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3 - The customs union and the diversion of trade

Published online by Cambridge University Press:  05 September 2012

Larry Neal
Affiliation:
University of Illinois, Urbana-Champaign
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Summary

The most important aspect of the enlargement of the European Union in 2004 is the expanded market for trade among the member countries that has been created. Further, trade will not be limited to just coal and steel, or manufactured goods, or agricultural goods, as was the case in the European Union as it gradually opened up trading opportunities within western Europe over the decades following the end of World War II. After a reasonably short transition period of adjustment, ranging from five to seven years, depending upon the country and the policy issue, all ten accession countries will be open to, and have opened to them, trade not only in goods but in services, of labor, and of capital, all regardless of nationality. That is the consequence of agreeing to take on the entire acquis communautaire of the European Union that has gradually accreted over the past half-century. The economic consequences for the original members and the subsequent entrants have been enormously beneficial; the central and eastern European countries hope that, by leapfrogging over the intermediate stages of institutional adjustments that their western neighbors labored through, they can achieve comparable economic prosperity in a much shorter time. In response to this prospect, the accession countries have already made dramatic structural changes within their economies, expecting that by imitating the economic practices of the western EU countries they will generate rapid economic progress for themselves and their citizens.

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Publisher: Cambridge University Press
Print publication year: 2007

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