EU Green Light to a New Wave of Enlargement: Implications in a CGE context

On the dawn of the fifth round of enlargement of the European Union the question arising for both EU-skeptics and advocates is the following: will it work again? The relative success of the eight communist states that have joined the EU in 2004 is given, however the Balkan pair is different (if not backwards) in several aspects. The paper examines the economic implications of Bulgaria’s and Romania’s recent accession to the EU. The analysis has been carried out by using the GTAP model and database – a tool powerful enough for assessing policy shocks such as those considered here. Scenarios have been developed in order to consider this multifaceted process. In a first attempt the effects of the removal of formal trade barriers and the adoption of common external tariffs are considered and not surprisingly we find that associated impacts are not large, given that existing barriers have been gradually removed in accordance with the Europe Agreements. Further, we take into account the so-called "value of the current preferences", representing a scenario where there is a potential return to the MFN tariff schedule.