Implications of EU Accession of Ten New Members

At the Copenhagen European Council Meeting in December 2002 the European Union (EU) decided to enlarge the EU with ten new Member States. As anticipated negotiations on the appropriations for agriculture, structural operations and administration for the new Member States were difficult but a comprise was reached. In this study we present the economic impacts of the Accession for each of the EU-25 Member States. Results include impacts for agricultural production and trade, the EU budget, and economic welfare. The analysis shows that supply responses will be very different across acceding countries, and that there is solid potential for increasing agricultural production in a number of these countries. There will be marginal negative effects on EU-15 members’ agricultural production. Related to the WTO discussion, the enlargement of the EU seems primarily to be an intra European (distributional) story with minor impacts on countries outside Europe. It is found that the overall economic welfare losses in EU-15 member countries are minimal, despite increases in their budgetary contributions. Therefore in economic terms the enlargement of the EU with the CEECs is affordable even within the existing design of the Common Agricultural Policy. This does not, however, remove the need for reforming the CAP along the lines, as recently proposed by the EU Commission – reforms that would enhance economic efficiency in the enlarged European Union as well as being a constructive step towards compromise in WTO negotiations.