1) The document discusses exporting into the European Union from a governmental perspective, focusing on EU commercial regulations regarding food safety, presentation, labeling, and quotas. 2) It analyzes the wine export situation of small, agriculture-based countries like Romania, Bulgaria, and Hungary in relation to EU quotas over the period of 1995-2004. 3) The use of quotas by the EU is debated, with arguments on both sides as to whether it represents justified protectionism or unnecessary restriction of trade.

1. Exporting into European Union – A Governmental
Approach
Dr. ec. Genoveva PERJU
Technical University, Iasi, Romania
and
Zentrum für Europäische Integrationsforschung, Bonn, Germany
ICBE, 27 October 2006

2. • European Union
– Trading block
– EU commercial regulations:
» Ex. food safety (GMO), presentation and labeling , quotas
• Source: World Bank, 2006
Trading
Trading
Across
Across
Borders
Borders
Ease of Doing
Ease of Doing
Business
Business
Country Year Rank Rank
Country Year Rank Rank
United 2006 3 11
Finland 2006 14 2
States
Denmark 2006 7 3
Canada 2006 4 8
Norway 2006 9 5
United 2006 6 14
Estonia 2006 17 6 Kingd
om
Germany 2006 21 7
Denmark 2006 7 3
Canada 2006 4 8
Australia 2006 8 23
Sweden 2006 13 9
Norway 2006 9 5
United 2006 3 11
States Ireland 2006 10 30
United 2006 6 14 Japan 2006 11 19
Kingd
Sweden 2006 13 9
om
Finland 2006 14 2
Netherland 2006 22 16
s Switzerland 2006 15 49
Japan 2006 11 19 Lithuania 2006 16 32
Australia 2006 8 23 Estonia 2006 17 6

3. • Small countries
– Mainly food producers, consumers and exporters
– Agricultural based
– Weak bargaining power within WTO
– Facing protectionism in trade from main agricultural trader and strong
bargaining power of EU
• Finland – highest degree of openness
» Health control of products of animal origin for human
consumption
» Import license for agricultural products
(Only required for more than 150 kg net or more than 30hl)
» Presentation and labelling of wine and certain wine products
» Labelling for foodstuffs
Export to European Union Helpdesk
• Wine
• Milk
• Enlargement – increasing market size

4. Country Production (average 1997-2000)
1 France 56077
2 Italy 53289
3 Spain 34952
4 United States 22049
5 Argentina 13649
6 Germany 10326
7 South Africa 7684
8 Australia 7541
9 Portugal 6107
10 Romania 5800
11 Chile 5376
12 Hungary 4111
13 Greece 3763
14 Brazil 3070
15 Bulgaria 2630
16 Yugoslavia 2628
17 Russia 2505
18 Austria 2412
19 Moldova 2164
20 Croatia 2131

5. • Why does European Union makes use of quotas for wine trade?
Wine consumption
Wine production
200 140
180 120
160
140
100
Thousend
Thousend
120 80
hl
100
hl
60
80
60 40
40 20
20
0
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
97
99
03
04
95
96
98
00
01
02
19
19
19
19
19
20
20
20
20
20
Time
Time
Romania Bulgaria Hungary European Union
Romania Bulgaria Hungary European Union
• Is it a justified protectionism from EU?

6. y1 ( p1 ) = α1 + β p1 d ( p)1 = A − B p1
y 1* ( p 1* ) = λ ( α 1* + β p 1* ) d ( p 1* ) = λ ( A − B p 1* )
Wine production
200
180
160
140
Thousend
120
100
hl
80
60
40
20
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Time
Romania Bulgaria Hungary European Union

7. • Olivier Cadot, Jaime de Melo and Marcelo Olarreaga (2002)
E ( p ,W ) = R ( p , l) + b ∑ ( p k − 1)q
m a x V = ∑ C k (q k ) + a W s.t k
q k
m k(pk) = qk
∂V y k − a (1 − b ) q k ′
= + ab(p − 1)
∂q k ′ k
m k
• Eric W. Bond and Jee-Hyeong Park (2000)
d ( p)1 = A − B p1 y 1* ( p 1* ) = λ ( α 1* + β p 1* )
• Small country Big country
y1 ( p 1 ) = α 1 + βp 1 d ( p 1* ) = λ ( A − B p 1* )
• The cooperative game:
Common objective function has the efficiency propriety (Grossman and
Helpman‘s ,1995)
a *G + a G *
a *G (q ,q * ) + a G * (q ,q * ) = a *
∑ C k (q ,q *) + a ∑ C k* ( q , q * ) + a * a [ W ( q , q * ) + W *
(q ,q *)]

8. The cooperative quota:
• q- exports
• q*-imports
1 1 1 1 b λ +1 λ +1 * 1 b *
qc = − y+ * y+ ( pk − p w ) + ( p − pw ) − q
a 1− b a 1− b 1− b λ λ λ 1− b
1− b  1 1 1 1 λ +1 b λ +1 * 
qc = λ
*
− y+ * y+ ( p − pw ) + ( p − pw ) − q 
b  a 1− b
 a 1− b λ 1− b λ 
qc < q *
c , the negotiated quota is not restrictive for trade

9. Variance of the EU import quota over the period 1995-2004
1.8
1.6 2.5
1.4 2
1.2
1 BULGARIA Exports 1.5
Exports
HUNGARY Expor
Exports
0.8 BULGARIA Quota
0.6 1 HUNGARY Quota
0.4
0.5
0.2
0 0
00
95
96
97
98
99
01
02
03
04
95
96
97
98
99
00
01
02
03
04
19
19
19
19
19
20
20
20
20
20
19
19
19
19
19
20
20
20
20
20
7
6
5
4 ROMANIA Exports
Exports
3 ROMANIA Quota
2
1
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

10. END