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On
May 1, 2004, 10 countries will join the European Union (EU)—eight
of the formerly Communist Central and East European (CEE)
countries (Czech Republic, Hungary, Poland, Slovakia, Slovenia,
Latvia,
Lithuania, and Estonia) plus Cyprus and Malta. This is the
largest expansion
in the history of the EU and will bring profound changes
to Europe. The EU population will grow by 28 percent, with arable
acres
increasing by nearly 40 percent. Grain area in the 10 candidate
countries
totaled 16 million hectares in 2000, nearly half the grain
area in the current EU-15. The EU-15 already has a larger value
of
agricultural production than the United States. The EU-25 will
be an even larger
presence on the global agricultural market.
ERS has analyzed the impacts of expansion on the CEEs,
the enlarged EU, and U.S. trade with the region. Results show that
many of the
adjustments have already taken place following preferential trade
agreements. The most dramatic changes after accession are likely
to be significant increases in output of beef and feed
grains by the CEEs and a small decline in wheat output by the enlarged
EU. The United States stands to lose its poultry market in the
CEEs, but could see slightly larger wheat exports.
In the longer term, accession to the EU will bring significant
structural change to CEE agriculture. CEE farmers and food processors
will be subject to 80,000 pages of EU regulations governing sanitary,
phytosanitary, veterinary, and animal welfare standards. Producers
who cannot meet those standards will be barred from the market;
processors who fail to comply will be closed. These pressures are
already leading to consolidation in the CEE processing sectors.
Similar trends may emerge at the farm level. Smaller farms unable
to meet the new standards will not be allowed to sell their products
in the commercial market and will eventually be forced out of business.
This momentum toward farm consolidation could mean fewer, larger,
and more capital-intensive farms and a reduction in demand for
agricultural labor. It is an open question whether enough jobs
can be generated in other sectors to absorb the labor released
from agriculture.
Get the Details
EU Enlargement: Implications
for the New Member Countries, the United States, and World Trade.
A new report from ERS is part I of a series of forthcoming outlook
reports on the integration of the transition economies of Central
and Eastern Europe (CEE) and the Newly Independent States (NIS)
into global commodity markets. With a focus on Poland, Hungary,
and the Czech Republic—the largest agricultural producers
among the entering countries—the report presents a medium-term
forecast of the changes that EU enlargement will bring to commodity
production and trade in the CEEs, the enlarged EU, and U.S. and
world trade. The report also evaluates the implications of the 10-year
phase-in of direct payments that farmers in the acceding countries
will receive from the EU budget and the likely impacts of the reform
of its Common Agricultural Policy (CAP), announced in June 2003.
The reduced levels of payments and their eventual conversion to
a single farm payment, a key provision of the 2003 CAP reform, will
have only small impacts on CEE output, but greater implications
for farm income.
See Also...
 A
Historic Enlargement: Ten Countries Prepare to Join the European
Union. This feature article in Amber
Waves provides a nontechnical
overview of the implications of enlargement for CEE and EU commodity
markets and U.S. trade with the enlarged EU. The article points
out that while accession to the EU can potentially bring higher
prices for some commodities and increases in farm income, many
smaller CEE farmers are apprehensive. The need to meet strict
EU standards will raise production costs, and farmers unable
to meet those standards will be eventually forced out of business.
 U.S. – EU Food and Agricultural Comparisons. This report provides information and analysis on a wide range
of topics relating
to agriculture in the United States and European Union, including
comparisons of farm structure, production, agricultural productivity,
risk management, environmental, commodity policy, trade, and food
consumption, as well as implications of EU enlargement for bilateral
relations. The chapter on EU enlargement discusses the most contentious
issues that arose during negotiations between the CEEs and the
EU, as well as implications for agricultural trade between the
United States and the EU-25.
For Additional Information, see the ERS Briefing Room on the European Union.
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