Trade Effects of European Integration

In this paper I have examined the trade effects of European integration, analising four phases in the process of European integration. The first one (up to 1973) can be seen as an example of "traditional" regional integration, where the main effects stem from the reduction of formal tariff barriers between the member states. The second phase (1974 - 1986) involves consolidation of the customs union agreement together with the first stages of monetary integration. The third phase (1987 - 2000) can be characterized as an example of "new" integration, where the aim was to create a truly single market through the removal of nontariff barriers and the harmonization of product standards and other rules and regulations with an impact on trade. The fourth phase of integration could be illustrated by the enlarged EU, that emerged after the accession of ten new member countries in 2004. In the first phase of integration, the trade effects are related to some reallocation of production between the member countries and after 2004, by contrast, the main effects emanate from better use of scale economies, with higher efficiency and external competitiveness as the main results. A common measure of the integration effects is the amount of trade taking place between countries. During the 1990s, the share of the EU-15 in the new member states markets has remained substantially stable, but since 2004 the rate of growth of imports has increased remarkably. After the accession of Romania and Bulgaria in 2007, there has been an expansion in the intra-EU-27 trade flows. In order to assess the significance of such an “enlargement effect”, I checked for the existence of a statistically significant change in the values of trade flows after 2004.