New protectionism in Central Europe. Exchange rate adjustment, customs tariffs and non-tariff measures.

Many of the 10 Central European candidate member countries for EU accession entered into the transition period with strongly undervalued exchange rates to stimulate exports and protect domestic industries. However, this policy was not maintained. During 1993-1995 real currency appreciation increased competitive pressure by foreign firms. To protect domestic firms governments applied high third country tariffs, temporary import taxes, and numerous administrative barriers to trade. As countervailing pressure by the EU and the USA increased and current account deficits soared in 1996 and 1997, the CE-10 more and more brought exchange rate policies in line with the changes in purchasing power parity. However, petty protection and harassment of importers prevails. (author's abstract)