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Deep integration and its impacts on non-members: EU enlargement and East Asia

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  • Lee, Hiro
  • van der Mensbrugghe, Dominique

Abstract

Ten countries—most completing their transition from socialist-based economies to market economies—became the EU members in 2004, two additional countries are slated to join the Union in 2007, and a few others are expected to become members at some future dates. Despite a relatively small economic size of the new member, acceding and candidate countries, this type of deep integration can have non-negligible effects on countries outside of the preferential zone as the reduction in barriers across partners leads to a re-orientation of trade. In this study, we evaluate the extent of trade adjustments and the economic impacts it will have on the East Asian economies using a dynamic computable general equilibrium (CGE) model. The overall macro¬economic effects on East Asia are small. There is some trade diversion, but there may be an opportunity to increase market penetration in some sectors of the expanding EU for which East Asia has a marked comparative advantage. This paper also assesses the relative importance of linking trade openness to productivity and lowering trade costs between the new member, acceding and candidate countries and the EU-15.

Suggested Citation

  • Lee, Hiro & van der Mensbrugghe, Dominique, 2006. "Deep integration and its impacts on non-members: EU enlargement and East Asia," MPRA Paper 82286, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:82286
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    References listed on IDEAS

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    More about this item

    Keywords

    EU enlargement; East Asia; CGE model;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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