Trends in external trade of the new member countries after three years of membership with special reference to their intra-trade

Inotai, András (2007) Trends in external trade of the new member countries after three years of membership with special reference to their intra-trade. Hungarian Statistical Review, 84 (SN10). pp. 43-74. ISSN 0039-0690

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Abstract

The first three years of membership in the EU have had substantial impact on the trade of the new member countries (NMS) in general, and on that of Hungary, in particular. Trade creation, an obvious tendency from the early 1990s on, has stopped in NMS exports to the EU 15. Even more, EU 15 share started to diminish substantially, between 2.2 and over 20 percentage points. In turn, EU 15 share in total imports reveals a more controversial picture of trade creation and trade-diversion effects. By far the biggest change is represented by the dramatic increase of intra-NMS trade. Its volume more than doubled from less than EUR50 billion in 2003 to almost EUR 100 billion in 2006. Thus, intra-NMS trade flows did not only become the most dynamic factor of EU 25 trade but they played a fundamental role in replacing previous commodity flows to, and partly from, the EU 15. Hungary’s exports and imports from the EU 25 grew slower than those of other NMS but much quicker than the EU 25 average. Two important new trends have to be highlighted. First, Hungary’s intra-NMS-trade has been characterised by a strong increase of the share of NMS in total exports (from 7.5 to 13 percent in a four-year period). Second, and not less importantly, Hungary’s traditional trade deficit with the NMS turned into a remarkable and sustainable surplus and contributed by EUR 1.7 billion to the improvement of the country’s overall trade balance. This figure points to sustained competitiveness. It is the task of forthcoming studies to shed light on the main factors that had been driving exports and fostered competitiveness in intra- NMS-trade.

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