European Enlargement to the East and its Implications for the MENA Region

Abstract

The European Union has recently launched the overall enlargement process with the ten Central and East European countries (CEEC) and with Cyprus. Bilateral intergovernmental conferences will soon be convened to begin negotiations with Hungary, Poland, Estonia, the Czech Republic, Slovenia, and Cyprus on the conditions of their entry into the EU. The eastern enlargement of the EU will naturally have considerable impacts on these countries but also on third countries which have close trade linkages with the EU. This paper focuses on the impacts of the EU enlargement on the MENA region. The paper uses a multinational and multisectoral general equilibrium model to examine two scenarios. In the first experiment all trade barriers between the EU and the CEECs are removed and the CEECs' protection with respect to the rest of the world is harmonized with the EU-15 rates. In the second scenario the accession of the CEECs is combined with a reform of the Common Agricultural Policy in the EU.