10.11130/jei.2005.20.3.543

European Enlargement and Single Market Accession: A Mistreated Issue

G. Philippidis, A. Carrington,

Centro de Investigacion y Technologia Agroalimentaria(CITA)
Natonal Statistics

ABSTRACT

From 2004, enlargement of the European Union is expected to bring substantial net economic benefits. Herein lies a weakness, in that practically all empirical studies characterise ‘single market’ accession using simple ad hoc uniform percentage reductions in trade costs. Employing a modified gravity specification we estimate these costs and derive non-tariff barrier (NTB) equivalents, whilst associated regional impacts are calculated within a computable general equilibrium (CGE) framework. Our results suggest that spatial effects in gravity estimations have a dampening impact on NTBs for eleven of our sixteen sectors, which is reflected at the regional level.

JEL Classification

F1: Trade
F11: Neoclassical Models of Trade
F13: Trade Policy; International Trade Organizations
F15: Economic Integration

REFERENCE

1.	Anderson, J.E. and Wincoop, E.V. (2001) Gravity with Gravitas: A Solution to the Border Puzzle, NBER Working Paper No. 8079.

2.	Anderson, K and Tyers, R. (1995) Implications of EU Expansion for European Agricultural Policies, Trade and Welfare, in Ch. 9, Expanding membership of the European Union, Baldwin, Haarparanta & Kiander (eds.), Cambridge, Cambridge University Press.

3.	Anselin, L. and Griffith D.A. (1988). Do Spatial Effects Really Matter in Regression Analysis? Papers of the Regional Science Association, 25: 11-34.

4.	Anselin, L. (1998). Lagrange Multiplier Tests for Spatial Dependence and Spatial Heterogeneity, Geographical Analysis, 20: 1-17.

5.	Armington, P. (1969). A Theory of Demand for Products Distinguished by Place ofProduction, IMF staff papers, 16, 159-178.

6.	Asilis, C.M. and Rivera-Batiz, L.A. (eds.) (1994) Geography, Trade Patterns and Economic Policy, in The Creation of Economic Activity. London Centre for Economic Policy Research, pp.355-387.

7.	Bach, C.F., Frandsen, S.E. and Jensen, H.G. (2000) Agricultural and Economy -Wide Effects of European Enlargement: Modelling the Common Agricultural Policy, Journal of Agricultural Economics, 51(2), 162-180.

8.	Baldwin, R.E., Francois, J.F. and Portes, R. (1997) The Costs and Benefits of eastern enlargement: The impact on the EU and Central Europe, Economic Policy, 24, 127-176.

9.	Bauer, T.K. and Zimmerman, K. (1999) Assessment of Possible Migration Pressure and its Labour Market Impact Following EU Enlargement to Central and Eastern Europe: A Study for the Department of Education and Employment, UK.

10.	Bergstrand, J. H. (1989). The generalised gravity equation, monopolistic competition, and the factor-proportions theory in international trade, Review of Economics and Statistics, 71: 143-153

11.	Boeri, T. and Brucker H. (2002) The Impact of Eastern Enlargement on Employment and Labour Markets in the EU Member States, Final Report, European Integration Consortium, Berlin.

12.	Brenton, P. and Gros, D. (1993) The Budgetary Implications of EC Enlargement, CEPS London, Working Paper No. 78.

13.	Brenton, P., Sheehy, J. and Vancauteren, M. (2001) Technical Barriers to Trade in the European Union, Journal of Common Market Studies, 39, 264-284.

14.	Deardorff, Alan V. (1998), Determinants of Bilateral Trade; Does Gravity Work in a Neoclassical World?, in Frankel, Jeffrey A (ed.), The Regionalization of the World Economy. London: Chicago University Press, pp.7-22.

15.	Deardorff, A.V. and Stern, R.M. (1998) Measurement of Non-Tariff Barriers, Ann Arbor: University of Michigan Press.

16.	Dimaranan, B.V. and McDougall, R.A. (2002) Global Trade Assistance and Production: The GTAP 5 Database, Centre for Global Trade Analysis, Purdue University.

17.	EC (2001) The Free Movement of Workers in the Context of Enlargement, Brussels.

18.	EC (2002) Agricultural Situation in the Candidate Countries – public document, http://europa.eu.int/comm/agriculture/external/enlarge/publi/countryrep/

19.	Evenett, Simon J. and Wolfgang Keller (1998), On Theories Explaining the Success of the Gravity Equation, NBER Working Paper, no. 6529

20.	Fotheringham, A. S. and M. J. Webber (1980). Spatial Structure and the Parameters of Spatial Interaction Models, Geographical Analysis, 12(1): 33-46.

21.	Fox, A., Francois, J.F. and Londoño-Kent, P. (2003) Measuring Border costs and their impact on Trade Flows: The United States - Mexican Trucking Case, Sixth Annual Conference on Global Economic Analysis, The Hague, Netherlands, 2003, Download: http://www.gtap.agecon.purdue.edu/resources/download/1492.pdf

22.	Francois, J.F. (1998) Scale Economies, Imperfect Competition and the Eastern Expansion of the EU, in Economic Transition and the Greening of Policies: Modelling New Challenges for Agriculture and Agribusiness in Europe, Brockmeier, M., Francois, J.F., Hertel, T.W. and Schmitz, P.M. (eds), Proceedings of the 50th European Seminar of the European Association of Agricultural Economists (EAAE) October 1996.

23.	Francois, J.F. and Hoekman, B. (1999) Market Access in the Service sectors, unpublished manuscript, Tinbergen Institute.

24.	Frandsen, S.E., Jensen, H.G. and Vanzetti, D.M. (2000) Expanding Fortress Europe: Agricultural Trade and Welfare Implications for European Enlargement for Non-Member Regions, The World Economy, 23 (3), 309-329.