A Global Baltic: Potential Gains from Trade Liberalisation in the Baltic Sea States

Though the Baltic Sea countries have displayed substantial reform-facilitated growth and trading activity over the last decade, significant trade barriers still exist. We analyse their implications, using a CGE-model. Besides the "usual suspects" (tariffs, subsidies, and service barriers) and trade facilitation, we address non-tariff-measures (NTM) in a separate scenario. We find that reforms would substantially boost national income and trade, especially for the group of emerging economies. Income gains are primarily due to elimination of dead-weight losses caused by rules and regulations and improved resource allocation. Jointly, the simulations indicate a move towards services and industrial production and exports.