Differentiation as a Precondition for Efficient EU Enlargement the Case of Slovenia

This paper's aim is an assessment of economic effects of Slovenia's accession to the EU in the field of agriculture and a discussion about some key dilemmas about the introduction of CAP in the new member states. For the purpose of assessing economic effects, a new sectoral model of Slovenian agriculture APAS-PAM has been compiled which allows assessment of market and income effects for ten key agricultural products with regard to various accession scenarios. The accession under the scenario of equal treatment of new member states would bring significant improvements in the aggregate income levels. On the other hand, discrimination of the candidate countries in the field of direct payments ("phasing in" process) would result in a fall of aggregate income level by an eighth. Moreover, noncompetitive production structures in the food-processing sector would deteriorate the economic situation of agricultural production by up to further 40 %. The positive effects of different accession scenarios are expected in the sugar beet and - under assumption of eligibility for direct payments - also in coarse grains, beef and sheep meat production. The economic situation in milk production is not expected to change significantly. The negative accession effects can be expected in pigmeat, cereal, egg and, potentially, poultry production. The results reveal a great significance of the equal treatment and differentiation approach to negotiation process for the preservation of the economic situation of Slovenian agriculture after accession. This holds especially for cereal, beef and sheep meat production.