EU enlargement and environmental policy

action due to the so-called “carbon leakage effect”. Carbon leakage is defined as the ratio of
the total increase in carbon emissions of the non Annex-B countries to total emissions
abatement by Annex-B countries. Following Rutherford (1995) there are three basic channels,
through which carbon leakage may occur. Firstly, the carbon leakage may arise when in the
abating countries the energy intensive industries lose their competitiveness and production
relocates the emissions in non-abating countries. Secondly, the decrease in energy demand in
large regions due to carbon mitigation policies induce a drop in the world energy prices,
which lead to an increase in demand in the other regions. Thirdly, carbon leakage may be
induced through changes in national income due to the changes of terms of trade. Estimates
for the carbon leakage rate range from about 5 to 35 per cent (EMF 1999).

3. Trade liberalization between CEEC and the EU

According to the decision of the European summit in Copenhagen 1993, the CEEC
may enter the EU as soon as they express their concern about the membership and fulfill the
conditions known as the Copenhagen criteria. These require the democratic organization of
the state justice, the existence of a market economy and the complete adoption of the EU
acquis communtaire. The consideration of the economic development of the transition
countries as well as its environmental implications represents a major challenge since several
features of the transition process have to be kept in mind: (i) the sharp decrease of the
domestic production and exports during the beginning of the reform followed by a slow
growth, (ii) obsolete production capacities with low capital and labor productivity and energy
efficiency, (iii) distorted price systems especially in the energy and agricultural sector due to
the remaining subsidies (Klarer and Moldan 1997).

Most of the CEECs have decided to implement a „shock therapy“ (World Bank 1991
and 1999), the fast economic adjustment to the market. Siebert (1991) considers as main parts
of the reform process macroeconomic stabilization, real microeconomic adjustment and
creation of institutional frameworks. We focus here on the microeconomic adjustment,
especially on the issues concerning the liberalization of trade. The objective of a further
extension of the common market in Europe is the expected increase of welfare through the
reduction of existing structural imperfections, immersion of efficiency gains through
toughened competition and particularly the exploitation of economies of scale. Since 1993 the
gradual reduction of tariffs and quantitative trade barriers between the EU and the CEEC has

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