members of the enlarged EU will have to face a more expensive Union with a clear fiscal
implication.
Piazolo (2000) considers the welfare effects of Poland’s integration into the EU. The
economic effects of the EU membership contain the overall abolishment of tariff barriers
between the EU and Poland and the adoption of common external tariffs. The study includes
also the implementation of the single market, which will decrease the real trade costs through
the abolition of custom and fiscal controls and the harmonization of standards. The results of
the simulations are mainly in line with the two previous models and show an increase in
welfare in all scenarios. Other studies focus e.g. on the specifics of the common agriculture
policy and fiscal issues (Frandsen and Jensen 2001).
The economic impacts of different trade and environmental policies in the process of
the EU enlargement are analyzed in this section. We extend this estimates of the effects of the
EU enlargement through the inclusion of alternative environmental policies and run three
environmental policy scenarios under two different patterns of trade. We simulate a
completely liberalized trade between EU vis-a-vis CEEC, where all trade barriers are set
equal to zero. The three different scenarios of environmental policy are distinguished by the
different degree of flexibility that is allowed in reaching the Kyoto commitments:
[DOMESTIC] Each country applies only domestic measures (e.g. a carbon tax) to comply
with their commitments in the Kyoto Protocol. There is no international trade
in carbon permits.
[ANNEX] The Annex-B countries are allowed to trade with their carbon allowances.
[GLOBAL] All regional restrictions on trade with carbon permits are relaxed and all
countries may participate in carbon trade.
Those three scenarios are considered within two different patterns of international trade
between EU and CEEC, while the trade conditions vis-a-vis third countries remain
unchanged:
[NO-LIB] No trade liberalization between EU and CEEC takes place.
[LIB] EU and CEEC liberalize trade vis-a-vis. Tariff trade barriers between EU and
CEEC are abolished.
17
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