PROMOTING CEA AGRICULTURAL EXPORTS THROUGH ASSOCIATION AGREEMENTS WITH THE EU - WHY IT IS NOT WORKING -

Abstract

This paper analyzes why the Association Agreements between the Central and Eastern European countries, referred to as Central European Associates (CEAs), and the European Union (EU) have failed with respect to agriculture. In the first part of the paper the development and importance of agricultural trade in the CEAs is described. It is shown that the EU is the most important trading partner in agricultural and food products for the CEAs. However, in recent years the trade balance for agricultural and food products between these countries and the EU has changed in favor of the latter; this is contrary to the aim of these agreements. Important external and internal factors determining trade relations between the EU and the CEAs are identified and discussed in the second half of the paper. These include the development of the real exchange rates, restrictions in the levels of domestic production, inadequate food quality compared to EU products, and insufficient sanitary standards in and a lack of competitiveness of the processing industry. These factors offset agricultural and food policies which have been aimed at protecting and supporting agriculture and the food processing industry in all CEAs but Bulgaria and Romania. In the last two countries, agricultural and food policies have primarily protected consumers at the expense of these two sectors.

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zbw Leibniz-Informationszentrum Wirtschaft
Leibniz Information Centre for Economics
Frohberg, Klaus; Hartmann, Monika
Working Paper
Promoting CEA agricultural exports through
association agreements with the EU: why it is not
working
Discussion paper // Institute of Agricultural Development in Central and Eastern Europe,
No. 1
Provided in Cooperation with:
Leibniz Institute of Agricultural Development in Central and Eastern
Europe (IAMO)
Suggested Citation: Frohberg, Klaus; Hartmann, Monika (1997) : Promoting CEA agricultural
exports through association agreements with the EU: why it is not working, Discussion paper //
Institute of Agricultural Development in Central and Eastern Europe, No. 1
This Version is available at:
http://hdl.handle.net/10419/28578

1An earlier version of this paper was presented at the 21st European Conference of Agricultural Economists
“Redefining the Roles for European Agriculture” in Edinburgh (Scotland) from 3rd to 7th September 1996.
PROMOTING CEA AGRICULTURAL EXPORTS
THROUGH ASSOCIATION AGREEMENTS
WITH THE EU
- WHY IT IS NOT WORKING -1
KLAUS FROHBERG
MONIKA HARTMANN
Discussion Paper No. 1
1997
DISCUSSION PAPER
Institute of Agricultural Development in
Central and Eastern Europe
Magdeburger Straße 1, D-06112 Halle (Saale), Germany
Phone: +49-345-500 81 11
Fax: +49-345-512 65 99
E-mail: iamo@iamo.uni-halle.de
Internet: http://www. landw.uni-halle.de/iamo/iamo.htm

Prof. Klaus Frohberg is the Executive Director of the Institute of Agricultural Development in Central
and Eastern Europe (IAMO), in Halle, Germany and Head of the Department for External
Environment for Agriculture and Policy Analysis. Prof. Dr. Monika Hartmann is Head of Department
for Agricultural Markets, Marketing and World Agricultural Trade at the same institute.
Mailing address: Institute of Agricultural Development in Central and Eastern Europe (IAMO)
Magdeburger Straße 1
D-06112 Halle/Saale
Germany
Phone: +49-345-500 81 10 / 20
Fax: +49-345-512 65 99 / 5008177
E-mail: frohberg@iamo.uni-halle.de
hartmann@iamo.uni-halle.de
Internet: http://www.landw.uni-halle.de/iamo/iamo.htm
Discussion Papers are interim reports on work of the Institute of Agricultural Development in Central
and Eastern Europe (IAMO) and have received only limited reviews. Views or opinions expressed in
them do not necessarily represent those of IAMO. Comments are welcome and should be addressed
directly to the author(s).
The series Discussion Papers is edited by:
Prof. Dr. Klaus Frohberg (IAMO)
Prof. Dr. Monika Hartmann (IAMO)
Prof. Dr. Dr. h.c. Peter Tillack (IAMO)

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 2
ABSTRACT
This paper analyzes why the Association Agreements between the Central and Eastern
European countries, referred to as Central European Associates (CEAs), and the European
Union (EU) have failed with respect to agriculture. In the first part of the paper the
development and importance of agricultural trade in the CEAs is described. It is shown that
the EU is the most important trading partner in agricultural and food products for the CEAs.
However, in recent years the trade balance for agricultural and food products between these
countries and the EU has changed in favor of the latter; this is contrary to the aim of these
agreements.
Important external and internal factors determining trade relations between the EU and the
CEAs are identified and discussed in the second half of the paper. These include the
development of the real exchange rates, restrictions in the levels of domestic production,
inadequate food quality compared to EU products, and insufficient sanitary standards in and a
lack of competitiveness of the processing industry. These factors offset agricultural and food
policies which have been aimed at protecting and supporting agriculture and the food
processing industry in all CEAs but Bulgaria and Romania. In the last two countries,
agricultural and food policies have primarily protected consumers at the expense of these two
sectors.
ZUSAMMENFASSUNG
Die Assoziierungsabkommen zwischen den Mittel- und Osteuropäischen Ländern (MOEL)
und der Europäischen Union haben im landwirtschaftlichen Bereich nicht den erhofften
Erfolg gebracht. Der vorliegend Beitrag untersucht die Gründe für dieses partielle Scheitern.
Im ersten Teil des Papiers wird die Entwicklung und Bedeutung des Agrarhandels der MOEL
beschrieben. Dabei zeigt sich, daß die EU für die meisten MOEL im Agrarbereich der
wichtigste Handelspartner ist. Die Handelsbilanz für Agrar- und Ernährungsgüter zwischen
den MOEL und der EU hat sich in den letzten Jahren jedoch zu Gunsten der Europäischen
Union verändert; eine Entwicklung, die dem Ziel der Assoziierungsabkommen widerspricht.
Wichtige externe und interne Faktoren, die die Handelsbeziehungen zwischen der EU und den
Assoziierungsländern bestimmen, werden im zweiten Teil des Beitrags aufgezeigt und
diskutiert. Hierzu gehören die Veränderung der Realen Wechselkurse, Begrenzungen in der
inländischen Agrarproduktion, unzureichende Nahrungsmittelqualität im Vergleich zu den in
der EU erzeugten Produkten, unzureichende sanitäre und phytosanitäre Standards und
mangelnde Wettbewerbsfähigkeit in der Verarbeitungsindustrie. Diese Faktoren können auch
nicht durch die Agrarpolitik dieser Länder kompensiert werden, die mit Ausnahme von
Bulgarien und Rumänien in allen Assoziierungsländern auf einen Schutz des
landwirtschaftlichen Sektors ausgerichtet ist.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 3
CONTENTS
Abstract.............................................................................................................................. 2
Zusammenfassung............................................................................................................. 2
List of Tables ..................................................................................................................... 4
List of Abbreviations......................................................................................................... 4
1 Introduction.................................................................................................................... 5
2 Agricultural Trade Performance of the CEAs ............................................................ 5
3 Failure of the Europe Agreements due to Internal Factors ....................................... 7
3.1 Exchange Rate Policy............................................................................................................ 7
3.2 Restrictions in the Quantity of Domestic Production............................................................ 8
3.3 Lack of Quality and Insufficient Sanitary Standards ............................................................ 8
3.4 Inefficient Food Industry....................................................................................................... 9
3.5 Agricultural Policies.............................................................................................................. 10
4 Failure of the Europe Agreements due to External Factors....................................... 11
4.1 EU Agricultural Policy Reform, the Uruguay Agreement and EU North Enlargement........ 11
4.2 Design and Content of the Association Agreements............................................................. 12
5 Summary and Recommendations................................................................................. 13
References .......................................................................................................................... 16
Appendix............................................................................................................................ 17

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 4
LIST OF TABLES
Table 1: Value of CEA Trade in Agricultural and Food Products over the Years
1989 to 1996..................................................................................................... 18
Table 2: Share of Agriculture and Food Industry in Total Exports and Imports,
1993 to 1996 (in %).......................................................................................... 19
Table 3: Destination and Origin of CEA Agricultural Trade: Share of Country
Groups in Total Value...................................................................................... 20
Table 4: Value of CEA Trade in Agricultural and Food Products with the EU (in
Mio ECU)......................................................................................................... 21
Table 5: Development of the Nominal Exchange Rate of the CEAs Compared to
the German Mark (DM).................................................................................... 22
Table 6: Development of the Nominal Exchange Rate of the CEAs Compared to
the German Mark (DM) (where the value is 100, this indicates the base
year).................................................................................................................. 23
Table 7: Consumer Price Indices for the CEAs and Germany (where the value is
100, this indicates the base year)...................................................................... 24
Table 8: Development of the Real Exchange Rates for the CEECs Compared to
the German Mark (DM) (where the value is 100, this indicates the base
year).................................................................................................................. 25
LIST OF ABBREVIATIONS
CEAs Central European Associates
CMA Centrale Marketing-Gesellschaft der Deutschen Agrarwirtschaft mbH
CPI Consumer Price Indices
DM German Mark
EFTA European Free Trade Association
EU European Union
FSU Former Soviet Union
GATT General Agreement on Tariffs and Trade
NIS Newly Independent States
PPP Purchasing Power Parity

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 5
1INTRODUCTION
Between December 1991 and July 1995, Association Agreements commonly referred to as the
Europe Agreements were signed between the European Union and ten Central and Eastern
European Countries, referred to as Central European Associates (CEAs), namely Poland, the
Czech Republic, the Slovak Republic, Hungary, Bulgaria, Romania, Estonia, Latvia, Lithuania
and Slovenia (TRACY 1994, p. 1; AGRA EUROPE 1995, p. 31). The main purpose of these
agreements has been to strengthen the new democracies by promoting closer economic and
cultural co-operation between the European Union (EU) and the CEAs. The establishment of
free trade areas was central to this process. As with other trade agreements concluded by the
EU, full liberalization of agricultural trade was considered impossible, since there would have
been strong opposition from EU farmers fearing that Western Europe would be flooded with
cheap foodstuff from the CEAs if the EU market opened. The EU has thus limited preferential
access to its agricultural markets, mainly to a series of tariff quotas that stretch over a period
of some years, with quotas being raised and tariffs reduced progressively over the course of
the agreement3. Following the general principle of asymmetry in favor of the CEAs, tariff
concessions granted for EU exports to the CEAs are less far-reaching.
Up to now, the Europe Agreements have not fulfilled the CEAs' expectations. Throughout
1993, 1994 and 1995, all CEAs fully utilized their EU preference quotas for only a few
products. While the EU's agricultural exports to these countries rose substantially in the period
1992 to 1996, the CEAs' exports to the EU only increased slightly, making most of those
countries net importers of agri-food products from the EU. Thus it is not surprising that
politicians and farmers in the CEAs claim that in reality the EU is the sole beneficiary of the
Europe Agreements (AGRA EUROPE 1995, No. 150, p. 2; AGRA EUROPE 1995, No. 153, p. 17).
In their view, it is the EU countries with their agricultural and food products who threaten the
CEAs' farm sectors rather than the other way around.
What are the main factors to have caused a reversal in agricultural trade positions between the
EU and most CEAs, preventing the CEAs from fulfilling the preference quotas? Is this rather
poor result primarily due to the agreement, or are there other reasons for this development?
These are some of the questions the paper attempts to answer. Accordingly, section 2
discusses the development of the CEAs' agricultural trade performance. In section 3 possible
internal reasons for the failure of the Europe Agreements are discussed, while section 4
focuses on the analysis of externally induced deficiencies hampering their success. In the final
section recommendations are given on how preferences granted could be better utilized, and
how to generally improve the export and import conditions of the CEAs.
2AGRICULTURAL TRADE PERFORMANCE OF THE CEAS
The development of trade in agricultural and food products in the CEAs shows a very diverse
picture. From 19894 to 1996 exports increased considerably in the Baltic and the Visegrad
countries, while Bulgaria and Slovenia experienced a fall in their agricultural export values
2An earlier version of this paper was presented at the 21st European Conference of Agricultural Economists
“Redefining the Roles for European Agriculture” in Edinburgh (Scotland) from 3rd to 7th September 1996.
3For some commodities the EU has also granted the CEAs preferences, all without quantitative restrictions,
some of them also without tariffs, others with ad-hoc reduced tariffs. However, imports of sensitive products
to the EU are generally restricted by quotas (see also OVERBERG 1996, p. 18-26).
4For Slovenia and the Baltic States, trade figures have only been recorded since 1992.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 6
(see Table 15). Imports, on the other hand, increased for all CEAs except Bulgaria and
Romania in the period considered. The expansion of trade in the Czech and Slovak Republics
from 1989 to 1996 is partly due to the fact that pre-1992 figures did not record trade between
these two countries. The rather strong changes in this period therefore have to be interpreted
with care.
Most countries started out as net exporters of agricultural and food products in 1989. This also
holds for the Baltics, although the earliest figures available for them date from 1992.
However, since imports increased far more than exports, all CEAs but Bulgaria and Hungary
became net importers in 1996. As a group the CEAs turned from being a net exporting region
in 1992 to becoming a net importer in 1996 (see Table 1).
Agriculture is important for the overall economy in the CEAs. An indicator for this is the
share of agriculture and the food industry in total exports and total imports in the CEAs.
Table 2 reveals that this share in total exports declined slightly from 12 % in 1993 to 11 % in
1996, revealing a decrease of 6 % over the considered period. Imports follow a similar pattern.
However, the share of agricultural imports in total imports is lower, while the decrease is
slightly higher.6 With 21 to 22 %, Hungary has the highest export share and, at the same time,
the lowest import share (6 to 8 %). A similar pattern can be observed for Bulgaria. In Estonia,
agriculture also accounts for a relatively large proportion of total exports (16 to 25 %), but in
contrast to Hungary and Bulgaria, it has an equally large share of agriculture in total imports
(14 to 16 %). In the Czech and the Slovak Republics agriculture is of minor importance for
total trade, both on the export and the import sides.
In most CEAs, the regional structure of trade in agri-food products followed a similar pattern
from 1989 to 1996. With the end of the socialist era, traditional export markets in the east
were lost. This was followed by a significant orientation of trade towards the West European
market. In 1996 the EU was the most important agricultural trade partner for nearly all CEAs
(see Table 3), accounting for 55 % of the CEAs' agri-food imports and for 38 % of their
exports. This clearly shows the importance of the EU for the CEAs' agricultural trade.
Especially the CEAs' agricultural imports primarily come from EU countries. However, while
imports from other CEAs and the Newly Independent States (NIS) are of minor importance
for most CEAs, they are quite important trade partners in terms of export. This holds
especially for the three Baltic countries and Bulgaria, and thus for the countries that were
either part of the Soviet Union or, in the case of Bulgaria, had strong trade relations with the
NIS already prior to transition.
It is interesting to note that in some countries a reorientation towards the market of the Former
Soviet Union (FSU) is taking place. Poland, for example, almost doubled its share of exports
to the NIS in the last three years, while its share of exports to the EU is declining (see Table
3). There are two major reasons for this. Firstly, western markets are highly protected, making
it almost impossible to expand into these markets. Secondly, there are still large differences
between East and West European countries in terms of product quality and sanitary standards
for agricultural products (see also section 3.3). It is therefore much easier for Poland to export
to markets in the east where such trade impediments do not exist. These reasons probably also
explain the generally strong deviation between the export and import flows of the CEAs'
agricultural and food trade (EUROPEAN COMMISSION 1997, p. 79).
5All tables are listed in the appendix.
6In 1994 this share amounted to 9 % on the import and export sides in the group of OECD countries and is
thus smaller compared to the CEAs, especially on the export side (OECD 1996b, p. 13).

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 7
Although the share of exports to the EU in total agricultural and food exports slightly declined
in the region (see Table 3), EU purchases of agricultural and food products from these
countries increased in absolute value over the years 1992 to 19967 (see Table 4). However,
imports from the EU rose on average far more over the same period. Since 1992, the trade
balance for agricultural and food products between the CEAs and the EU has become
increasingly negative for all CEAs but Bulgaria and Hungary (see Table 4). This is especially
remarkable since the Interim Agreements between the EU and Hungary, Poland and
Czechoslovakia came into force during 1992, and those with Romania and Bulgaria in 1993,
providing these countries with preferred access to the European market. At first glance, one
could conclude that, instead of promoting agricultural exports from the CEAs to the EU, the
agreement might have had the opposite effect. However, in addition to structural flaws in the
Association Agreements, other external and internal factors might have led to the poor export
performance of the CEAs in recent years. These will be discussed in more detail in the
following sections.
3FAILURE OF THE EUROPE AGREEMENTS DUE TO INTERNAL FACTORS
3.1 Exchange Rate Policy
Agriculture is influenced by many macroeconomic variables. This holds especially with
respect to the exchange rate. Due to its development over the last 7 years, the value of most
CEAs' currencies has had a strong impact on agricultural trade in these countries. Tables 5
and 6 reveal that all countries but Estonia and Latvia have devalued their currencies compared
to the German Mark (DM) considerably since the beginning of the transformation process.8
This devaluation has been especially substantial in Romania, Bulgaria and Slovenia.
Devaluation raises domestic prices, thereby leading to an implicit protection of trade-related
sectors such as agriculture. Thus at first glance it seems that the development of the exchange
rate should have encouraged net exports in agricultural and food products instead of
hampering them.
This view, however, neglects some important aspects. The nominal exchange rate is merely an
undeflated conversion factor between the domestic currency and a foreign currency. It can
therefore not measure a country’s competitiveness in international trade, since quantities
demanded and supplied depend on relative rather than on absolute prices. Changes in the
exchange rate only affect the price of tradables. Nominal exchange rates must therefore be
corrected, taking into account inflation, to determine their possible impact on relative prices
and the volume of trade. One way to account for inflation is to construct a real exchange rate
based on purchasing power parity (PPP). This PPP rate is the nominal exchange rate adjusted
by the ratio of foreign to domestic prices. Thus the PPP real exchange rate can be expressed
as:
e e p
p
RNF
D
=⋅
7There was a change in trade statistics in 1993. Since then, trade figures have included the exchange of goods
with the Slovak Republic which had not been recorded separately for earlier years. This partly explains the
decline in exports from the Czech and the Slovak Republics to the EU in 1993.
8Estonia has fixed its exchange rate to the German Mark since independence.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 8
where eR is the real exchange rate, eN is the nominal exchange rate expressed in units of
domestic currency per one unit of foreign currency, and pF and pD are the appropriate foreign
and domestic price deflators. In this paper, the consumer price indices (CPI) of the respective
CEAs and Germany are used as price deflators (see Table 7). For the purpose at hand, other
inflation measures such as the implicit GDP price deflator would usually be preferred.
However, these statistics are not available for all countries considered in the analysis.
In Table 8, the development of the real exchange rate is summarized. The results reveal that
nominal devaluation in the CEAs was not sufficient to fully compensate for the differential
developments in the inflation rates between the respective CEA and Germany, thus leading to
real appreciation in all countries during the period 1990 to 1996.9 This was a steady process in
the Czech and Slovak Republics, and also, although to a lesser extent, in Estonia and
Lithuania, while in Poland considerable real appreciation took place only in 1990. Since then
the real exchange rate has been kept constant. In Bulgaria, Slovenia, Romania and Hungary
the direction of change in the real exchange rate has varied over time. In Hungary, for
example, real appreciation took place in the period 1990 to 1993. However, in 1993 and 1994,
trade and budget deficits rose to unsustainable levels (see OECD 1996a). To reduce this twin
deficit, considerable nominal devaluation of the Hungarian Forinth was introduced. This was
able to more than offset the inflation differences between Hungary and Germany, thus
inducing a real depreciation of the Forinth versus the German Mark in 1994.
A decline in the real exchange rate indicates an implicit appreciation of the currency relative
to the DM in the country considered. The implicit appreciation of the CEAs' currencies in the
years of transition has made it more difficult for all CEAs' export industries to compete on the
world market. This might be a first explanation for the deterioration of the trade balance in
most CEAs since 1990.
3.2 Restrictions in the Quantity of Domestic Production
One group of factors preventing Hungary, Poland, the Czech Republic, the Slovak Republic,
Bulgaria and Romania from fulfilling the quotas in previous years are restrictions on the
production levels of the countries considered. Serious drought conditions in some of the
countries in 1992 and 1993, and substantially reduced production of almost all animal
products, especially meat products, in all CEAs since the beginning of the transition period
have been detrimental to agricultural trade performance and preference quota utilization in
these countries. The latter was further hampered by a shift away from products for which the
CEAs had been awarded preference quotas, such as buckwheat in the case of Poland.
3.3 Lack of Quality and Insufficient Sanitary Standards
One of the main reasons for the pronounced deviation in the development between import and
export flows in agri-food products between the EU and the CEAs are differences in product
quality and sanitary standards between these groups of countries. Generally speaking, the
quality, especially of processed goods, is not always satisfactory in the CEAs, which makes it
difficult to export these products to the highly sophisticated and demanding consumer markets
of Western Europe.
9For Bulgaria 1991 to 1996, for Estonia and Lithuania 1993 to 1996, and for Latvia 1992 to 1996.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 9
In most CEAs quality assessments according to the classification system EUROP have not yet
been introduced. In the Czech Republic for example, only four meat processing plants have
been equipped with technology meeting the requirements of this classification. The picture is
even more problematic for other CEAs such as the Baltics, where at present no single
slaughterhouse fulfills EU standards (e. g. EUROPEAN COMMISSION 1995a, p. 18-26), making
exports to the EU impossible. In Bulgaria no slaughterhouse for cattle or poultry has been
approved by the EU commission, which makes beef and chicken exports to the EU
impossible. Although some slaughterhouses for pigs do meet EU requirements, exports of
pigs and pork to the EU amount to zero. This is not due to a lack of competitiveness, but to
the fact that Bulgaria is situated in a high-risk region where the vaccination of pigs against pig
fever is mandatory. Imports of meat from vaccinated animals are, however, banned under EU
veterinary legislation. Thus the preferences granted to Bulgaria for beef and veal, as well as
for pigs and pork are of no relevance to the country at present (KOLAROVA et al. 1994,
p. 17 and p. 21).
Although the Baltic countries have been given preference quotas for butter, skimmed milk
powder and meat products since the beginning of 1995, the Commission expects inadequate
hygiene standards to provide a significant barrier for the Baltics' export of these products to
the EU for a considerable time (AGRA EUROPE 1995, p. 16; EUROPEAN COMMISSION 1995b,
p. 33-34). Especially the lack of cooling equipment on farms leads to a deterioration of the
quality of milk.
This reveals that higher standards in EU and EFTA countries often impose considerable
restrictions on CEA exports to Western Europe. In extreme cases, this can even lead to an
import ban against countries with lower sanitary standards, as mentioned above. This
happened during 1993 and 1994, when the EU banned all imports of pork originating from
Central and East European countries, because of pig fever. These standards, as well as the
unsatisfactory quality especially of meat and dairy products manufactured in the CEAs, partly
explain why preferential import quotas granted by the EU in the Europe Agreements were
hardly used during the last years.
On the other hand, Central European consumers generally do have two reasons for buying
imported food products. First, because the product they want to buy is not available
domestically (e. g. exotic fruits) or second, because they desire food items with a higher level
of quality, packaging or presentation than are available from domestic producers. It is
especially for the latter reason that imports of Western European products to the Central
European region have soared, while purchases from neighboring countries have more or less
stagnated. (AGRA EUROPE 1995, p. 1). However, as in the new Länder, this development is
expected to slow down due to an increasing market orientation of domestic firms on the one
hand, and a reorientation of consumers in the CEAs towards domestic products on the other
hand. The latter can be explained by a new national consciousness, the former is partly
encouraged by an inflow of foreign capital that has accelerated industrial restructuring and
favors the implementation of new technologies, new management and new organizational
techniques.
3.4 Inefficient Food Industry
In the CEAs the food industry of the pre-1990 era consisted of state-owned, highly
concentrated and strongly regulated enterprises. All agricultural products were supplied
directly by farms to processing or trading companies. Competition between different

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 10
enterprises in the food industry existed neither on the supply nor on the demand side, since all
companies were assigned specific regions where they would purchase raw materials from and
sell their products. Food marketing chains were vertically co-ordinated by state planners and
prices at all levels were fixed by the government. This ensured total state control of all
activities related to the food industry. The marketing infrastructure was generally poorly
developed in most CEAs during socialist times. The distribution of processed products was
managed by state-owned companies that were supplemented by consumer co-operatives on
the wholesale as well as on the retail level (see e. g. OECD 1996c, p. 64).
In the privatization process, most food processing companies in the CEAs were transformed
into state-owned joint stock companies and then privatized, mostly through voucher
privatization. Smaller companies were either returned to their original owners through
restitution or sold during small-scale privatization. Since the beginning of the transition
process, the number of food-processing enterprises has thus risen substantially in all CEAs.
Since the processing volume has declined rather than increased as is discussed below, the
average scale of operation and capacity utilization has decreased considerably.
At the same time, food consumption has fallen during the transformation process, leading to a
decrease in food industry output measured in gross revenue. The decline of the latter was,
however, more pronounced than the fall in food consumption, since part of the preparation
and processing of food was reoriented to the household level. The sharp drop in food industry
output was especially pronounced in the meat and dairy industries, reflecting an increasing
problem with overcapacity, particularly in these sectors. A decline in the rate of utilization
leads to an increase in unit costs.
Other factors impairing the economic performance of the food industry in many of the CEAs
in the transition process are higher prices for energy and other inputs10, huge debts, an
outdated and inefficient capital stock, and little change in the management or decision-making
structures compared to pre-transformation times (HARTMANN und WANDEL 1997). In addition,
labor costs in most countries have increased far more than productivity. In the Slovak
Republic, for instance, labor productivity in 1994 went up by 5 % compared to 1993, whereas
wages increased by 16 %. This led to a total increase in labor costs of 7 % in the Slovak food
industry (AGRARINFORMATIONSDIENST OSTEUROPA 03/1995, p. 15). Consequently,
profitability of the food industry has declined in many countries, making it difficult to keep up
or even increase investments. These are also the main reasons for lack of quality in processed
food, and thus the main impediments for export to the EU. In addition, grading, sorting and
packing equipment are often also missing, yet they are necessary to comply with EU
standards.
3.5 Agricultural Policies
Agricultural and food policies differ somewhat between the various CEAs. It goes beyond the
scope of this paper to provide a detailed account of the policies each individual country has
pursued. Nevertheless, one can state that all CEAs but Bulgaria and Romania have
implemented measures aimed at stabilizing domestic markets, reducing imports and
enhancing exports.
10 At this point it should, however, be noted that retail prices of food, which can be used as a proxy for output
prices of the food industry, rose much faster than the prices companies in this industry have to pay for
agricultural raw materials. This apparent advantage of the food industry was obviously overcompensated by
other impediments discussed in the text.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 11
The types of policy instruments used in the CEAs include especially minimum prices and
import tariffs, but also export subsidies. In situations where domestic supply was severely
interrupted, some of these countries also used export quotas to ensure sufficient supplies for
domestic consumers. Protection was generally reduced immediately after the collapse of the
communist system. However, an increase in import protection has taken place in most CEAs
since 1992. Together with the export subsidies granted, this should have caused the trade
balance for agricultural and food products between these countries and the EU to develop
positively. However, as indicated above, the reverse happened (EUROPEAN COMMISSION 1997;
OECD 1996a).11 One point to be mentioned , however, is that both the kind of trade policy
and its stability matter. Especially in Bulgaria, but also in other CEAs, trade measures that had
been approved and implemented were changed several times in the course of one year
(EUROPEAN COMMISSION 1997, p. 117). This has certainly had considerable negative effects
for farmers.
While agricultural policies in most CEAs were primarily aimed at protecting producers,
Bulgaria and Romania pursued policies that focused on protecting the consumer. In these two
countries agricultural exports have been prevented by taxes, quotas or even bans, while in
some cases agricultural imports have been facilitated by waiving import duties (EUROPEAN
COMMISSION 1995a and 1995c). Thus the negative agricultural trade balance for these
countries, and the underutilization of the quotas granted by the EU, have been partly induced
by discriminating against agriculture with trade policies. An example might illustrate this
point. In 1994, zero utilization of Bulgaria's preferential quota for common wheat and millet
could be observed. This was due to the fact that the Bulgarian government had banned all
exports of these products to prevent food shortages for domestic consumers.
4FAILURE OF THE EUROPE AGREEMENTS DUE TO EXTERNAL FACTORS
4.1 EU Agricultural Policy Reform, the Uruguay Agreement and EU North
Enlargement
Both the EU Agricultural Policy Reform of May 1992 and the agreement reached in the
Uruguay Round have led and will continue to lead to a reduction in agricultural protection in
the EU. This induces increased market access of all third countries to the EU, thus reducing
the relative advantage enjoyed by the CEAs under their bilateral arrangements with the EU.
(AGRA EUROPE 1995, p. 5). Smaller preference margins and therefore lower benefits have
been the results of this development. The objective of the CEAs has been to maintain the
advantages originally granted in the Europe Agreements. The CEAs also intend to ensure that
they will be not negatively affected by the EU North Enlargement , the accession of Austria,
Finland and Sweden to the EU. The integration of the preferential terms agreed by the CEAs
and the three former EFTA countries into the Europe Agreements is of vital importance for
the profitability of exports for some CEAs countries. This holds especially for Hungary
(AGRA EUROPE 1995, p. 22).
An arrangement has been reached between the CEAs and the EU on this issue. They will
revise their bilateral agricultural trade agreements to take into account the EU agricultural
11 The Czech Republic is an exception in this respect. Agricultural protection has declined gradually since the
beginning of the transition process.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 12
policy reform, the North Enlargement and the impact of the GATT Uruguay Round
agreement. It has, for instance, been decided to reduce import tariffs and customs duties on
agricultural imports by 80 %. The maximum tariff reduction had originally been set to 60 %.
In addition, import quotas are to be increased by 5 % annually over the next five years (OECD
1996a, p. 13).
4.2 Design and Content of the Association Agreements
The underutilization of the preference quota can be partly explained with the specific design
of the Association Agreement. Imports under preferences are hampered by several
administrative conditions. Licenses for importing commodities with preference quotas are
distributed by the European Commission to Member States on an equal-share basis. The
annual quota is also spread evenly over all four quarters of the year. In addition, the preferred
country cannot compensate for unfulfilled quotas expected in a later quarter by exporting
more in an earlier quarter of the same year. This essentially means that preference quotas are
not entirely annual quotas, but rather resemble quarterly ones. Hence, the EU will not
suddenly be facing a sudden large volume of cheap imports from CEAs. The fact that
preferential quotas were based on pre-reform export flows, which took place under quite
different economic conditions, as well as the very detailed product specification of the granted
quotas prove to be further impediments to utililizing the preferential allowance.
However, additional reasons can be forwarded why the CEAs have not fulfilled the preference
quota, among them the high likelihood that the preference value does not accrue to traders and
producers in the CEAs. It is very difficult to show whether this is the case, since the
Commission neither surveys nor checks import prices, and customs officers are only
responsible for collecting the correct import tariffs.
In general, distribution of the quota rent between the EU (importer) and the respective CEA
(exporter) very much depends on the
• structure of the preferential agreement;
• access to information about the utilization of the quota;
• market power in the exporting and importing country.
The way the Commission issues the import licenses for the preferential quotas, the lack of
transparency concerning the utilization of quotas, and the distribution of market power all
make it very likely that the preference value will indeed remain with the importing agent.
These three aspects will be discussed below.
As for the issuing of licenses, the Commission delegates this task to the Member States as
already mentioned above. Thus only importers can apply for a license. The procedure adopted
requires the importer interested in obtaining a license to pay a certain deposit, in order to show
his or her sincere interest in importing from the CEAs. The license handed out is valid for a
specific period, depending on the product concerned. If nothing is imported during this time,
the deposit is lost for the importer. This shows that importing using preferential arrangements
can be a rather risky undertaking. The risk was especially pronounced in the first years of the
agreement, since business relations between firms in the EU and the CEAs still had to be
established. There was also little knowledge on the side of EU traders about the supply
capabilities in the CEAs, or about the dependability of export firms in these countries

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 13
(OVERBERG 1996, p. 134). In any case, the cost of importing goods under the preferential
agreement seems to be far from negligible if one considers the risks discussed above, the time
lag between making the deposit and having the imports arrive, and the considerable
bureaucratic costs of applying for a license.
These aspects certainly reduce the overall benefit of the preferences granted and might also be
responsible for the underutilization of the quotas. However, by themselves they would not
necessarily result in the rent accruing to the importing agent. If there was transparency about
the utilization of quotas, and market power existed neither on the supply nor on the demand
side of the trading chain, exporters could negotiate for a price that would secure them at least
part of the quota rent. Thus the distribution of information from the EU to the exporters and
importers is an important issue in determining who is able to capture the preferences.
This is in fact a crucial problem. Statistical data on quota utilization are not issued by the EU.
This shortage of information on the side of the exporters considerably weakens their
negotiating position in comparison with their counterparts on the import side. The exporters
do not know whether the negotiated trade will be carried out under preferential conditions or
not, since they have no information as to whether the importer was successful in obtaining a
license for the preferential trade. This lack of transparency, combined with the fact that
licenses are issued to importers, leads to asymmetric information among importers and
exporters and makes it very likely that the quota rent accrues to the importer.
This problem could be reduced if a private or state trading monopoly existed in the CEAs, an
option, however, which would certainly have considerable negative side effects and therefore
cannot be recommended. Alternatively, an up-to-date, detailed trade information system in the
respective Central and Eastern European Countries would partly compensate for the lack of
information from the EU. However, these conditions do not apply for most CEAs.
5SUMMARY AND RECOMMENDATIONS
Preferential export quotas granted to the CEAs under the Europe Agreements have not been
fully utilized. In many cases underutilization of the total quota has reached 50 %, and in much
of the trade the quotas have not actually been used. At the same time the CEAs' export
performance in the agri-food sector has been rather disappointing, especially in the area of
exports to the EU. This paper has proposed a range of possible reasons for this development.
In this section more general actions to improve the functioning of the Association Agreements
and the export performance of the CEAs are suggested.
Reconsidering Exchange Rate Policies
It was pointed out above that for all CEAs an appreciation of their real exchange rates versus
the German Mark has taken place since the early 90s. Since this effect could hardly be
compensated for by cost-cutting measures, export industries in these countries have found it
increasingly difficult to compete on foreign markets.
Improving Food Quality
To compete on EU markets, imports from the CEAs must be of a similar quality and meet the
same standards as those produced in the EU. It is therefore of great importance to ensure that
CEA exports are of comparable quality. A number of steps need to be considered in this
respect, including setting up organizations which control and issue certificates on product
quality, and others that carry out and oversee grading and classifying. In addition, sanitary and
phytosanitary regulations need to be implemented or tightened. Most of these organizations

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 14
and regulations are in place, but may not be sufficiently aligned with EU standards or with
GATT sanitary and phytosanitary regulations.
Making the Food Industry More Competitive
The discussion in section 3.4 has shown that the food industry in many CEAs is facing serious
structural problems. To regain competitiveness in this industry, the following challenges have
to be met (OECD 1995):
• reduction of overcapacities in a way that future processing capacities are adapted to lower
demand levels;
• increase in labor productivity to at least keep pace with rising labor costs;
• improvement of the co-ordination of purchasing, processing and selling operations, to
ensure the supply of raw materials for processing facilities, but also to guarantee the sale
of the processed products;
• improvement of the distributional network in the areas of transportation, administration
and goods handling;
• investments in improved processing facilities to guarantee not only higher efficiency, but,
even more importantly, to ensure a higher quality of agricultural products. Foreign direct
investments could partly help to bridge the gap in capital availability in the considered
countries;
• investments in advertising.
There is generally a need for a more market-oriented attitude in the food industries of the
CEAs. Competition requires not only production at low costs, but also the willingness to
explore and expand product varieties and to ensure high quality standards.
Improving the Marketing of the CEAs’ Agricultural and Food Products
It would be advisable to create an institution that specializes in improving the marketing of
agricultural and food products. In most - if not all - Western countries, such marketing
agencies exist. In the FRG, this agency, the so-called Centrale Marketing-Gesellschaft der
Deutschen Agrarwirtschaft mbH (CMA), is entirely funded by farmers and wholesalers
through commodity sales.
Changes in Managing the Association Agreements
The importance of ensuring that the preferential margin is passed on to the exporting agent
needs to be understood. It affects not only the money he or she receives, but also the quantity
exported - if the preference quota is not binding12. There are several ways of achieving this.
The most certain one would be to do without quotas. In this case exporters would achieve a
higher export price for the whole quantity exported into the EU (OVERBERG 1996, p. 178).
The problem of asymmetric information between exporters and importers discussed in section
4.2 would no longer be of relevance, and a misallocation of preferential benefits could be
prevented. This alternative would be very likely to even benefit the CEAs if the EU were to
considerably reduce the tariff benefit. Nevertheless, without a further liberalization of EU
agricultural policies, granting unrestrained preferences for sensitive agricultural products such
as milk, beef and sugar is politically not enforceable.
12 TANGERMANN 1993: Estimated the preference value to be about 35 to 40 mill. ECU or 1.15 to 1.32 billion Kc
for the CR in 1995.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 15
Alternative ways of ensuring that the preferential margin is captured by the importers would
be to
• completely bypass EU importing agents and sell directly to customers in the EU. The EU
member states would then co-ordinate the quantities with the Commission. The non-
violation of possibly existing preference quotas would thus be ensured. This procedure was
adopted for the preferential exports of ducks and geese from Poland and Hungary to the EU
in the late 80s (BANSE 1992). Exporters from the CEAs were thus able to sell their products
on EU markets at the going prices and only pay the preferential tariffs. A precedent for this
move has been set by handing over the responsibility of managing quotas for sheep and
mutton to Hungary’s Sheep Council (AGRA EUROPE 1995, p. 18).
• sell the preferential import licenses in an auction. This auction could be administered in the
EU by the Commission itself or another institution, or handed over to the CEAs. The latter
procedure has already been adopted for the preferential exports of mutton from Bulgaria to
the EU, which has so far proven to be quite successful (OVERBERG 1996,
p. 181).
The European Commission seems to have realized that some changes in quota management
are needed to ensure quotas are used more in the future. Thus the Commission has arranged a
series of information seminars to improve the understanding of the quota arrangements among
both exporters in the CEAs and importers in the EU. A review of license management to
establish whether the system can be simplified is also deemed necessary. In addition, it has
been realized that more licenses should be made available to newcomers. Finally, the
Commission is reviewing its phytosanitary and veterinary arrangements under the
Equivalency Agreements with the CEAs. It has been suggested that the CEAs be granted
technical assistance under the PHARE program if weaknesses are discovered in their
veterinary control procedures (AGRA EUROPE 1995, p. 5). Greater flexibility within product
sectors has already been realized.
So far, however, the Commission seems to be very reluctant to change the general procedure
for issuing licenses. Thus it should be investigated whether it would be viable for CEA
exporters to establish an import company inside the EU and also undertake the tasks of an
importing agent with all the advantages and disadvantages implied. Another approach for
preventing the gains from preferential trade from accruing to the CEAs would be to collect
and publish detailed information on exports to the EU and on the EU's minimum prices for
imports. For most products, if not for all, the minimum import price minus transportation
costs is equivalent to the importer's selling price for the product on internal EU markets.
Deducting the preferential tariff and the importing costs, one obtains the amount the importer
can (and should) pay the exporter as long as the quota is not fulfilled.
If the CEAs are, however, successful in capturing the quota rent, they have to ensure that it is
properly passed on to the producers. It can be assumed that the beneficiaries of the rent were
intended to be the producers of any specific commodity included in the preferential
agreement.
Ultimately, these changes in the Association Agreements might also be in the EU's interest.
While the Union may initially appreciate the positive balance in agricultural and food trade
with the CEAs, it may eventually lead to stagnation in the CEAs' agriculture. Inefficient and
non-competitive agricultural sectors in the CEAs will cause a permanent dependency on
budgetary subsidies in the agriculture of these countries, a burden which would upon
integration be borne by EU taxpayers.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 16
REFERENCES
AGRA EUROPE (Ed.) (1995): East Europe Agriculture and Food, various numbers in 1995.
AGRARINFORMATIONSDIENST (Ed.) (1995): Osteuropa, No. 3, p. 15.
BANSE, M. (1992): Abschöpfungssenkung für Entenfleischimporte aus Polen und Ungarn,
Agrarwirtschaft, Vol. 41, p. 16-18.
DEUTSCHE BUNDESBANK (Ed.) (1997): Devisenkursstatistik 1997.
DEUTSCHE BUNDESBANK (1997): Inquiry.
EUROPEAN COMMISSION (Ed.) (1995a): Agricultural Situation and Prospects in Central and Eastern
Europe Countries, Latvia, Brussels.
EUROPEAN COMMISSION (Ed.) (1995b): Agricultural Situation and Prospects in Central and Eastern
Europe Countries, Estonia, Brussels.
EUROPEAN COMMISSION (Ed.) (1995c): Agricultural Situation and Prospects in Central and Eastern
Europe Countries, Summary Report, Brussels.
EUROPEAN COMMISSION (Ed.) (1997): European Economy. The CAP and Enlargement. Agrifood
price development in five associated countries, No. 2, Brussels.
EUROSTAT (Ed.) (various years): EEC External trade, CD-ROM version.
HARTMANN, M., WANDEL, J. (1997): Restructuring Process of the Food Industry in Central and
Eastern Europe: An Analysis using Industrial Organization Theory, In: THE INSTITUTE FOR
AGRICULTURAL ECONOMICS (Ed.), Agriculture in Transition - Where and How Further Away,
Belgrad.
KOLAROVA, M., VICHEVA, C., TSENOVA, T., GEROVA, V. (1994): Why have the Agricultural Import
Quotas under the Europe Agreement not been filled, Agricultural Policy Working Paper, PAU
Project 94.6, Sofia.
OECD (Ed.) (1995): Agricultural Policies, Markets and Trade in the Central and Eastern European
Countries, Selected Independent States, Mongolia and China, Paris.
OECD (Ed.) (1996a): Agricultural Policies, Markets and Trade in Transition Economics, Monitoring
and Evaluation 1996, Paris.
OECD (Ed.) (1996b): Agricultural Policies, Markets and Trade in OECD Countries, Monitoring and
Evaluation 1996, Paris.
OECD (Ed.) (1996c): Review of Agricultural Policies: Estonia, Paris.
OECD (Ed.) (various years): Short-Term Economic Indicators Transition Economies, Paris.
OECD (Ed.) (1997): Unpublished Data, Paris.
OVERBERG, B. (1996): Die Auswirkungen der Europa-Abkommen mit den mitteleuropäischen
Ländern auf den Agrarhandel, Schriftenreihe des Bundesministeriums für Ernährung,
Landwirtschaft und Forsten, Reihe A: Angewandte Wissenschaft, Heft 451, Bonn.
STATISTISCHES BUNDESAMT (Ed.) (various years): Statistisches Jahrbuch für das Ausland 1995 and
1996, Wiesbaden.
TANGERMANN, S. (1993): Some Economic Effects of EC Agricultural Trade Preferences for central
Europe, Journal of Economic Integration, Vol. 8, p. 152-174.
TRACY, M. (Ed.) (1994): East-West European Agricultural Trade. The Impact of Association
Agreements, Agricultural Policy Studies, Kent.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 17
APPENDIX

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 18
Table 1: Value of CEA Trade in Agricultural and Food Products over the Years 1989 to 1996
Country Exports Imports Net Trade
Mio. US$ % Change Mio. US$ % Change Mio. US$
1989 1992 1995 1996 1996/1989 1996/1992 1989 1992 1995 1996 1996/1989 1996/1992 1989 1992 1995 1996
Bulgaria 2364 1011 1119 891 -62 -12 1003 377 393 373 -63 -1 1361 634 726,4 518
Czech
Republic 348 758 1268 1201 245 58 1006 833 1741 1970 96 136 -658 -75 -473 -769
Estonia n.a. 72 300 328 -355 n.a. 38 361 500 -1215 n.a. 34 -61 -172
Hungary 2267 2653 2886 2892 28 9 710 660 1230 1297 83 96 1557 1993 1656 1595
Latvia n.a. 89 216 245 -175 n.a. 60 189 311 -418 n.a. 29 27 -66,5
Lithuania n.a. 146 496 556 -281 n.a. 45 488 577 -1182 n.a. 101 8 -21
Poland 1850 2002 2511 2737 48 37 1402 1952 2978 3955 182 103 448 50 -467 -1218
Romania 527 290 532 677 28 133 367 997 896 758 107 -24 160 -707 -363,8 -81,2
Slovak
Republic 89 304 539 423 375 39 206 203 747 819 298 303 -117 101 -208 -396
Slovenia n.a. 542 430 445 --18 n.a. 690 953 923 -34 n.a. -148 -523 -478
CEA-10 n.a. 7867 10297 10393 -32 n.a. 5855 9975 11482 -78 n.a. 2012 321,6 -1089
Source: Own calculations based on data from OECD (Ed.) (1996a), OECD (Ed.) (1997).

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 19
Table 2: Share of Agriculture and Food Industry in Total Exports and Imports, 1993 to 1996 (in %)
Countries Share in Total Exports Share in Total Imports
1993 1994 1995 1996 % Change in the Share
between 1993 and 1996 1993 1994 1995 1996 % Change in the Share
between 1993 and 1996
Bulgaria 19 23 22 19 -2 10 12 8 8 -28
Czech Republic8775 -41 9987 -23
Estonia 25 22 16 16 -55 15 16 14 16 4
Hungary 22 21 22 22 -2 6788 20
Latvia 17 13 17 17 17 11 11 14 49
Lithuania 7 24 19 18 58 2 10 13 13 82
Poland 12 12 11 11 -5 12 11 10 11 -11
Romania 7679 24 15998 -95
Slovak Republic6665 -22 9997 -18
Slovenia 6655 -16 10 11 10 10 -4
CEA-10 12 12 12 11 -6 10 10 9 9 -7
Source: Own calculations based on data from OECD (Ed.) (1997).

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 20
Table 3: Destination and Origin of CEA Agricultural Trade: Share of Country Groups in Total Value
EU Other OECD CEAs1NIS Other
Exports Imports Exports Imports Exports Imports Exports Imports Exports Imports
Bulgaria 1993 22 44 13 19 12 7 28 4 25 26
1996 22 21 1 15 15 8 40 9 12 47
Czech Republic 1993 33 37 9 11 40 26 11 0 7 26
1996 38 57 3 6 38 16 15 0 6 20
Estonia 1993 18 49 9 28 20 5 44 9 9 9
1996 20 64 3 8 15 12 59 10 2 6
Hungary 1993 45 42 16 16 10 7 20 3 9 32
1996 47 43 6 8 17 5 20 1 10 43
Latvia 1993 9 36 5 12 20 17 65 25 1 10
1996 15 51 0 0 12 27 72 12 1 11
Lithuania 1993 16 4 12 66 2
1996 18 45 4 3 12 17 63 21 4 14
Poland 1993 57 57 14 22 3 3 19 4 7 14
1996 49 70 2 5 6 10 36 6 7 9
Romania 1993 29 45 20 23 8 8 18 1 25 23
1996 22 40 13 15 10 6 18 5 37 35
Slovak Republic 1993 16 24 8 10 57 51 13 1 6 14
1996 17 36 2 4 56 43 19 1 7 17
Slovenia 1993 36 32 6 19 3 11 6 2 49 36
1996 32 47 4 9 3 14 5 2 57 29
CEA-1021993 39 44 13 18 15 13 21 3 12 22
1996 38 55 4 7 16 14 29 5 12 20
1) Includes Poland, Hungary and Czech Republic which became members of OECD in 1996.
2) Weighted with the share of each CEA in total CEA exports and imports. In 1993 data for Lithuania were not available. However, since in 1993 the share of Lithuania
in total CEA exports (imports) was only 2% (1%). the exclusion of Lithuania has hardly any effect on the overall results.
Source: Own calculations based on data from OECD (Ed.) (1997).

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 21
Table 4: Value of CEA Trade in Agricultural and Food Products with the EU (in Mio ECU)
Countries Exports to EU-15 Imports from EU-15 Net Trade with the EU
1992 1993 1994 1995 1996 change 1992 1993 1994 1995 1996 change 1992 1993 1994 1995 1996
(1996/1992)2(1996/1992)2
Bulgaria 172 165 189 217 198 16% 122 209 218 222 145 19% 49 -45 -29 -4 53
Czech. Rep.1267 219 250 280 269 23% 408 414 543 743 832 104% -140 -195 -293 -463 -563
Estonia 8 10 18 27 38 376% 64 80 84 178 219 241% -56 -71 -66 -151 -181
Hungary 754 670 741 872 935 24% 224 332 424 424 363 62% 530 337 317 447 573
Latvia 5 11 9 13 18 296% 68 91 124 194 215 215% -64 -80 -115 -182 -197
Lithuania 22 36 31 46 61 181% 114 157 171 164 209 84% -92 -120 -140 -118 -147
Poland 859 729 791 877 858 0% 898 1.059 1.060 1.226 1.467 63% -39 -330 -269 -349 -609
Romania 74 79 100 121 130 76% 316 312 174 278 293 -7% -242 -233 -74 -157 -163
Slovak. Rep.1267 37 48 60 62 67% 408 108 125 197 213 -48% -140 -71 -77 -137 -150
CEA-10 46 69 68 58 65 41% 68 205 263 359 363 434% -22 -136 -195 -301 -298
CEA-10 2.474 2.025 2.245 2.570 2.635 7% 2.689 2.969 3.187 3.985 4.318 61% -216 -943 -942 -1.415 -1.682
1)Between 1993 and 1996 for the Czech Republic and the Slovak Republic
Source: Own calculations based on data from EUROSTAT.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 22
Table 5: Development of the Nominal Exchange Rate of the CEAs Compared to the German Mark (DM)
Poland Czech
Republic Slovak
Republic Hungary Slovenia Romania Bulgaria Estonia1Latvia Lithuania
ZL/DM CZK/DM SK/DM HUF/DM SIT/DM Lei/DM Lv/DM EEK/DM Lat/DM LT/DM
1990 0,5882 11,08 11,08 39,14 11,3 52,0
1991 0,6383 17,76 17,76 45,03 21,6 297,0 11,30
1992 0,8757 18,14 18,14 50,67 52,4 285,0 14,95 0,51
1993 1,0969 17,64 18,64 55,62 68,7 460,3 16,17 8,0 0,35 2,42
1994 1,4050 17,75 19,51 71,47 79,5 1027,9 44,84 8,0 0,35 2,47
1995 1,6910 18,52 20,74 87,88 82,8 1424,9 49,35 8,0 0,37 2,79
1996 1,7930 18,06 20,38 101,45 90,0 2045,3 116,21 8,0 0,37 2,65
1) In Estonia the nominal exchange rate was fixed to 8 EEK/DM
Source: STATISTISCHES BUNDESAMT (Ed.) (various years), OECD (Ed.) (various years), DEUTSCHE BUNDESBANK (Ed.) (1997), DEUTSCHE BUNDESBANK (1997): Inquiry.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 23
Table 6: Development of the Nominal Exchange Rate of the CEAs Compared to the German Mark (DM)
(where the value is 100, this indicates the base year)
Poland Czech
Republic Slovak
Republic Hungary Slovenia Romania Bulgaria Estonia1Latvia Lithuania
1990 100 100 100 100 100 100
1991 109 160 160 115 191 571 100
1992 149 164 164 130 464 548 132 100
1993 187 159 168 142 608 885 143 100 68 100
1994 239 160 176 183 703 1977 397 100 68 102
1995 288 167 187 225 733 2740 437 100 73 115
1996 305 164 184 259 797 3933 1028 100 73 110
1) Due to lack of data the base year of the nominal exchange rate differs among the countries
Source: STATISTISCHES BUNDESAMT (Ed.) (various years), OECD (Ed.) (various years), DEUTSCHE BUNDESBANK (Ed.) (1997), DEUTSCHE BUNDESBANK (1997): Inquiry.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 24
Table 7: Consumer Price Indices for the CEAs and Germany (where the value is 100, this indicates the base year)
Poland Czech
Republic Slovak
Republic Hungary Slovenia1Romania Bulgaria1Estonia1Latvia1Lithuania1Germany
1990 100 100 100 100 100 100 100
1991 170 152 158 135 218 275 100 104
1992 244 169 174 166 656 853 191 100 108
1993 330 203 214 203 868 3331 331 100 256 100 112
1994 436 223 243 242 1041 7888 649 142 348 172 115
1995 599 243 272 310 1196 9521 985 191 435 241 118
1996 719 259 383 1312 14938 2335 234 512 300 121
Source: STATISTISCHES BUNDESAMT (Ed.) (various years), OECD (Ed.) (various years), DEUTSCHE BUNDESBANK (Ed.) (1997), DEUTSCHE BUNDESBANK (1997): Inquiry.

Frohberg/Hartmann: Promoting CEA Agricultural Exports through Association Agreements with the EU 25
Table 8: Development of the Real Exchange Rates for the CEECs Compared to the German Mark (DM)
(where the value is 100, this indicates the base year)1
Poland Czech
Republic Slovak
Republic Hungary Slovenia Romania Bulgaria1Estonia1Latvia1Lithuania1
1990 100 100 100 100 100 100
1991 66 109 105 88 91 215 100
1992 66 104 101 84 76 69 72 100
1993 63 88 88 78 79 30 47 100 27 100
1994 63 83 84 87 78 29 68 73 20 61
1995 56 81 81 85 72 34 50 55 17 50
1996 51 86 82 73 32 51 46 14 39
1) Due to lack of data the base year of the nominal exchange rate differs among the countries
Source: STATISTISCHES BUNDESAMT (Ed.) (various years), OECD (Ed.) (various years), DEUTSCHE BUNDESBANK (Ed.) (1997), DEUTSCHE BUNDESBANK (1997): Inquiry.

DISCUSSION PAPERS
DES INSTITUTS FÜR AGRARENTWICKLUNG
IN MITTEL- UND OSTEUROPA (IAMO)
DISCUSSION PAPERS
OF THE INSTITUTE OF AGRICULTURAL DEVELOPMENT
IN CENTRAL AND EASTERN EUROPE (IAMO)
No. 1 FROHBERG, K., HARTMANN, M. (1997):
Promoting CEA Agricultural Exports through Association Agreements with the
EU - Why is it not working?
No. 2 FROHBERG, K., HARTMANN, M. (1997):
Comparing Measures of Competitiveness: Examples for Agriculture in the Central
European Associates
No. 3 POGANIETZ, W.R., GLAUCH, L. (1997):
Migration durch EU-Integration? Folgen für den ländlichen Raum
No. 4 WEINGARTEN, P. (1997):
Agri-Environmental Policy in Germany - Soil and Water Conservation -
No. 5 KOPSIDIS, M. (1997):
Marktintegration und landwirtschaftliche Entwicklung: Lehren aus der
Wirtschaftsgeschichte und Entwicklungsökonomie für den russischen
Getreidemarkt im Transformationsprozeß
No. 6 PIENIADZ, A. (1997):
Der Transformationsprozeß in der polnischen Ernährungsindustrie von 1989 bis
1995
No. 7 POGANIETZ, W.R. (1997):
Vermindern Transferzahlungen den Konflikt zwischen Gewinnern und Verlierern
in einer sich transformierenden Volkswirtschaft?
No. 8 EPSTEIN, D.B., SIEMER, J. (1998):
Difficulties in the Privatization and Reorganization of the Agricultural Enterprises
in Russia
No. 9 GIRGZDIENE,V., HARTMANN, M., KUODYS, A., RUDOLPH, D., VAIKUTIS, V.,
WANDEL, J. (1998):
Restructuring The Lithuanian Food Industry: Problems and Perspectives
No. 10 JASJKO, D., HARTMANN, M., KOPSIDIS, M., MIGLAVS, A., WANDEL, J. (1998):
Restructuring The Latvian Food Industry: Problems and Perspectives

Die Discussion Papers sind erhältlich beim Institut für Agrarentwicklung in Mittel- und Ost-
europa (IAMO).
The Discussion Papers can be ordered from the Institute of Agricultural Development in
Central and Eastern Europe (IAMO).