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Abstract
Croatia joined the European Union (EU) on July 1st, 2013. This paper
assesses the likely effects of this accession on the agricultural and food sectors,
and analyses the impact on the EU, Croatia and their main trading partners. It
considers both the harmonization of Croatia's trade instruments with those
applied in the EU, and the adoption of the Common Agricultural Policy (CAP).
The analysis is carried out using MAGNET, a global recursive dynamic CGE
model. Results show that Croatia slightly benefits from its accession to the EU
with an increase in GDP, whereas the impact on the EU-27's GDP is
insignificant. Total exports of Croatian agricultural products increase by 7.4%
and those of food products decrease by 2%. Croatia will face some changes in its
production structure. At constant prices, agricultural production benefits
(increasing by 1.1%), whereas food production contracts (decreasing by 5.5%).
This result sheds some light on competitiveness limitations of the Croatian food
processing industry. The scope of this paper is to model both European trade and agricultural policies. It is worth mentioning that other EU policies such as the
structural or cohesion policies, and additional gains resulting from the accession
such as a less risky investment environment or a more efficient regulatory
framework, are not modelled.