Transition and Integration in Europe: Implications for agricultural and food markets, policy, and trade agreements

Several Central and Eastern European countries are on their way to becoming members of the European Union. Agriculture and agricultural policy is an important issue in EU enlargement. This paper reviews the changes that have occurred in the agricultural and food sector of the CEECs and draws implications for the impact of EU enlargement on agri-food markets and policy. First, those countries which have reformed most rapidly and most thoroughly are now doing best and their reform efforts have resulted in significant recovery and efficiency improvements. Second, the impact of Eastern Enlargement will be less dramatic than initially feared, although some uncertainty remains. The possibility that the accession of the CEECs into the CAP will cause a conflict with WTO commitments has been reduced, but cannot be excluded for some specific commodities, depending on the CEEC supply evolution. However, the likelihood of a WTO conflict, and the impact on the CAP, will depend more on the outcome of the negotiations in the WTO Millennium Round than on enlargement. Similarly, the impact of enlargement on the EU budget depends mostly on the (political) decision on the allocation of direct payments to CEEC farmers and/or of the extent of structural funds for CEECs.