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Estonia’s accession to the European Union: implications for the agricultural sector

Author : Eurocollege at the Tartu University

Heili Riik, Rena Selliov, Kristina Toming

The European Union (EU) is getting ready for an eastern enlargement. The negotiations on agriculture, in this process, are creating serious dissension between the Central and Eastern European countries (CEECs) and the European Union, as agriculture is a strategic field for both sides. The difficulties of the accession negotiations reveal the differences between the agricultural policies of the CEECs and the Common Agricultural Policy (CAP) of the EU. The agricultural policies of the CEECs themselves differ considerably – in some countries
the government intervenes actively in the agricultural market (Slovenia, Poland), while others’ agricultural policy is very liberal (Estonia, Hungary, the Czech Republic). At the same time, almost all developed countries have a high protection level of their agricultural markets. The European Union with the CAP is one of the most extreme cases, being highly protective of its agricultural producers. Although the work of the WTO (and the rounds of the GATT) has enforced the EU to somewhat reduce the subsidies to and protection of its agricultural sector over the last decades, agriculture still remains the most heavily
protected and regulated sector.

Agriculture is also one of the main issues related to Estonia’s accession to the EU. European Union membership will lead to a substantial change in the support and regulatory system within which Estonian agriculture is presently operating, as the principles of the CAP will also apply to the new Member States. Much research has been done on how the adoption of the CAP would impact on the agricultural sector of the CEECs. Quite many papers have dealt with the effect on Estonian agriculture as well. One of the first contributions was made by Fock (1999), closely followed by Toming (2000). The former focused on the impact
of accession to the CAP on consumer expenditures in Estonia, the latter on the overall changes in trade policy due to the EU accession. Varblane et al (2001) has analysed how rising agricultural prices in Estonia would affect the Estonian food market. Several other studies have concentrated on the agricultural issues of integration (e.g. Roth 2001; Varblane and Toming 2001; Riik and Selliov 2001). One of the most important contributions is the analysis of the price effects of Estonia’s agricultural accession to the EU (Varblane et al, 2002). Reiljan and Kulu (2002) have analysed the development and competitiveness of Estonian agriculture prior to joining the EU. Recently, Toming (2002) contributed a paper
about the influence of Estonia’s accession to the EU on agricultural imports and
economic welfare. Also the influence of Estonia’s accession to the EU on the Estonian food products’ market (Selliov 2002), and more specifically, on the Estonian dairy products’ market (Tamm 2002) have been analysed.

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