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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

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  • Serban S. Scrieciu

    (Institute for Development Policy & Management, School of Environment & Development, University of Manchester)

Abstract

Joining the European Union club implies, among many other policy changes, full integration of Romania's economy into EU's customs union. This is 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 modelling 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 predict potential outcomes.

Suggested Citation

  • Serban S. Scrieciu, 2004. "Assessing the Economic Impacts of Incorporating Romania's Agricultural and Food Sectors into EU's Customs Union: an Applied General Equilibrium Approach," Computational Economics 0410004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpco:0410004
    Note: Type of Document - pdf; pages: 38. The paper was first published in 2004 as IDPM Development Economics and Public Policy Working Paper No.5, Institute for Development Policy and Management (IDPM), University of Manchester.
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    References listed on IDEAS

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    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.
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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

    Keywords

    EU enlargement; Customs union; Agriculture; Romania; AGE modelling;

    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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