Economic assessment of EU enlargement: Western Balkans and the Enlargement Trio (Ukraine, Moldova and Georgia)

The study
At the request of the Dutch Ministry of Economic Affairs, SEO Amsterdam Economics conducted an economic impact assessment of the accession of nine candidate countries to the EU single market. This concerns the Western Balkan countries (Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, Serbia) and the ‘Enlargement Trio’ (Ukraine, Moldova and Georgia). The report focuses primarily on the impact on trade relations and competition, but also considers broader policy implications such as the expected effects on labour migration. Specifically, the analysis examined the extent to which the candidate economies are complementary to the current EU single market and to the Dutch economy, which sectors may face new opportunities or increased competition, and what policies could help ensure a level playing field. Possible shifts in the allocation of labour and capital were also assessed. 

Method
SEO estimated the effects of accession using our own gravity model of international trade. In addition, we carried out a qualitative assessment of the potential implications for factors of production and value chains. The analysis was complemented by trade data, information on tariff and non-tariff measures, and insights from interviews with relevant stakeholders. 

Findings
The trade relations of the Netherlands with the candidate countries are limited and largely dominated by Ukraine and Serbia. In 2023, total Dutch trade with the candidates amounted to €6.2 billion, just 0.4 percent of total Dutch trade. Existing trade barriers are already minimal: applied tariffs are very low and most non-tariff measures will largely disappear upon EU accession, provided that implementation and enforcement are effective. Existing trade patterns suggest complementary comparative advantages, with opportunities in the agri-food sector (notably for Ukraine, Moldova and Georgia) and limited competitive pressure in sectors such as textiles, wood and mineral products. 

Model estimates indicate that the accession of all nine countries would generate small but positive welfare effects for the Dutch economy and the EU, but these generally do not exceed 0.01 percent of real GDP. These gains are driven almost entirely by the agricultural sector, where the trade gains for the Netherlands are estimated at around 0.1 percent of agricultural real GDP. Given the modest size of this sector in the Dutch economy, the aggregate GDP effect remains limited. For the candidate countries themselves, however, the welfare gains are substantially larger, with increases of up to 1.7 percent of GDP. Historical data and the experiences of other countries suggest that the expected impact on future labour migration to the Netherlands will be limited.