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Assessing the Economic Impacts of Incorporating Romania's Agricultural and Food Sectors into EU's Customs Union: An Applied General Equilibrium Approach


  • Scrieciu, Silviu Serban


Join the European Union club implies, among many other policy changes, full integration of Romania's expected to have significant implications for domestic farmers and food processors. The paper constructs a single-country Applied General Equilibrium (AGE) model to investigate the impact of tariff border adjustments on changes in relative prices, production and trade patterns associated with fifteen local agro-food activities. Moreover, the modeling work identifies those agro-food sectors that have the potential to benefit the most from EU enlargement in terms of output effects given that Romanian producers are capable of fully responding to the incentives provided with integration. These mainly include (bovine) live animals and meat products, sugar and cereal grains. Agro-food trade with EU intensifies in particular for those commodities for which trade restrictions are still substantial prior to accession. However, the magnitude of changes is relatively small due to the weak integration of domestic agro-food sectors into international trade structures. The AGE model also predicts static welfare gains of 0.65 percent of GDP equivalent variation. These seem to be more associated with better access to EU markets and increased export prices, and less with the preferential unilateral elimination of tariffs or their adjustment to EU's external levels. The model assumptions are highly theoretical and the model structure does not reflect with fidelity the workings of an economy in transition. Nonetheless, it does represent a solid base upon which further improvements could be added and structural transitional issues could be attached to more accurately predicted potential outcomes.

Suggested Citation

  • Scrieciu, Silviu Serban, 2004. "Assessing the Economic Impacts of Incorporating Romania's Agricultural and Food Sectors into EU's Customs Union: An Applied General Equilibrium Approach," Development Economics and Public Policy Working Papers 30543, University of Manchester, Institute for Development Policy and Management (IDPM).
  • Handle: RePEc:ags:idpmde:30543

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    References listed on IDEAS

    1. McDaniel, Christine A. & Balistreri, Edward J., 2002. "A Discussion on Armington Trade Substitution Elasticities," Working Papers 15856, United States International Trade Commission, Office of Economics.
    2. Schiff, Maurice & Winters, L Alan, 1998. "Regional Integration as Diplomacy," World Bank Economic Review, World Bank Group, vol. 12(2), pages 271-295, May.
    3. Herok, Claudia A. & Lotze, Hermann, 2000. "Implications of an EU Eastern Enlargement Under a New Common Agricultural Policy," Journal of Policy Modeling, Elsevier, vol. 22(6), pages 661-690, November.
    4. Maurice Schiff & L. Alan Winters, 2003. "Regional Integration and Development," World Bank Publications, The World Bank, number 15172.
    5. Frank H. Fuller & John C. Beghin & Samarendu Mohanty & Jacinto F. Fabiosa & Cheng Fang & Phillip Kaus, 1999. "Impact of the Berlin Accord and European Enlargement on Dairy Markets, The," Food and Agricultural Policy Research Institute (FAPRI) Publications 99-wp231, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    6. Arjan Lejour & Ruud de Mooij & Richard Nahuis, 2001. "EU enlargement: economic implications for countries and industries," CPB Document 11, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Hertel, Thomas W., 2002. "Applied general equilibrium analysis of agricultural and resource policies," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 26, pages 1373-1419 Elsevier.
    8. Erno Zalai, 1998. "Computable Equilibrium Modelling and Application to Economies in Transition," CERT Discussion Papers 9804, Centre for Economic Reform and Transformation, Heriot Watt University.
    9. Wonnacott, Paul & Wonnacott, Ronald, 1981. "Is Unilateral Tariff Reduction Preferable to a Customs Union? The Curious Case of the Missing Foreign Tariffs," American Economic Review, American Economic Association, vol. 71(4), pages 704-714, September.
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    Cited by:

    1. Scrieciu, Silviu Serban & Blake, Adam, 2003. "General Equilibrium Modelling Applied to Romania (GEMAR): Focusing on the Agricultural and Food Sectors," Development Economics and Public Policy Working Papers 30544, University of Manchester, Institute for Development Policy and Management (IDPM).

    More about this item


    EU enlargement; Customs union; Agriculture; Romania; AGE modelling; Political Economy; D58; F15; 013;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products


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