Development of New Members' EU Trade: Evidence from the Slovenian Agri-Food Sector

With the recent enlargement of the European Union (EU), ten new member states (NMS) have entered the borderless Single European Market (SEM) and adopted common EU policies in trade with third countries. This policy change causes trade creation effects within the borderless SEM and trade diversion effects in trade with third countries. Slovenia is a typical example of trade creation effects within the enlarged EU-25 and trade diversion effects particularly with traditional former Yugoslav markets. We investigate Slovenian agri-food trade structures and trade types prior to and after EU accession in 2004 to evaluate a turning point for development of Slovenian agri-food trade. Trade creation effects are found to be much more significant in Slovenian imports than exports, indicating lack of Slovenian export competitiveness.