The Impact Of EU Eastern Enlargement On Zhejiang's Export To It: Theoretical Study And Empirical Analyse

In 2004 May 1~st, ten countries like Poland entered European Union, which was the largest enlargment of EU. After that, EU has becoming the greatest market in the world, meanwhile, being the largest trade partner of Zhejiang Province of China. This paper analyzed the effect of the Eastern Enlargement to Zhejiang's export to EU, from the aspect of trade effect and policy effect.This paper discussed from five parts. Firstly, this article analyzed the trade structure of Zhejiang and EU, finding that complementary action of Zhejiang and EU's 15 countries is quiet large, while Zhejiang is competitive with the New Ten Countries(NTC) ,Zhejiang may face the challenge from the NTC after the Eastern Enlargement. However, for the trade relationship between Zhejiang and EU 15 countries is more intensive than that between Zhejiang and NTC, EU will still be inclined to import from Zhejiang in spite of the competition. Secondly, the article studied the trade creation and trade diversion since from the foundation of EU, which was always obvious, according to this, conclusion can be made that trade creation and trade diversion of the Eastern Enlargement will be quite remarkble. Thirdly, the paper used Trade Gravity Model to measure the degree of trade diversion effect to trade between Zhejiang and EU. The conclusion is that the effect is not very obvious, which is the most notable in the very year of enlargement, however, it will weaken when time is passing. Fourthly, the paper analyzed the effect of duty reduction, change in trade remedy policy and adjustment of Generalized System of Preferences to Zhejiang's export. Finally, conclusion is made that the postive facts and negative facts of Eastern Enlargement can be counteracted mostly, the export of Zhejiang province to EU can develop in a steady way.