Promoting CEA agricultural exports through association agreements with the EU: why it is not working

This paper analyzes why the Association Agreements between the Central and Eastern European countries, referred to as Central European Associates (CEAs), and the European Union (EU) have failed with respect to agriculture. In the first part of the paper the development and importance of agricultural trade in the CEAs is described. It is shown that the EU is the most important trading partner in agricultural and food products for the CEAs. However, in recent years the trade balance for agricultural and food products between these countries and the EU has changed in favor of the latter; this is contrary to the aim of these agreements. Important external and internal factors determining trade relations between the EU and the CEAs are identified and discussed in the second half of the paper. These include the development of the real exchange rates, restrictions in the levels of domestic production, inadequate food quality compared to EU products, and insufficient sanitary standards in and a lack of competitiveness of the processing industry. These factors offset agricultural and food policies which have been aimed at protecting and supporting agriculture and the food processing industry in all CEAs but Bulgaria and Romania. In the last two countries, agricultural and food policies have primarily protected consumers at the expense of these two sectors.