Is there any potential in trade in sensitive industrial products between the CEECs and the EU?

In this paper we seek to evaluate the potential for trade in sensitive products between the EU and the CEECs and identify which countries within Europe are likely to face the greatest competition in such sectors. It turns out that the case for expecting a surge in imports of sensitive products is extrmely weak. Later, in Section 3, we show that the statistical properties of the empirical models which have been used to generate such a prediction are very poor and small changes in key assumptions remove any discrepancy between actual flows of sensitive products and potential flows generated by the model. Firstly, in the next section, we assess the potential for trade in sensitive products on the basis of analysis of apparent comparative advantages in the CEECs, which also provides little reason to expect a surge in imports from the CEECs. Finally, in Section 4, we show that the competition in sensitive sectors provided by exports from individual CEECs, appears to be most important for other CEECs rather than existing members of the EU. Thus, the effect on trade of the next enlargement of the EU, if limited to a group of countries in Central and Eastern Europe, will be of greatest importance for those CEECs not included in the first wave of accession, rather than for the poorer members of the current EU. Section 5 provides some concluding comments.