| The Vienna Institute for International Economic Studies - WIIW |
ABSTRACT
After four decades of quasi-isolation from the mainstream world economy, the Central and East European countries quickly reoriented their external economic relations towards the West, primarily towards the countries of the European Union. The Europe Agreements established the framework for comprehensive economic cooperation between the CEECs and the EU, based on the gradual introduction of free trade in industrial products, concessions in trade in agricultural products, partial liberalization of services trade, and detailed regulation of several other important issues of economic cooperation. The conclusion of a free trade agreement between Czechoslovakia, Hungary and Poland (CEFTA) in December 1992 was possible only one year after the Europe Agreements had been signed. Although in some important respects the CEFTA Document follows the structure of the Europe Agreements, all in all it is much less ambitious than those concerning the targets and means of cooperation with the European Union.
After the collapse of the CMEA, mutual trade of the later CEFTA members dropped to a historical low in 1991/92. With CEFTA in force and the beginning recovery from the transitional recession, intra-CEFTA trade was expanding quickly and by 1995/96 its share in total trade of the members approached or surpassed the immediate pre-transition level. Even so, this share is still rather low, in the range of 5% to 10% of total trade. Before the transition, under the protective umbrella of the CMEA, machinery and transport equipment was the most important commodity group in mutual trade of the later CEFTA members with a share of over 50%; its share in exports to the EU amounted to a mere 14%. By the mid-1990s the commodity group machinery and transport equipment had lost its eminent position and its share in intra-CEFTA trade dropped to far below 20%, while its share in exports to the EU increased to over 20%.
Keywords: CEFTA; Europe Agreements; regional integration; free trade; Central and Eastern Europe; East-West economic relations; trade patterns; EU eastern enlargement
JEL Classification: F15