The significance of the "Europe
            agreements" for Central European industrial exports
In 1991 and 1992, the European Union
            (EU) and the economies in transition of Central and Southern
            Europe - the CEE-5 (Bulgaria, the former Czechoslovakia,
            Hungary, Poland and Romania) - signed the European
            Association Agreements. The Agreements established a new
            framework for their mutual economic relationship, including
            the transition to a free trade regime for industrial
            products. The importance of the "Europe
            Agreements" has been underscored by the rapidly
            shifting trade patterns between the CEE-5 countries and OECD
            markets, and by the emergence of the EU as their major
            trading partner. The author examines the significance of the
            trade concessions granted by the EU to the CEE-5 countries
            (1) by analyzing the incidence of EU trade barriers on
            imports from the CEE-5 before and after implementation of
            the Agreements and (2) by identifying trade flows of groups
            of industrial products subject to different concessions. He
            focuses on trade liberalizing measures for industrial
            products for which a free trade regime should be in place no
            later than five years after the Agreements are in force.
            (Excluded are textiles and clothing, discussed in the
            Uruguay Round of Trade Negotiations.) Overall, the
            industrial product trade provisions of the Agreements, which
            affect about 80 percent of CEE-5 exports to the EU,
            significantly improve those countries' access to EU
            markets. In 1992, the first year they were in force in
            Hungary, Poland, and the former Czechoslovakia, the
            Agreements freed slightly less than 50 percent of total
            exports to the EU from import duties and nontariff barriers
            (NTB's). In terms of the 1992 composition of exports,
            this "free trade" share in total exports increases
            over five years to about 80 percent for the former
            Czechoslovakia, 60 percent for Hungary, and 70 percent for
            Poland. Although there are significant differences in the
            composition of exports from CEE-5 economies affected by EU
            trade liberalizing measures, these are the result of varying
            shares of sensitive (especially agricultural) products
            across countries, not dissimilar of concessions from the EU.
            The EU's negotiation approach, as revealed in the
            Agreements, was to minimize the adverse effects of opening
            up "sensitive" sectors: the time and the pace of
            transition tends to be longer and slower for groups of
            products with higher NTB-coverage ratios and higher average
            tariffs. Whether by design or not, the variation in products
            identified in various provisions assures a more equitable
            treatment of CEE-5 countries, judging from their industrial
            export patterns in 1990-92.