The impacts of an EU enlargement to include the seven Central and Eastern European Countries (CEEC-7: Hungary, Poland Slovenia, the Czech and Slovak Republics, Bulgaria and Romania) are analysed using a modified version of the multi-region applied general equilibrium GTAP (Global Trade Analysis Project) Model. Based on post-Uruguay Round (UR) protection levels for non-agriculture and the latest protection estimates of the European Commission for agriculture, four different integration scenarios are conducted. Overall, the experiments show that economic integration would result in very substantial increases of both crop and livestock production in the CEEC-7. However, if the rate of direct producer subsidies in the CEEC-7 is held at current levels, the net budgetary consequences of integration for agricultural expenditure will be quite modest. Economic integration of CEEC-7 will cause regional welfare to rise by about 3.4 billion ECU per year in the CEEC-7 and 0.9 billion ECU per year in the EU, whereas the welfare gain will be much smaller if agriculture is omitted from the integration agreement. If accompanied by CAP reform, integration will not only allow the CEEC-7 allocative efficiency to improve, but will also reduce agricultural expenditures of the EU budget and reverse the adverse effects of CEEC-7 integration on the poorest countries of the world.
