Single Market for Current and. New Member ... Modelling Single Market Access. ⢠Impact of the ... Abolition of tariff and non-tariff barriers to trade. ⢠Adoption of ...
EASTERN EU EXPANTSION: Implications of the Enlarged Single Market for Current and New Member States Maryla Maliszewska University of Sussex
Overview • • • • • • • •
Aim of the Study. Defining Accession. Previous Studies. Data and Methodology. Impact of the Customs Union. Modelling Single Market Access. Impact of the Single Market. Summary.
Process of accession: • Customs union with freedom of movement of non-CAP goods, of services and of capital. • Single Market. • CAP and free movement of labour. • EMU.
Previous CGE studies: • Brown, Deardorff, Djankov and Stern (1995). Removal of all tariffs and NTBs. Welfare gains: Czechoslovakia (7.3%), Hungary (6.8%), Poland (5.6%)
• Baldwin, Francois, Portes (1997) & Francois (1998). Customs union, 10% reduction in transaction costs of trade + reduction in risk premium on investment in the CEECs. Real income change: CEECs7 (1.5%, 18.8%), EU 15 (0.2%)
• Lejour, de Mooij, Nahuis (2001) Customs union, reduction in estimated TBTs (Single Market access), labour migration. GDP volume (%): Poland 4.3 5.8 -1.4 Hungary 1.9 9 -1.3 RCE 1 3.4 -2.3 EU15 0 0.1 0.6
Differences with respect to previous studies. • • • •
Updated tariff data. Sectoral/national dimensions of accession. Two types of labour. Modelling of standards and border costs.
Data • Data: GTAP Version 5 - 1997. 10 EU regions, Poland, Hungary, RCE, FSU, ROW 26 sectors (15 IRTS), 4 factors of production
Benchmarking • Data re-benchmarked using tariff data from WTO Trade Policy Reviews and Trains database to reflect the provisions of the Europe Agreements and CEFTA as of 1997. • Modelling the impact of provisions of the Uruguay Round and further liberalistion of trade according to the EAs to obtain the estimated SAMs at the time of Accession.
Updated 1997 Tariffs HUN EU GTAP TPR GTAP TPR Agriculture 37 15.8 30.9 Raw materials 2.5 0 1 Food 62.4 17 57.9 Textiles 12.8 3.9 13.9 Clothing 26.6 17.7 26.9 Leather 14.7 4.4 9.8 Wood 11.3 0 12.3 Paper 10.2 0 9.2 Petroleum 22.9 2.4 19.3 Chemicals 10 0 10.8 Nonmetallic min. 11 0 10.6 Iron and steel 17.7 7.3 17.7 Other metals 10.6 7.3 11.5 Metal prod. 11.6 4.5 13.9 Motor vehicles 17.6 4.4 18.5 Other transport 14.3 0 11.1 Electronics 14.8 6.9 12.8 Machinery nec 11.6 0 11.2 Other man. 12.8 0 16
ROW GTAP TPR 17.0 26 0.0 0 33.5 56 9.0 14 16.0 27 10.6 19 5.8 10 5.0 8 4.3 16 6.5 10 6.4 10 7.8 17 7.8 10 7.3 14 8.8 17 4.7 7.5 5.0 14 4.0 12 8.8 15
18.2 0.0 35.1 15.7 26.7 17.2 10.7 10.0 5.8 11.2 11.4 14.6 14.6 14.3 10.5 10.8 14.9 11.7 15.0
Methodology • Multi-regional Trade Model of Harrison, Rutherford and Tarr (JEI, 1996) • Border costs modelled as additional purchases of transport commodity (shipping, handling, and warehousing). • Standard costs are modelled as costs of production (additional value added).
Customs Union • Abolition of tariff and non-tariff barriers to trade. • Adoption of the Common External Tariff.
Welfare effects of the Customs Union (equivalent variation as a percent of GDP): Common External Tariff Austria Rest of the EU France Germany Great Britain Greece Portugal Spain Italy Netherlands Hungary Poland RCE FSU Rest of the World
-0.01 -0.011 -0.004 -0.015 -0.004 -0.003 -0.008 -0.005 -0.009 -0.008 0.196 0.246 -0.021 0.005 0.011
Common External Tariff plus Free Trade in CAP Goods -0.001 -0.008 -0.004 -0.004 -0.004 -0.002 -0.012 -0.006 -0.006 -0.004 0.718 0.697 -0.013 0.027 0.013
Percentage changes in output as a result of the Customs Union: CU Hungary Agriculture Raw materials Food Textiles Clothing Leather Wood Paper Petroleum Chemicals Non-metallic Minerals Iron, steel Other metals Metal products Motor vehicles Other transport Electronics Machinery nec Manufacturing nec Utilities Construction Trade Transport Financial services Public administration
Poland
2.4
-7.6
-2.7
1.6
7.9
-7.6
-3.3
3.9
-5
9.1
-2.9
-1
-0.4
7.8
0.3
0.2
-0.9
-1.2
-3.4
0.3
-2.4
1
0.2
5.2
-0.7
6.8
-1.9
0.5
6.5
3.9
1.6
0.8
6.6
-1.3
3.5
1.7
-3.1
-1.9
-0.8
-0.2
0.3
-0.1
-0.3
0.2
0.8
5
-1.1
0.4
-0.7
-0.9
Single Market Access: • Product-related regulation. • Border formalities.
• Data on the cost of border formalities. Ernst and Whinney (1988): estimates of administrative costs of both exporters and importers, agent’s fees and border delays (pre1992). Adjustment to 1997 values: Survey from the Single Market Review.
• Data on standards costs. The Cost of Non-Europe vol.3 – interviews with managers. Adjustment to 1997 values: the stage of implementation of total mandated standards.
agriculture raw materials food textiles clothing leather wood paper petroleum chemicals non-metallic minerals iron, steel other metals metal prod. motor vehicles other transport electronics machinery nec manufacturing nec utilities trade transport financial serv.
STANDARDS COST RATE (%) 1988 1997 2 0 1 0 2 0 1 0 1 0 1 0 1 0.6 1 0.2 1 0 2 0 1 0.7 1 1 1 2 3 3 2 1
0.6 0.5 0 1.6 1.3 2.2 0.4 0.7
1 1 1 1
0.2 0.4 0.2 0.2
HUN
agriculture raw materials food textiles clothing leather w ood paper petroleum chem icals non-m etallic minerals iron, steel other m etals metal prod. motor vehicles other transport electronics machinery nec Manufact. nec
POL
HUN
Exports as a share of production 15 3 10 20
POL
Im ports as a share of consumption 9 11 79 39
24 52 82 76 59 21 24 43 37
8 26 58 24 50 12 6 19 17
16 75 70 81 54 44 24 56 44
11 60 41 39 21 27 30 43 30
30 63 32 69
32 50 22 20
41 71 48 73
31 34 30 55
65
25
67
34
83 86
26 29
82 90
59 57
31
9
52
18
Single Market Access – results. • Welfare effects of elimination of border and standard costs (equivalent variation as a percent of GDP): ACC0 – 0% reduction in border and standard costs ACC100 – 100% reduction in border and standard costs
Austria Rest of the EU France Germany Great Britain Greece Portugal Spain Italy Netherlands Hungary Poland RCE FSU Rest of the World
ACC25 0.048 0.021 0.033 0.002 0.029 0.02 -0.009 0.042 0.034 0.031 2.543 1.288 -0.053 0.04 0.116
ACC50 0.084 0.022 0.019 0.015 0.023 0.017 -0.009 0.032 0.03 0.033 4.083 2.021 -0.087 0.029 0.096
ACC75 ACC100 0.128 0.176 0.026 0.03 0.009 -0.004 0.032 0.05 0.019 0.014 0.017 0.008 -0.008 -0.009 0.026 0.019 0.03 0.03 0.04 0.047 5.775 7.598 2.809 3.642 -0.118 -0.151 0.02 0.011 0.08 0.062
ACC25 – 25% reduction in border and standards costs ACC100 – 100% reduction in border and standards costs
O utput changes in selected countries resulting from a 50% reduction in border and standards costs (A C C 50, IR TS scenario). H ungary Poland A ustria G erm any 0.3 0.3 0.1 0.2 A griculture -0.8 0.2 0.4 0.3 R aw m aterials 1.8 0.8 0.1 0.1 Food -0.2 4.5 -1.1 -1.2 Textiles -1.2 12 -2.2 -1.6 C lothing 0.5 -2.2 -0.8 -1.4 Leather 3.6 3.6 -0.1 W ood 2.3 -0.4 0.2 0.1 Paper 2.2 -0.8 0.1 Petroleum -1.3 -0.4 0.1 C hem icals 0.9 0.2 0.2 0.1 N on-m etallic M inerals 7.2 3 0.1 0.2 Iron, steel 8.5 5.8 0.6 0.6 O ther m etals 4.5 0.8 0.1 -0.1 M etal products 28.2 11.2 -0.7 -0.3 M otor vehicles 15.6 1.1 0.4 0.3 O ther transport 29.7 4.4 -0.2 -0.2 Electronic equipm ent 19 2.2 0.1 0.2 M achinery nec 0.3 -1.1 0.2 0.2 M anufacturing nec 2.3 1.2 0.1 U tilities 4.9 2.5 0.1 0.1 C onstruction 3 1.7 0.1 Trade 1.6 2 0.1 0.1 Transport 2.9 1.2 0.1 0.1 Financial services 1.9 0.5 0.1 Public adm inistration
Welfare effects of the adoption of CET and reduction in border and standards costs Austria Rest of the EU France Germany Great Britain Greece Portugal Spain Italy Netherlands Hungary Poland CEECs5 Former Soviet Union Rest of the World
ACC25
ACC50
0.048 0.021 0.033 0.002 0.029 0.02 -0.009 0.042 0.034 0.031 2.543 1.288 -0.053 0.04 0.116
0.084 0.022 0.019 0.015 0.023 0.017 -0.009 0.032 0.03 0.033 4.083 2.021 -0.087 0.029 0.096
ACC75 ACC100 0.128 0.026 0.009 0.032 0.019 0.017 -0.008 0.026 0.03 0.04 5.775 2.809 -0.118 0.02 0.08
0.176 0.03 -0.004 0.05 0.014 0.008 -0.009 0.019 0.03 0.047 7.598 3.642 -0.151 0.011 0.062
