Valentin COJANU

The Integration Game: Strategic Interaction

in the Process of the EU Enlargement
 Redactor:
Coperta: Adriana POPESCU

Tehnoredactare computerizată: Luminiţa DRAGOMIR

Descrierea CIP a Bibliotecii Naţionale a României

COJANU, VALENTIN
The Integration Game: Strategic Interaction in the Process
of the EU Enlargement
/ Valentin Cojanu -
Bucureşti:
ISBN 973-
 Valentin COJANU

The Integration Game: Strategic Interaction

in the Process of the EU Enlargement
 ISBN 973-

Copyright  Editura AGER – Economistul, 2004

Autorul poartă întreaga răspundere morală, legală şi materială,

faţă de editură şi terţe persoane, pentru conţinutul lucrării.
 To my wife Aura,
for her generosity, so lovely shared
 CONTENTS

List of Tables...................................................................................
List of Figures.................................................................................
Foreword.........................................................................................
Acknowledgments...........................................................................
Abstract...........................................................................................
I. Introduction.................................................................................
II. Problem statement.....................................................................
A. Rationale for the research........................................................
B. Research questions and objectives..........................................
C. Scope and limitations of the study...........................................
D. Definition of terms..................................................................
III. Review of the Literature.........................................................
A. Overview.................................................................................
B. Discussion ..............................................................................
1. Objectives of integrating countries: Theoretical
perspective.........................................................................
2. Objectives of integrating countries: Empirical
 arguments...........................................................................
3. Constraints..........................................................................
4. Preferences and strategic structures ...................................
5. Summary ............................................................................
IV. Research methodology ............................................................
A. Background on Community decisional mechanism................
B. Situational variables and constraints........................................
1. The international level of dependence................................
2. The national level of independence.....................................
3. The issue area of interdependence .....................................
C. Instrumentation .......................................................................
D. Data collection .......................................................................
E. Data analysis .........................................................................
V. Bargaining power: resources and constraints..........................
A. The agriculture dossier ...........................................................
B. Bargaining position of the European Union ...........................
1. Uncontrollable sources........................................................
2. Controllable in the long-run (CLR) sources........................
3. Controllable in the short-run (CSR) sources........................
C. Bargaining position of Poland.................................................
1. Uncontrollable sources........................................................
2. Controllable in the long-run (CLR) sources........................
3. Controllable in the short-run (CSR) sources........................
D. Bargaining position of Romania..............................................
1. Uncontrollable sources........................................................
2. Controllable in the long-run (CLR) sources........................
3. Controllable in the short-run (CSR) sources........................
E. Summary.................................................................................
VI. Formulation and solutions of strategic negotiations..............
A. Assessment of issue bargaining power....................................
1. Enacted power for EU.........................................................
2. Enacted power for Poland...................................................
3. Enacted power for Romania................................................
4. Summary.............................................................................
B. Assessment of general power and institutional stability..........
1. A qualified view on general power......................................
2. Institutional stability............................................................
C. Outcomes of negotiations........................................................
 1. The EU-Poland strategic game............................................
2. The EU-Romania strategic game.........................................
3. Discussion...........................................................................
D. Anticipation of objections.......................................................
1. Objections on methodology.................................................
2. Objections on analysis.........................................................
VII. Conclusions..............................................................................
Bibliography....................................................................................
Appendix A......................................................................................
Appendix B......................................................................................
Appendix C......................................................................................
Appendix D......................................................................................
Index................................................................................................

List of Tables

Table 1. A comparative view of the non-traditional gains from

integration...........................................................................
Table 2. Estimations of relative decisional power within the
enlarged EU Council...........................................................
Table 3. Estimates of indices of institutional stability.......................
Table 4. Negotiating agenda of the EU-Poland game.......................
Table 5. Negotiating agenda of the EU-Romania game....................
Table 6. Overall view on the possible outcomes when the EU
plays PD.............................................................................
Table 7. Estimations of payoffs with Agricultural Trade
Policy Simulation Model (ATPSM)...................................
Table 8. Overall view on the possible outcomes when the EU plays
'issue weak'.........................................................................

List of Figures

Figure 1. Theoretical model of bargaining power in strategic

negotiations......................................................................
Figure 2. A generic game of strategic interaction.............................
Figure 3. Deduced constrained preference order from Row’s
perspective........................................................................
Figure 4. Deduced symmetric ordinal games....................................
Figure 5. The EU-Poland strategic game: Representation.................
Figure 6. The EU-Poland strategic game: Solutions.........................
Figure 7. The EU-Romania strategic game: Representation.............
Figure 8. The EU-Romania strategic game: Solution........................
Figure 9. Simulation of multilateral strategic negotiations in
agricultural trade with cardinal payoffs............................
Figure 10. Simulation of multilateral strategic negotiations in
agricultural trade with ordinal payoffs..............................

FOREWORD

T he Romanian economic literature needs realism, in-depth

analytical treatment, and genuine, distinctive approach on
behalf of the researchers with intellectual zest for multi-
disciplinary study. It is for this reason extremely promising to see a
new generation of economists who stand out on grounds of both
solid methodological design and insightful alternatives to the
established body of economic knowledge.

The study on The Integration Game anchors well in the

parameters of an economic analysis of such a caliber, by a
courageous handling of factual issues, conflicting arguments, and
demanding dilemmas in a field of research, which apparently has
little new to discover. The investigation begins with a survey of
game-theoretical contributions with application to international
economics and, particularly, international trade, just to make
clearer the point that the analysis of games of strategy is
particularly suited to offer perceptive venues for research on the
topic of integration. The author's choice is for the subject of
negotiations in the process of the EU enlargement, which
conveniently fits a twofold objective of investigation: to adapt
established models of analysis to the practical needs of
understanding the benefits a country may reasonably expect to
derive from negotiations.

An elaborated and thoroughly searched section on the

literature sheds light on those key contributions, which could
enrich the practical meaning of strategic negotiations in the context
of integration. The reader is thus invited to extend its intellectual
journey beyond the informational-rich text and actively take part in
the debate. The lead topic evolves around the strategy dimension.
It is in this key that investigative questions are proposed and
hypotheses formulated to design an arguably perfectible research
methodology. It would hardly be more appropriate to make thus a
perfect match between an objective analysis and a subjectively
imposed need to deal with such sensitive issues as the expected
results of negotiations, the political nature of integration process,
or the intricate web of interests in the agricultural dossier.

To stick with that central theme and still reach valid

conclusions based on a substantive investigation, an inevitable
trade-off with relatively marginal matters has to be decided. That
hardly has any impact on the flow of arguments. Rich
developments of concepts, as well as a comprehensive review of
literature position the study on an appropriately equidistant
research path toward diverse approaches, which have been making
up the theory and policy of economic integration for the last 50
years, including the provoking debates on its macroeconomic
effects. A point in case is the analysis of the objectives the
negotiating countries pursue on the way to integration, and
particularly in that setting which characterizes the European
process. The author remarks the good strand of researches, which
attempted to build support in favor of the benefits the theory on
integration claims to exist. The book excels at this point, as it aims
at assessing comparatively various results of the quantitative
analyses and accompanying rationales about parameters used to
ascertain the likely impact of integration on negotiating countries.
Along the presentation, advantages and disadvantages of various
perspectives are contrasted in order to get a clearer picture of the
economic evolutions and a better understanding of the relationship
between political conditions and economic behavior.

Besides proposing an interesting view on past works, the

book is however about original research. The design of
methodology is constructed on the rationale that the issue of the
Central and Eastern European Countries' accession to the
European Union was not actually the object of negotiations. A
whole chapter tries to argue instead that the terms on which
negotiations proceeded were depended on an interactive
relationship of decision-making processes, policy developments,
and institutional settings. A deconstruction analysis is carried
out to observe potential and real reactions based on both factual
evidence, and findings from the literature. Results of
negotiations are simulated given specific constraints and
existing resources of bargaining power. The rigorous treatment
combines with social and political details, which eventually
prove decisive to experiment the negotiating behaviors of both
the EU, and the two candidate countries – Poland and Romania
– considered for this application. What the reader eventually has
consists of various scenarios as to the strategic dimensions of
negotiations, which is probably the most challenging part of the
analysis.

The way is conceived and researched, this book may be

confidently positioned as a reference paper, which consistently
voices those reasoned and realistic arguments of the economic
literature on European economic integration. It is a worthwhile
contribution of Valentin Cojanu to that analytical thinking,
which rests on such premises as elaborated style, attention to
methodology design, commendable conceptual developments,
and reliable argumentation. Even the reader, which is not
familiar with the conventional theses of economic integration,
may still find a convincing path to understanding negotiations in
international relations, all this with a sense of scientific
investigation and meaningful conclusions. In other words, he is
about to read a book with capital "B".

Professor Dr. Dumitru Miron

Academy of Economic Studies Bucharest
 Acknowledgments

T he work to this study has benefited from encouragements and

suggestions kindly addressed by friends, professors, and
family. Although the author retains the sole responsibility for the
ideas and commentaries expressed therein, recognition for the
valuable support received is certainly due.

The quality of the investigation was greatly enhanced by the

dedicated supervision of Dr. Jerry Haenisch, Chancellor of Preston
University. The author was particularly privileged to have kept
with him a professional working relationship during the years spent
on this research, a source of advice, which finally proved so
constructive.

For their comments on earlier drafts of this study, the author

remains grateful to Professors Mihai Korka and Dumitru Miron
from the Academy of Economic Studies in Bucharest. They helped
the text improve its readability and convey a more comprehensible
message.

This book makes inroads into unexplored themes of research

in Romania, but this assertion ought to sound like a confession
rather than an ambition. The point is that substantial time was
spent with collaborators on finding out a relevant approach for
Romania on integrating game theory and enlargement negotiations.
It is thus worth mentioning that many working hypotheses took
shape in the framework of Pre-Accession Impact Studies Programs
at the European Institute of Romania in Bucharest. The intellectual
and constructive atmosphere created during the numerous
workshops and conferences, which accompanied that process, has
proved uniquely inspiring.
 Abstract

T his study presents an adapted model of 2 × 2 games of

strategy to provide arguments for understanding the various
levels of interaction between the parties during negotiations and
attempts to identify the strategic structures of the integration
process of the CEECS into the EU. The arguments are elaborated
against the background of negotiations on agricultural trade issues,
whose conclusion became effective also for the last two candidate
countries – Bulgaria and Romania – in June 2004.
The research model builds on the existing analytical framework
developed in the works of Aggarwal and Allan, Aggarwal and
Cameron, Brams and Kilgour, Conybeare, and Leaps, and Grigsby.
The method considers three levels of interaction – dependence,
independence, and interdependence – and gathers each party’s
strategic capabilities in a game-theoretical context with the help of
three variables: institutional stability; overall power; and issue
bargaining power.

The findings present a detailed analysis of bargaining power

and consider the predicted solutions to negotiations. Bargaining
power is transformed from potential to effective influence a party
can wield during negotiations by transformational factors. Analysis
of these factors is illustrative of the bargaining strength on the
issue and helps square the determinants of strategic interaction.

The model’s predictions closely follow the results of

negotiations in every significant detail. Moreover, the overview
tableau of possible solutions helps assess better the gains and
losses from negotiations given the interplay of interests.
 I
Introduction

B ehind the Iron Curtain, the Central and Eastern European

Countries (CEECS) have long aspired to become part of the
civilized world, in the sense that they were seeking a more
prestigious economic status and the fundamental right to share the
universal libertarian values. At the time the political openness had
arrived at the beginning of the 1990s, Western Europe, with the
European Union (EU) at its core, ideally represented the object of
their veneration. Geographic proximity, historical tradition, and
relatively close economic ties all indicated that a negotiated
rapprochement between the two parts of Europe would naturally
come next.
This imperative eventually led to the conclusion of legal
arrangements between the EU and individual CEECS - Poland,
Hungary, the Czech Republic, Slovenia, Estonia, Bulgaria,
Romania, Slovakia, Lithuania, and Latvia - in the form of the
Europe Agreements (EAS), and the accession negotiations started
in 1998. With these initiatives, the EU embarked on the fifth wave
of enlargements since its founding in 1957. This process proved
different from the past especially because it simultaneously had to
confront a large number of candidates and to consider their evident
development gaps vis-à-vis the EU. The income differences are
prominent whether they are measured at official exchange rates or
at purchasing power parities; whether the comparison is made with
the EU-15 average or with the lowest ranked EU-15 member
states. As for the countries this study particularly considers, when
negotiations began the income level in Romania (at official
exchange rates) was 8% of the EU-15 average and ca. 17% of the
levels in Greece or Portugal, the less developed EU countries. For
a relatively wealthy and developed CEEC as Poland, the
corresponding numbers were 20% and ca. 40% (Quaisser and Hall
4).
The present enlargement process stands out for another
reason as well: the CEECS are taking on a far more complex body
of legislation than did previous applicants. The EU institutional
accomplishments of the Single Market and European Monetary
Union, as well as its policy developments in the field of judicial
and foreign affairs significantly stretch the legal and technical
capacity of the applicants as they are starting with much more
simple institutional framework at national level. It is only the
eastward enlargement, which formally makes the adoption of
acquis communautaire – the whole body of the EU legislative acts,
along with secondary legislation and policies derived thereof -
mandatory by accession.
In annually issued Regular Reports, the EU identified 31
chapters of the acquis, covering virtually all fields of Community
governance, such as free movement of production factors,
education, statistics, judicial system, property rights, international
relations, competition and industrial policies, and, in chapter seven,
of particular interest for this study, agriculture.
Agriculture is considered to be a particularly sensitive
subject because agriculture in the CEECS is simply much more
important, in terms of its share in production, employment and
foods consumption, than in the EU on average, while its impact on
every-day situations of life and work is crucial for countries like
Romania and Bulgaria. The CEECS would constitute 22% of the
population of the enlarged EU; would contribute to the GNP, and
thereby to the budget, only around 4%; would increase agricultural
area of the EU by 45%; and would nearly double employment in
agriculture. By consequence, according to figures of the European
Commission (EC), the enlarged EU will be more agricultural than
the EU-15 (Analysis of the Impact 15). While the EU agricultural
exports to these countries rose substantially after 1990, the CEECS
exports to the EU only increased slightly, making most of those
countries net importers of agri-food products from the EU
(European Commission Regular Reports; Frohberg and Hartmann).
As these considerations suggest, unveiling the interests at
stake is expectedly a different matter for the two partners. While in
the West the emphasis is put on maintaining a desired level of rural
development, along with the privileges acquired historically for the
farmers, in the East concerns about the viability of agriculture as
an economic activity take the leading role in shaping a certain
position in negotiations.
The constraints of the acceding countries are mostly due to a
long history with central-planned policies. Although favorable land
endowment and climatic factors should have sharpened their
comparative advantages in agro-food business, systematic neglect
of this industry evolved in precarious regional development.
Hallet’s study reports how the regions dependent on agriculture
prevalently rank among the most socially vulnerable. One notable
result emphasized by Pouliquen is that the contribution of the
semi-subsistence sector to the total agricultural production of the
ten CEECS is at least in the order of half against approximately
20% in the EU (41, 63).
 The privatization and restructuring processes of the 1990s
have not succeeded in revitalizing the sector in spite of continuing
convergence of average farm prices towards Community levels as
reported in the literature (e.g. Pouliquen 15; European
Commission, Agricultural Situation and Prospects 31). Low
productivity levels, estimated by the EC at around 11% of the EU
level (Agricultural Situation) and increased fragmentation of
production in the form of individual holdings reported by several
other studies (e.g. Josling and Tangermann; Pouliquen) have
placed considerable restraints on the agriculture development.
An immediate consequence of the convoluted evolution of
agriculture was the near absence of farm lobbies at the outset of the
negotiating process, a time when all efforts and energy were
directed to re-introduce the elements of the market economy, such
as land reform, price liberalization or the opening-up of foreign
trade. A partial exception was Poland, where private ownership
prevailed in the agricultural sector during the communist regime
(Note on Polish Agriculture) and allowed thus for a continued and
more assertive defense of private interests.
The conventional analysis represented by the theory of
economic integration helps in explaining the rationale underlying
negotiations set in such a context, but leaves aside the strategic
considerations inherently associated with that process. As the way
negotiations are structured and the inherent conflicting nature of
dossiers like "agriculture" eloquently shows the analysis of the
process of strategic interaction proves essential in understanding
the economic terms on which the integration negotiations proceed
and conclude.
This study presents an adapted model of 2x2 games of
strategy to provide arguments for understanding the various levels
of interaction between the parties during negotiations and attempts
to identify the strategic structures of the integration process of the
CEECS into the EU. Constructs are accordingly identified from
game theory and economic theory and integrated. The research
model builds on the existing analytical framework developed in the
works of Aggarwal and Allan, Aggarwal and Cameron, Brams and
Kilgour, Conybeare, and Leaps and Grigsby.
 The arguments are elaborated against the background of the
interaction pattern of European Union enlargement process and the
issue of agricultural negotiations, whose conclusion became
effective also for the last two candidate countries – Bulgaria and
Romania – in June 2004. The strategic analysis of negotiations
addresses first the theoretical framework in which to build a model
of bilateral negotiations; then, the model is used to test and predict
the possible outcomes of negotiation on specific issues in general,
and specifically for the purpose of this study in relation to
negotiations on agriculture. Resemblance with other classes of
interactions, e.g. debt rescheduling, enforcement of international
agreements, and security aspects, indicates the option of
considering 2x2 games in an empirical context, an issue that is
developed in the section on methodology.
As the CEECS negotiated separately their accession, a
choice had to be made as to the most appropriate case(s) to
consider. The option was to include an application of the model on
Poland and Romania, the largest agricultural countries in CEECS
according to data on agricultural land and the contribution of
agriculture to GDP.
The findings present a detailed analysis of bargaining power
and offer predicted solutions to negotiations for the two cases
considered in the application. Bargaining power is transformed
from potential to effective influence a party can wield during
negotiations by transformational factors. Analysis of these factors
is illustrative of the bargaining strength on the issue and helps
square the determinants of strategic interaction.
The initial presumption that the cases of both Poland and
Romania would provide adequate inputs for the analysis proved
right. The model's predictions closely follow the results of
negotiations in every significant detail. Moreover, the overview
tableau of possible solutions helps assess better the gains and
losses from negotiations given the interplay of interests and so
makes the methodological contrast with conventional approaches
to integration more visible.
A concise introduction to the subject of strategic negotiations
is provided in Chapter II. Despite the major achievements in the
economic research, the theme proposed here still finds at the
junction of conventional with innovative approaches to the study of
economic interaction when several countries integrate. Chapter III
on the literature seeks to make evident these various and often
conflicting intellectual strands and to show how they resonate with
the present research. In Chapter IV on methodology a model is
proposed to find solutions of strategic negotiations. The method
considers three levels of interaction – dependence, independence,
and interdependence - and three corresponding variables - overall
power, institutional stability, and issue bargaining power – to
frame each party's strategic capabilities in a game-theoretical
context. This study's findings are grouped in two chapters: Chapter
V analyzing bargaining power and Chapter VI presenting the
solutions to negotiations. Before concluding, a section on
anticipation of objections attempts to identify clearly the range of
situations to which the proposed model applies. Chapter VII ends
this study with conclusions and suggests implications for further
application of games of strategy in negotiations.

II
Problem statement

A. Rationale for the research

T he choice of an appropriate approach to the subject has been

eased by a considerable scholarly tradition. The research on
explaining strategic interactions by means of game-theoretical
concepts has made significant headway for long. From the early
development of the theory in the interwar period, the approach
gained progressively in acceptance until „its virtual dominance of
economics“ (Foss 6) around the end of the 1980s. The explosive
dominance of game theory as an analytical tool has made a wide
array of disciplines, such as industrial organization, labor
economics, public finance, monetary policy, economic history,
law, marketing, political science or sociology, accept and explain
behavior of companies, governments or groups of actors in terms
of strategic options.
In the field of international trade alone, the interest stretches
over an ever more expansive range of topics, from games of trade
liberalization (McMillan, Game Theory; Conybeare; Kennedy;
Patterson) or settlement of disputes (Bütler and Hauser) to the new
theories of strategic trade policy (Benchekroun et al.; Abbott and
Kallio) or politics of trade (Grossman and Helpman; Helpman). At
the same time, arguments emerging from adjacent fields, such as
economic development (Wolkoff; Grabowski), economic history
(Greif), institutional economics (Juli), political science (Milner and
Rosendorff), industrial organization (Graham), international
relations (Allan and Schmidt) all contributed to adding new
insights, and evidently broadened the view over the international
trade issues against a unified background.
One of the findings this rich scholarship proposes is that
little refinement may be expected for both trade theory and
mathematics of games; instead, the main advantage of the new
approach has proved to be an improved and practical
understanding of how states and firms wield commercial policies
when their interests interact. The work of Schelling has the merit
of both pioneering the strategic analysis of interdependence among
nations and emphasizing the risk of misappropriation of game
theory for understanding the proper meaning of decision-making
processes in situations of conflict. He remarks:
We change the character of the game when we drastically
alter the amount of contextual detail that it contains … It is often
contextual detail that can guide the players to the discovery of a
stable or, at least, mutually nondestructive outcome. We have to
recognize that the kinds of things that determine the outcome are
what a highly abstract analysis may treat as irrelevant detail (162).
What makes this approach the more so problematic is its
versatility in yielding provoking results even if the texture between
theory and economic evidence is somewhat loose. Economists
must confront a theoretical construct imported from mathematics
that has its own laws and grows as such autonomously. Snidal
conceptually presents that sort of dilemma in the following
statement:
To apply the deductive power of game theory directly, we
must tighten up correspondences between empirical situations and
game models, and separate assumptions from predictions. As we
do this, the model and theory will provide a guide to relevant
empirical evidence, just as the evidence will provide a guide for
evaluating and revising the model (36).
Additional insights may be found in the papers of Jervis and
Kreps, who remark that the flawless logic of different game models
may often run counter common intuition, or worse, be mostly
invalidated by experimental research. Caves also considered
similar concerns, but only recently Ghemawat (Games) took on the
task to investigate the predictions of game-theoretic models. His
choice of cases makes sufficiently clear that some competitive
moves are well grounded on inside information about rivals’
internal organization or their muted strategic plans, which renders
futile the use of econometrics techniques in predicting the outcome
of the game.
A series of other papers (e.g. Brandenburger; McGahan)
establishes the tradition of looking for strategic aspects of
competition amenable to be treated as games, and then extracting
the rationale behind the interaction by means of a suitable formal
treatment. Instead of assembling game models around some
typologies of games or situations, there is this time a focus on the
peculiarity of the case, with a correspondingly increased
contribution of managerial insight.
In observance of these precautionary references to
methodology, this study presumes that the search for the empirical
assessment of bargaining outcomes should specifically lie at the
core of integration negotiations, and that it should appropriately
make use of insightful and practically relevant techniques.
The value of the proposed research framework thus
predominantly rests on both the structure and form of the
arguments. That invites the researcher to an analytical work
balanced between the specifics of how the outcome actually comes
about and the generalizations of the formal model. While the
former choice is closely suggestive of the „contextual detail“, the
latter rests on normal representations of game theory. An early
example is the Conybeare's work, which seeks for explanatory
factors of commercial dealings in an economic context where
states purposefully act to maximize their welfare through trade and
do that by trying to understand the other states’ strategies. He
favors a mixed approach thereby game theory, political science,
history and economics make up a common theoretical background.
On the whole, it seems that, although the analysis may weigh
differently the share of „contextual detail“, according to the
specific research objectives, there are at least two components,
which ought to validate the use of game method. First, the
resembling logic of models and reality should not be taken for
granted. The more the analysis aims at meeting some practical
requirements, such as decision rules or strategic plans, the more
intensely the logic of competitive assessment should guide the
investigative questions. A higher degree of abstractness would, of
course, reverse the balance, and ascribe the formal logic to a more
central role.
Second, wherever the logic of the interplay would stem from,
it must explain the competitive behavior in a predictable way.
Research, which is careful both of economic detail and systematic
investigation may usually achieve this objective through formation
of relevant classes of empirical evidence. It is for this reason that
good part of the works dealing with the applicability of game
theory to economics (e.g., McMillan, Game Theory; Gibbons;
Rasmunsen; Osborne and Rubinstein) is dedicated to several
established sets of „economic games“. The rigor of such formal
treatment eventually is the ingredient, which lays the foundations
for further research, whatever practical goals the analysis may
have.
The case of integration negotiations offers various instances
of what a practical purpose could stand for. Some papers (e.g.
Grossman and Helpman) simply assume a matter of choice
between preferential trade agreements (PTAS) or no other
alternative. Other models (e.g. Whalley) are constructed with
nations acting as welfare-maximizing players for its representative
consumer. In a different line of argumentation, authors like
Conybeare (13) or Baldwin (67) consider more realistic to direct
the analysis to the process in which the parties adopt decision rules
when they face strategic options. Basic economics draws attention
to the fact that there is an inherent conflict between national and
private interests: lowering barriers at home results in increased
competition from abroad and hence lowered firm profits.
Given these various treatments, the strategic perspective on
the integration process poses the problem of research design so that
the investigation reveals the underlying causes of conflict. Before
the next chapter takes up this task, preliminary research guidance
takes to the center stage the cautious approach towards integrating
the individual case into the generic model. The analysis of strategic
aspects of integration negotiations is conveniently apt to make use
of game theory, but the procedure for analysis is peculiarly
dependent on the research objectives.

B. Research questions and objectives

If research is conditional upon the particular context of
negotiations, the negotiation process itself is influenced by a set of
variables, which models the strategic interaction. One of the
objectives of the study is thus to define and justify these variables
as determinants of negotiations in the accession process.
The issue of integration between groups of countries with
dissimilar economic potentials brings inevitably into debate
strategic considerations. Not only does the development gap make
the negotiating agenda arduously disputed because of different
representations of gains, but other contiguous matters as well, such
as economic security, viability of the nation-state, and disruption of
the social order, raise vital questions on the way to integration.
The agricultural dossier of the EU enlargement suits
particularly well in this picture because of the diversified nature of
its conflicting topics. A first hint is inferred from nuances of its
importance: the negotiations over agriculture has been described as
a „political landmine“, implying „large conflicts of interest„ (Gacs
and Wyzan), but nevertheless a „win-win project“, that, if
successful, will leave „no losers by the wayside“ (Fischler).
 The latter consideration, which aptly belongs to a former EU
Commissioner for agriculture, encapsulates the rationale for an
analysis of the strategic aspects of negotiations: each party aspires
to a winning position in rather improbable terms of what success
may be taken for. Because the interplay of interests is precisely
based on these different representations of the terms in which
negotiations are to be concluded, the analysis proposed by this
study is required to shed light on the underlying determinants of
possible outcomes and to suggest with anticipation improved ways
of conduct.
The interaction between nation-states is then modeled in
classes of games or strategic structures of interaction on the basis
that the incentives of each party are revealed by their behavioral
stance, while their negotiating agenda is either explicitly or
implicitly formulated in official documents, historical contexts or
publicly voiced statements. It is this attempt, which makes the
game-theoretical construct necessary because both behavior and
negotiations are predominantly based in the integration process on
the interplay of expectations.

C. Scope and limitations of the study

The debate on negotiations regarding the integration process
of the EU has been enriched from a considerably large variety of
analytical perspectives. As previously suggested, the economics of
integration seems particularly suited to engender cases of strategic
integrations. The paper consequently limits its scope to those
aspects of understanding strategic responses in an interactive
context. Attention is particularly laid on the building blocks of the
logic of choice in situations that involve rivalry. The way game
theory facilitates a better design of strategic behavior, and,
reciprocally, how negotiation moves can be thought of as part of a
game are the guidelines of the present investigation. Indeed, a
foray into the government’s behavior given the challenges of
integrating countries with very different economic potential will
try to highlight possible strategic policy interrogations.
Because of this narrow framework and practical objectives
of the analysis, important aspects of integration negotiations have
been inevitably left aside. In the strategy realm, a minimal list
would include such topics as: time sequence of negotiations;
choice of productive locations; spread of financial risk; and market
entry. The game-theoretical literature on integration also takes
account of problems like voting power indices or influences from
pressure groups, aspects to which this study does ascribe
explanatory power even if the focus here shifts on a hopefully
more encompassing range of determinants. The interest is to focus
more on breadth than depth of the analysis; to enlarge the
perspective on integration is important in so far as the underlying
analytical purpose rests on practical considerations.
The analysis nevertheless stops short of formalizing the
negotiation procedure in the sense Binmore suggests, i.e. how to
conduct the negotiations under all possible eventualities and how
finally to choose a strategy contingent on the course the
negotiations took. Although there are solid theoretical references,
they are used in so far as they appropriately set out the
investigation; the issue-specific aspect of negotiation is thought
essential as to „the contextual detail“ and consequently left to
further, analytically renewed game-theoretical bargaining analysis.

D. Definition of terms
The „strategy“ and „strategic“ words prove to be remarkably
versatile in the relevant literature. For example, Mintzberg et al.'s
exhaustive search for „schools“ of strategy (24-5) finds distinct ten
interpretations of the strategy process but none relates directly or
indirectly to „games of strategy“ or situations where „the choices
of two or more rational decision makers together lead to gains and
losses for them“ (Krishna 1).
The topic of negotiations as focus of research shares a
similar fate. Behavioral theories are very often considered to be
able to offer the proper analytical framework to begin with. The
application of game-theory concepts to a wide range of research
problems has had the adverse result of an innovative terminology,
which in some instances bears little semblance of its original
mathematical meaning. This study compounds the problems of
terminology by making reference to „strategic negotiations“. It is
for these reasons that a review of the meaning of concepts, which
this analysis starts upon, becomes necessary.
Binmore presents the game-theoretic approach as a
descriptive (vocabulary and basic ideas) and analytical (formal
tools) use of game theory. It enables quantitative predictions, as
well as qualitative insights but only to the extent the study decides
on what aspects of the situation are of particular interest to the
research. From this perspective, the research design is to a lesser
extent constrained by the formal model, and thus basically rests on
the study objectives.
It is increasingly accepted the argument (Schelling;
McDonald; Branderburger and Nalebuff) that the economic
contexts are amenable to analysis of games of partial conflict, i.e.
variable-sum games, in which the players’ preferences are not
diametrically opposed. A strategic process may accordingly be
thought as the opposition of the interests of the players in an
interdependent process whose outcome may involve a situation of
conflict or not. It is not the conflict, which exclusively describes
the strategic nature of interaction; the whole variety of anticipated
events in association with gains or pay-offs in game-theoretical
parlance, whose predictable occurrence depends on the other
players' decisions, is instead the proper description of a strategic
interaction.
A game refers in this study to strategic negotiations
conducted within the process of the EU enlargement. It is basically
a study of conflict of interest by rational players, devoid of any
ethical or behavioral considerations (Binmore 6).
„Negotiation„ for the purpose of the study is largely
interchangeable with „bargaining“, although it does not borrow its
classical formal interpretation from game theory. Grossman and
Helpman provide a definition of bargaining which is significantly
closer to the particular situation this study envisages: „bargaining
can lead to a trade agreement in which each country makes
concessions in exchange for desired changes in the policies of its
partners“ (1). Preference is given to the former for describing the
strategic interaction, while the latter proves its importance in
devising another useful term, „bargaining power“. According to
one of the original definitions, the display of power in bargaining
is the ability or skill „in duping the other fellow“ as John Nash
initially highlighted (quoted in Binmore).
The sense in which the negotiating parties exert bargaining
power is certainly deprived in this study of that merchant facet.
The inquiry attempts instead to assess the strength of bargaining
power by comparing the degree in which the initial demands find
themselves in the final results of negotiations and the conditions
conducive to that outcome. A mathematical interpretation of
bargaining power has normally nothing to add on „conditions“.
This study however embraces both aspects of bargaining power –
capability to command influence and possibility to behave this
way. There is thus promoted a concept based on the exercise of
power, which induces learning experiences in the negotiation
process.

III
Review of the Literature

A. Overview

T he topic of beneficial enlargement of an integration structure

is theoretically exposed to a large variety of arguments. This
review focuses on how both orthodox and unconventional
explanations translate into strategic options the negotiating parties
may consider.
 Integration negotiations are typically understood as a
continuous process in which countries' preferences for a certain
outcome are shaped by constraints originating from three levels. A
country's dependence on its partners' decisions and the influence of
its domestic politics represent two levels of analysis, which have
received considerable treatment in the literature. Lately, arguments
on contextual areas of negotiations or the interdependence level
have been considered as equally significant for proper
understanding of interaction.
The use of game-theoretical techniques has evolved as a
widely accepted approach of integrating different sources of
constrained behavior into analysis. The way parties may conceive
under constraints their ranking of the mutually preferable
agreements distinctively lies at the core of the bargaining problem.
It is thus possible to infer various strategic structures of
negotiations and subsequently predict the preferred course of
settlement on a specific issue.
 B. Discussion
1.Objectives of integrating countries: Theoretical
perspective
The economics of integration has been traditionally regarded
as a theoretical body on the benefits the participating countries
enjoy in the form of static and dynamic effects of establishing a
free trade area with or without a common commercial policy.
Recent research has however challenged this conventional view
and added various arguments in explaining why countries seek to
negotiate integration agreements (IAS).
At a general level, the theory falls short of providing a
unified approach to the representation of countries' objectives in an
integration game. Some authors (e.g., Snidal 25) find metho-
dologically correct to model nations as goal-seeking actors, while
others (e.g. McMillan, Games 77) question the plausibility of the
coherence and consistency of such an endeavor. Zürn shares a
more balanced view when he dispels the theories of interest
formation that assume one fundamental motivation in all states
across all issue areas (299).
These different perspectives are nowhere better revealed as
in the contrasting debate on traditional and nontraditional gains
from integration. While the early analysis of Viner has given rise
to a remarkably standard terminology to describe the effects on
welfare, economists are less convergent toward a similar cohesive
approach as to other objectives integrating countries could pursue.
In the traditional vein, the central tenet rests on the classical
proposition that economic integration creates trade and thus
improves welfare by moving participating countries closer to free
trade (Markusen et al. 320). The expected benefits should not
however be taken for granted. The Viner-inspired research stresses
the importance of trade diversion as a possible welfare-worsening
effect of an IA.
A special case, when trade diversion could either improve or
leave welfare unaffected, is illustrated by several studies which
account for relaxed assumption on domestic consumption and pro-
duction patterns (Markusen et al. 315-18; Fernández 5). Additional
research (e.g. Schiff) makes the point of how dependent the
welfare impact is upon the underlying conjectures such as country
size, rules of origin, and the likelihood of illegal transactions.
The traditional analysis also emphasizes that no alternative
trade agreement, including free trade, could make a member
country better off in the presence of an optimum tariff (Markusen
et al. 318). The argument is based on Johnson's seminal study on
tariff retaliation and concerns the foregone opportunity of a large
country to improve its income (the terms of trade effect) by
imposing a sufficiently small tariff on imports and/or taxing its
exports.
The picture of the net effects is further obscured if one
considers the unequally distribution of gains among the member
countries. Some authors (e.g., Helleiner 759; Lindert 187) argue
that the integration process disproportionately favors the smaller
countries thanks to the larger impact of the new trade opportunities
on the structure of their markets’ incentives. According to some
other studies surveyed by Fernández, there are the economically
weaker countries, which supposedly bear the heaviest adjustment
burden as a result of their previously larger protectionist structures
(5).
The dynamic strand of analysis surveyed in the work of
Baldwin relegates these results to some marginal importance (9),
and underscores instead the overwhelming impact of scale
economies and investments on welfare thanks to increased
opportunities for growth in a larger market. Casella however
cautions against the reliability of theoretical predictions before
searching for the actual determinants of market access (23-24).
Salvatore escapes the difficulty of providing a clear-cut answer by
recommending an indicative list of various presumptions against
which countries could judge the attractiveness of the integration
choice (293-4).
In the light of these findings, the traditional objectives
supposedly underpinning IAS appear ambiguous (Schiff and
Winters 1; Abrego et al. 3), subject to critical assumptions
(Markusen at al. 312-22) or rather of little relevance (Whalley 22).
Moreover, the ramifications of economic theories trying to explain
integration unexpectedly „leave one with predictions that are
sometimes diametrically opposed„ (Reiner 39). These uncon-
vincing results make Abrego et al. conclude that „no set of gene-
rally accepted propositions regarding their effects has yet emerged
to guide policy makers and public officials“ (2).
A positive message emerges instead from the research on
nontraditional gains. Countries are now given a more active role in
deciding on the terms of an IA. Several studies (e.g., Schiff and
Winters 2-6; Whalley 15-20) suggest that the motivating factors
should be better ascribed to „the externalities“ accompanying this
process, including here military security, credibility of reforms,
trade leverage, as well as other „non-economic“ aspects.
Table 1 offers a glimpse of the nontraditional gains of the
IAS. Although largely overlapping, the wide range of arguments is
nevertheless indicative of the sophistication underlying the
decision-making process. According to the objectives highlighted
by Table 1, bargaining power is seemingly the most pervasive
rationale underlying negotiations. The integration context favora-
bly exposes negotiating countries to various opportunities in their
search for improved bargaining power.
In its simplest form, the exploitation of bargaining power
normally involves an exchange of concessions to derive changes in
the policies of the partners (Grossman and Helpman 1), but it
should not be seen however as an inevitable consequence. Some
countries have to negotiate the accession just to be in the position
of exercising this possibility („the level playing field“ option in
Table 1), while others are much better positioned in order to
impose their own rules („policy autonomy“ option in Table 1). A
dose of caution is therefore to be expected in the case of smaller
countries for which Helleiner thinks „the access to the integration
arrangement is likely to be highly conditioned“ (780).
 Table 1
A Comparative View of the Non-Traditional Gains from
Integration*
Whalley Fernández Baldwin
Domestic policy Time inconsistency: Level playing field:
reform: by binding a a country pursues to compensate for the
country to the policies that are potential loss of
provisions of an welfare improving relative
international trade but time- competitiveness (the
treaty, any future inconsistent, i.e. tem- threat of not being
reversal of domestic ptations of surprise inside) (71)
policy reform becomes trade policy actions
more difficult to when other first-best
implement. (15) instruments are una-
vailable, in the ab-
sence of the PTA. (7)
Multilateral bargai- Signaling: a country Gerrymandering:
ning power: indivi- wants to persuade changing the political
dual country may have other that certain boundary of a district
limited leverage in circumstances, e.g. a tends to change the
international nego- liberal type of objectives of the
tiations, including government, the policy makers
multilaterally, but if underlying condition representing that
all member countries of the economy, do district. (74)
acted cooperatively in in fact prevail. (15)
using a common trade
policy they would
increase their
leverage. (17)
Guarantees of access: Insurance: the Voting power: the
to make access to the unfavorable terms of capacity to influence
larger country market the PTA may consti- decisions by forming
more secure for the tute a type of insu- winning coalitions.
smaller country. (17) rance premium paid (76)
by one country to the
other against
possible (unfavo-
rable) events. (17)
 Whalley Fernández Baldwin
Strategic linkage: the Bargaining power:
security arrangements the transaction costs
among the integrating involved in reaching
countries are better an optimal negotia-
supported by ting position are re-
integration duced by greater
agreements. (18) coordination of trade
policies with respect
to third countries.
(19)
Multilateral/Regional Coordination
interplay: the actual device: uncertainty is
or potential use of reduced as to who
regional agreements will be the gainers
for tactical purposes from liberalizing.
by countries seeking (20-21)
to achieve their multi-
lateral negotiating
objectives. (19)
* This presentation remains faithful to the order of the arguments as
originally exposed in the referred authors’ works.

The argument is used to explain the outward behavior as

well. Generally, economists like Fernández admit a common sense
approach based on the belief that the integrating countries „should
in fact have greater bargaining power combined than separately“
(19). He proposes a subtle mechanism („coordination device“) to
explain how integrating countries are effective in making tradeoffs
between different policy areas more often at a regional rather than
multilateral level (21). As the argument goes, increased transpa-
rency due to relatively few participating countries possibly helps
substantiate better a wide range of issues - from support for free
trade to environmental and labor standards – and thus favors the
strength of the economic bloc.
Some studies observe that IAS could induce participating
countries to play strategically against third countries in a non-
cooperative, tariff-setting game (Abrego et al. 5; Grossman and
Helpman 1). McMillan (Game Theory) gives this topic a solid
theoretical background, while Kennedy applies it to real nego-
tiations. The case rests largely on the same hypothesis presumed by
the „terms of trade“ argument and is thus as much informative
except for the possibility to enter a retaliatory game.
Domestic politics interferes with IAS when countries imple-
ment reform policies or contemplate partnership with unstable or
economically weak countries. The argument has initially emerged
from the literature on time-inconsistent policies, which Fernández
describes as that circumstances under which governmental
behavior undermines the credibility of optimal public policies (7).
According to Hagen, standard solutions to overcome this
problem consist in the creation of appropriate institutions and of a
track record of consistent policies (35). There is a widespread
belief that the integration process is apt at creating an enforceable
mechanism including both those solutions (Whalley 16; Helleiner
762), and in general superior than other possible alternatives
(Fernández 10). The commitment to integrate thus credibly provi-
des an „agency of restraint„ on any future reversal of previously
announced policies. Countries are assumed to find costs far
outweighing the benefits when reneging on reforms explicitly
undertaken through negotiations, such as trade liberalization or
democratic change.
The security issue has accompanied the debates about the
importance of trade at least since Kant famously asserted in 1795
that commercial ties would reduce the risk of European wars (qt. in
Schiff and Winters 1). Schiff and Winters assume not much
differently from the original Kantian discourse that the larger the
level of imports, the lower the likelihood of a security threat
among the partner countries. They conclude, perhaps
unsurprisingly, that an economic bloc provides strong incentives in
the form of security dividends to non-member countries (28-29).
Other researchers put more emphasis on contextual details to
show that integration negotiations purport to a complex balance of
interests in order to inhibit any danger of conflict. Serdar describes
economic alliances as groups of states seeking to improve their
security in front of others by cooperating (3). But even in
economic terms, trying to seek refuge from any potential
protectionist measure should be thought as a realistic objective
especially for a small country (Whalley 17; Fernández 17), the
more so it is admittedly secured by means of side payments
(Whalley 18; Schiff and Winters 28) from the more affluent
member states.
Further descriptions of objectives borrow from adjacent
political science, and try to capture the economic significance
especially in the pursuit of regional power or influence. Baldwin
thus presents „gerrymandering„ and „voting power„ as likely
negotiating purposes. As they do not add conceptually much to the
previous discussion, but are nonetheless relevant to the nature of
the interdependence, the topic is to be reexamined in section 3
below.

2.Objectives of integrating countries: Empirical arguments

The attempt to produce empirical support in favor of one or
more of the theoretically anticipated benefits has been based on
two main categories of research data: quantitative measurements of
economic variables and direct evidence from the integration
negotiations. As one of the oldest and most dynamic, the
experience within the European area has compelled much
attention. In spite of the quantitative emphasis the theory inspires,
the formation of the Economic European Community (EEC) in
1957 is historically presented rather in terms of strategic
considerations than as a result of conscious computations of
economic benefits.
Whalley exemplifies the original motivation behind
European integration as a cooperative game in using common trade
policy to increase the founding members' leverage in negotiations
with the U.S., including at a multilateral level (17). The
justification is by and large maintained by Fernández to present the
individual search when most of the former European Free Trade
Association (EFTA) countries sought the entry into the EU (20).
Arguments put forth by Moravcsik suggest that the postwar
increase in European trade can hardly be attributed to policy
changes, but rather, at least until the 1980s, to structural factors
such as geographical proximity and per capita income (490).
Other arguments leave the economic incentives aside alto-
gether. Prevailing initially integration objectives are thus ascribed
to helping preventing further European war (Whalley 18) or to the
weight of American interest in the 1950s to deter the influence of
communism in Europe (Brabant 7). Even classical presentations of
the economics of integration do not resist underlining that „the
driving force behind the formation of the EU … was the political
unity of Europe with the aim of realizing eternal peace in the
Continent„ (El-Agraa 13).
Along with the successive waves of enlargement, EU
membership has been seen as a way to be part in the European
political system of liberal democracy, explaining at least accession
negotiations relative to Greece, Spain, Portugal, and, most recently,
the Europe Agreements (EAS) (Fernández 14). Presently, it is also
argued that the EU enlargement process is „critical to a relatively
stable, prosperous, and peaceful Europe“ (Josling et al.), „carries
with it a kind of peace dividend“ (Hagen 3), and attracts the
Central Eastern European Countries (CEECS) for geopolitical
reasons (Baldwin et al. 147). A further note on strategic behavior is
given by evidence that some Member states made demands in
order to compensate for their willingness to accept the widening of
the Community in such cases like the Integrated Mediterranean
Programs IMP in 1985 or the formation of the Single European
Market in 1986 (Reiner 78; Bache 68; Moravcsik).
This kind of argumentation has proliferated not only due to
its inbuilt credibility, but also as a secondary result of less than
impressive cost-benefit analyses. Pelkmans finds inconclusive the
estimates on the welfare effects of trade creation and diversion for
the EEC from the period up to 1970 in the range of 0.15 per cent to
maximum 1 per cent of GDP (94, 113). Dyker presents estimates
of the static trade effects of the creation of original Common
Market in the order of 1 per cent. Taking economies of scale and
competition effects into account raises the estimate, but only to a
still modest 3 per cent. Bolder assertions even claim that „all
estimates of trade creation and diversion by the EC which have
been presented in the empirical literature are so much affected …
that the magnitude of no estimate should be taken too
seriously„ (El-Agraa 150).
Research conducted on the ongoing EU enlargement
similarly reveals a fragile balance between costs and benefits,
taking into account how much of the integrating countries' GDP is
affected as a result of trade liberalization. Lejour et al. report
model simulations indicative of modest welfare improvement for
the EU, at the level of 0.1 per cent, and significantly varying
welfare gains for the CEECS, in the range of 1.5 to 9 per cent (8),
results largely confirmed by numerous other researches surveyed
by Quaisser and Hall (20-22). Other studies (e.g. Gacs and Wyzan;
Kohler) compound the ambiguity about these evaluations by
predicting a net cost for the EU on the average of 0.15-0.20 percent
of GDP for the accession of five countries, and 0.37 per cent in the
case ten countries are absorbed. Additional research with respect to
changes in stock market indices and investments rates show that,
with the exception of the 1986 entrants, „nothing automatic can be
inferred about the benefits, just the opportunity to catch-
up„ (Baldwin et al. 143-5; italics added).
Available data for non-European experiences with integra-
tion suggest a similar mixture of objectives. Fernández provides a
detailed account on the 1988 Canada-U.S. IA, as well as the 1992
Canada-U.S.-Mexico North American Free Trade Agreement
(NAFTA). While the economic estimates of the direct macroe-
conomic effects on the U.S. were tiny and statistically insigni-
ficant, a more beneficial exchange of concessions has seemingly
played the salient role for all parties concerned. Canada sought to
obtain some degree of exemptions from the use of anti-dumping
and countervailing duties and safeguard measures by the U.S.
producers (17); the U.S. sheltered itself against future unfavorable
domestic policy disciplines undertaken by Canada in certain areas
(18); Mexico concerned much with domestic policy reform and
secured very little in concrete tariff reductions or other concessions
from the U.S. (23). Improvement in the individual bargaining
positions is seen also central to the negotiators both for NAFTA
with respect to the EU and Japan (Fernández 24) and for
MERCOSUR countries as subsequent leverage in accession
negotiations to NAFTA (Whalley 17).

3.Constraints
The discussion so far has raised the important issue of
overcoming the problem of „reliable„ representation of disparate
integrating objectives. The economic factor is by no means a
predominant explanation of integration, although one should
consider it more realistically diffused into a multiple-level inte-
raction among negotiating countries. Some authors assign power a
precise meaning only when the analysis is applied to a particular
situation (e.g. Leap and Grigsby 204), or only in relationship with
the other party (Rao and Schmidt 671).
A comprehensive literature surveyed by Reza suggests that
the states' behavior is determined by a three-layered system of
basic constraints embodying elements of independence,
dependence, and interdependence (44), which eventually shed light
on the available and desirable courses of actions.
Conventionally, the formation of policy preferences has been
explained in terms of domestic – the „independence“ level – or
international – the „dependence“ level – constraints or both. The
work of several authors (e.g., Schelling; Mo; Putnam; Helpman)
models bargaining as domestic and international games that are
played simultaneously, and shows that the bargaining outcome is
resilient on the effective way a decision is reached in the first
place.
According to several studies (e.g., Patterson; Pahre and
Papayoanou) this approach is inconclusive. What they suggest is
that negotiations rather encompass simultaneous effects on state
behavior of a third level of interactive decisions as well. As
proposed by Lehman, to make this conjecture explicit amounts to
value the relative power of negotiating partners, an implication at
large exposed by the literature on neo-functionalism and
intergovernmentalism (e.g., Moravcsik; Bache). The concept is
suggestive of the supplementary constraints impeding choice
selection, beyond the commonly described dichotomy of interna-
tional and national levels of analysis.
This search for robust results induced a good strand of
applied research (e.g., Aggarwal and Allan; Lenway and Murtha;
Patterson L.A.; McDonald) to develop the two-level framework
into variants of three- and four-level games with the intent to refine
the strategic analysis. Papayoanou exemplifies such additional
factors that shape the preferences in the forms of domestic
sentiment, power considerations, stakes in a particular situation,
leaders' foreign and domestic policy interests, and leaders'
assessments of the value of their alliance.
What eventually emerges from these last studies consists of
varied solutions to define constraints, which poses „a task of
elimination, which can only be accomplished by an examination of
the cases“ (Conybeare 53). A precise interpretation is thus
subsequently sought for at the three presumed constraining levels
of analysis. The debate reveals the problem of representation of
constraints at each level.

a.The international level of economic dependence

Putnam gives a classical representation of constraints at
international level:
National governments seek to maximize their own ability to
satisfy domestic pressures, while minimizing the adverse
consequences of foreign developments (434).
The definition points to the dependence of domestic
objectives on the interstate relationship as the key determinant of
behavior in international relations.
Analytically, the concept of power conveys the message on
the constrained resources a nation has in the conventional sense
that more power means better chances to arrive at the preferred
outcome. Serdar emphasizes two main approaches to power: power
by which states pursue and control others' behavior; and capacity
stemming from their capabilities (2). The distinction is suggestive
for the analytical procedures to measure power. Various indicators
of power asymmetry reveal the hegemonic context depicted by the
former case, while the latter indicates a more laborious process to
influence decisions in international relations.
Hirschman's early work on economic dependency distin-
guishes between countries, which can act either as object or as
subject of a policy using foreign trade to influence other countries'
behavior (68). He develops statistical measures of geographic and
commodity concentration of trade to discuss the extent a country
could bilaterally constrain its commercial partners' choice.
Holzman applies a similar framework and argues that such
exercise of power has been used frequently in recent history (64-
66). His examples include the U.S. against all communist
countries; the U.S.S.R. against China, Albania, Yugoslavia and
Eastern European countries; the Middle East oil producers against
Western Europe, Japan, and the U.S. (55).
Other approaches to asymmetry give a country's size a
subjective predictive value depending on the particular interaction.
The underlying rationale offered by Lindert assumes that a country
is „small“ if it is likely to be more dependent on a particular trade
relationship with its partner country, viz. it trades exports and
imports with low price elasticity of demand (191).
Conybeare exemplifies this kind of economic warfare in his
model of trade war. The presumption correspondingly asserts that
„as the disparity in size increases, the ability of the large country to
extract gains from the small or hurt it with retaliation increases; the
ability of the smaller country to gain from a tariff or hurt the large
country by retaliation diminishes“ (26); the conflict engenders a
mutual loss if both countries are either large or small (27-28).
The benefits of size are documented in other contexts as
well. Alesina and Spolaore ascribe size a positive function of the
heterogeneity of population's preferences, and a negative function
of the fixed costs per capita of government, including such costs
for creating and maintaining a monetary system, a bureaucracy, a
tax collection system (3-4). Their model is consistent with the
widely accepted view that international conflict increases the
chances for success the larger is a country's size (14-15), but its
predictions become highly improbable in a tariff-formation setting.
They conclude first that a world of few, large countries increases
the probability of conflict, and second that the mass of observable
conflicts may go up among small countries (16, 23), although both
types of countries would rationally have no reason to embark on
such mutually harmful conflicts.
An appropriate inference from these results would be that
power-based relationships predictably do constrain countries'
behavior in a bilateral game. It is at the same time obvious that this
asymmetric perspective does not provide for a comprehensive
understanding of interaction between states. On the one hand,
when conflict among similarly sized countries is involved the
explanations are contradictory depending on how size is defined in
the first place.
 On the other hand, asymmetrical dependence is not by nece-
ssity indicative of relative power. Bottom et al. weigh experience
heavily in forging a much greater willingness and ability to exploit
the power differential in the negotiation process. Experienced
players, they claim, use their risk preferences to achieve a more
advantageous division of value (162).
Similarly, Wagner thinks that countries more realistically
face „unexploited opportunities to trade economic resources for
political concessions“ (463), a process which, if successfully
managed, could leave a country better off independent of the
degree of asymmetry. According to Grossman and Helpman,
policy constraints are relaxed, for instance, when a government
credibly makes use of domestic political contributions of various
special interests as an exchange currency for desired outcomes in
international negotiations (12).
In contexts where political economy plays a rather powerful
role it may be assumed a complex process to determine the
outcome of negotiations (Bottom et al. 147). Coalitions of partici-
pants and counter-coalitions, pivotal players are the normal
representations of a country's objectives and preferences. Countries
are rather prone to negotiate alliances in order to strengthen their
influence or to reduce their dependence by improving their
capabilities in competition with others (Serdar 3; Rao and Schmidt
671).
Manzini and Mariotti's study aims at modeling such a
context in which bargaining behavior is regulated by some
collective decision mechanism. Although majority vs. unanimity
voting are likely to result in different bargaining's outcomes, they
argue that during the process proposals are made using an internal
procedure, i.e. „a set of ex-ante rules of how to play the game“ (7)
and thus add an institutional structure to attain equilibrium. In
international negotiations, for instance, Conybeare remarks that the
Most Favored Nation (MFN) rule may constitute such a
mechanism later internalized in the politics of the domestic agents
by each player (72).

b.The national level of economic independence

 Rodrik observes that trade policies are almost always biased
against trade, rather than in favor of it (26). Several studies (e.g.
Conybeare 50; Rodrik 17; Helpman 1) point indeed that a country's
expected behavior may deflect from rational income-maximizing
objectives as politically-influential groups can be made better-off
by policy interventions in trade.
Although a theory of domestic politics has yet to come to life
(Helpman; Milner and Rosendorff), there is commonly ackno-
wledged that nation-states embody country-specific governance
capabilities (Lenway and Murtha 513), which bear on the strategic
interaction a highly influential mixture of domestic politics. When
trying to substantiate what those „governance capabilities“ really
mean, economists like Bhagwati typically admit a composite of
ideology, interests, and institutions as the key factors in settling on
a certain outcome of trade negotiations.
Several attempts have been proposed to understand the way
domestic political decisions shape strategic interactions. Romer
constructs a model in which misconceptions, i.e. individuals'
correlated errors, about how the economy functions play the key
role. According to his theory, voters' and politicians' beliefs are
relevant to political outcomes (29). The search for institutionally
conceived means to expose political representatives to information
is the solution he accepts in order to „provide any insights about
the source of seemingly inefficiently political decisions“ (3).
Rodrik's approach is more specific. He conveniently dicho-
tomizes between „demand-side„ of trade policy – individual
preferences and interest groups, and „supply-side„ of trade policy –
policymakers' preferences and the institutional setting. His analysis
however shows that „a satisfactory treatment of all these issues …
would likely be intractable“ (3). What nevertheless makes this
distinction important is the manner in which political influence
translates into bargaining advantage to a country. In this bargaining
environment, Mo argues that a negotiator operates with constraints
because she has to obtain the support of at least some of the other
domestic interests.
Several studies considerably enlarge the subject to correlate
more directly political conditions with economic behavior. Olson
explains slow economic growth as a positive function of the
stability of the overall pattern of rent-seeking interests or
„distributive coalitions“. July similarly ascribes economic
performance to the absence of ideological divisions in the
government.
Milner and Rosendorff reach complementary results from a
perspective they call „electoral uncertainty“, i.e. the majority in the
legislature and the executive are unlikely to share similar policy
preferences. They predict that an executive's ability to find
domestic consensus on an international agreement diminishes as
divisions in government increase, and the expected outcome
becomes more protectionist. These authors' evidence refers to the
1993 nearly failed NAFTA ratifications; the U.S. rejection of both
the League of Nations in the interwar period and the International
Trade Organization in the late 1940s. Ameldung also documents
the Turkey's choices of trade strategies in the postwar period and
shows how liberal trade policies regularly got promoted in the face
of non-factional domestic politics.
The attempt to reveal the mechanism in greater detail
nonetheless remains subject to analytical approaches with varying
degree of explanatory power. Schelling's and Putnam's works
advance the conjecture that, given sufficiently great domestic
constraints, a country can have a bargaining advantage in
international negotiations. Mo attempts to model the predicted
behavior, and his results show that the precise outcome depends on
the institutional setting whereby domestic political power is
distributed „in the medium range“. However elusive this result
may sound, it nonetheless underscores that a negotiating country
has to make in fact more concessions under greater domestic
constraints.
Miller strengthens the case of failure to avoid international
conflict due to domestic problems when he finds that democratic
and autocratic states indeed behave differently: the latter appear
more prone to escalate the conflict (399). His response, as well as
the Conybeare's lay emphasis on political vulnerabilities of leaders,
such as economic recessions, levels of domestic, cyclical decline of
specific industries, which discount the benefits of future
cooperation, and hence allow for protectionism.
 Grossman and Helpman capture the concept of trade
cooperation as a „measure of political well being“. By their
reasoning, trade war equilibrium is highly dependent on the way a
government's behavior reflects political conditions at home. A
liberal stance in international negotiations could thus be as much
expected as a protectionist one under the circumstances of credible
commitment on behalf of the executive to support various
industries' interests.
Recent research in institutional economics is an appropriate
field, which economists turn to in order to comprehend this
diversity of factors. North views institutions as „humanly devised
constraints that structure human interaction“ (10), faithful
reflection of the underlying incentive structure. In that sense, Juli
exemplifies cooperative behavior in trade policy area as a result of
alterations in the institutional framework (19).
In a comprehensive study, Easterly and Levine make a
strong case for the institutions, understood in the form of diverse
instances like political stability, property rights, legal systems,
patterns of land tenure and so on. Their findings explain cross-
country differences in GDP per capita once one controls for
institutions. In their words, „institutional quality seems to be a
sufficient statistic for accounting for economic development“ (33).
As easily can be inferred from these descriptions, the institutional
context is eventually made recourse to in order to gather
convergent, even if disparate, explanations for domestic policy
influences.

c. The issue-area level of economic interdependence

Aggarwal and Allen suggest that it is reasonably to think of
cases where overall power „may not always be fungible across
issue-areas„ (12). By consequence, the most preferred outcomes a
large country would normally envisage might be seriously
distorted by an apparently weak specific bargaining position, a
conclusion also supported by the previous discussion on power
asymmetry. Trade negotiations, and particularly integration
arrangements, have become increasingly multilateral. Large-
numbers trade games increase the complexity of interaction and
admittedly change the expectations about countries' behavior
(Alesina and Spolaore 23; Conybeare 55).
Papayoanou devises the concepts of collaborative-type vs.
unilateral-type preferences in order to deal appropriately with cases
when compromises and even submission to the other's party
proposals represent reasonable conduct. Similarly, Langlois and
Langlois conceive three possible classes of strategy whose
characteristics lie in the way the act of deviating from expected
play is moderately, severely or not punished by the partner (819).
This literature enriches the influence tactics in a considerably
wider range of determinants besides power. For example, Rao and
Schmidt list among them cultural distance, conflict frames, trust,
interpersonal orientation, and time horizon (667).
In Jervis' view, the actor is not supposed to understand the
logic of the theory; there are the actors' beliefs and expectations,
which should be incorporated in the models of interaction. The
approach to bargaining power thus attempts to settle on the best of
the outcomes possible in a specific situation. That makes research
particularly challenging. According to Snidal, to establish the
correspondence between an issue area (preferences, motivations)
and its game model is „the toughest problem confronting
successful empirical application of game theory“ (40).
Diverse explanations were proposed to understand power in
interdependence. Parts of them are simply conceptual. Commitment
and alternatives represent one of the answers in the sense that more
commitment leads to less power, while more alternatives bring about
more power (Leap and Grigsby 203). Resources too deserve
consideration because „the ability to provide, obtain, and withhold
resources is key to power“ (Leap and Grigsby 205). Lehman gives
credit to that capability to create new options, to make choices, and
to constrain the choice selection of other actors (1). For Schelling,
the actor's relation to the other player is to be understood as a
„mixture of mutual dependence and conflict, of partnership and
competition“(89). Nalebuff and Branderburger lay on the value-
added concept the same analytical value.
This research is particularly insightful because it draws
attention to the significance of the contextual issues. Schelling
anticipates the discussion when argues that the search for a favorable
outcome „is not concerned with the efficient application of force, but
with the exploitation of potential force“ (5). Kennan and Wilson's
empirical data on labor conflict resolution similarly suggest that the
parties influence the outcomes irrespective of the bargaining setting.
A consistent approach to the topic offers the Leap and
Grigsby's model which distinguishes between power that is available
(potential power) and power that the parties actually use (enacted
power) (205). It provides so an explanation for the process by which
power is accumulated or, alternatively, dissipated. In their view,
transformational factors account for the degree of the unused power
and may take the form of a particular party's strength of commitment
to a bargaining relationship; the alternatives available to a party; and
information available that has an impact on the bargaining
relationship (205). Because of the synthetic nature of this model, its
implications are developed in the next chapter.

4.Preferences and strategic structures

It is widely recognized that preferences are one important
parameter of conflict (Bennett 31). A common understanding is that
they reveal „an ordered and weighted set of values placed on future
substantive outcomes that might result from interaction„ (Moravcsik
24). Situational constraints provide the generic way to assess states'
preferences and further reveal the underlying strategic structures of
interaction. According to Snidal, an explanatory view on
negotiations emerges when a certain game structure, defined by
preferences and available strategies, and corresponding game theory
solution concepts lead to inferences about the behavior of individual
states and about the overall outcome (43).
Manski argues that if such processes are to get any practical
usefulness, one need to know what classes of processes are prevalent
in the real world (4). His own representation of interactions
describes preferences influenced by the behavior of the group a
person belongs to, by the exogenous characteristics of the group
members, and by the common individual characteristics or
institutional environments (24). Other significant results are implied
by experiments in evolutionary psychology, which assign
individuals one of the three behavioral strategies: „co-operators“ -
help the group at the expense of their individual rewards; „defectors“
- accept the help of others; and „punishers“ - punish defectors at a
cost to themselves (The Economist).
Generally, the essential features of these behavioral stances
are captured by a game structure in the form of assumptions about
actors, strategies, payoffs, and predictions about the outcomes
(Snidal 45). In most applied research, strategic structures are
understood in terms of simple 2 x 2 games to such an extent that
Stone views them a ubiquitous feature of the analysis of
international relations (216). This perspective allows researchers to
use taxonomy itself as a tool of cognition (Serdar 12; Kreps 37-41).
If this is adopted, the games formally include a description of
two policy choices available to each state (typically labeled
„cooperate“ and „defect“), an outcome associated with each of the
four combinations of policy choices, and preferences for each state
over the four outcomes. The game-theoretical approach is usually
presumed to provide rigorous flexibility, in the sense that
„mathematical logic provides the rigor, but dominant issues and
actors' interests let contributors be flexible in their modeling
choices“ (Pahre and Papayoanou).
Rapoport et al. who show that strictly ordered preferences are
conducive to 78 conceptually different 2 x 2 games provide a
reference work in taxonomy. Nonetheless, analysts embark on
characterizing several contexts in international relations, e.g. war,
nuclear deterrence, bargaining, crises, alliance formation, trade wars,
and international cooperation, by only a few games structures with
such odd names as Prisoners' Dilemma, Chicken, Harmony,
Deadlock, Stag Hunt, Bully or Called Bluff.
The relevant point with the game labels is their suggestive
implication with respect to the players' preference order over the
outcomes. That means that the same strategic structures may in fact
correspond to and explain different international issues if the same
preference orders apply. This inference inevitably makes scholars
like Fearon (Bargaining), Lichbach, Conybeare, and Aggarwal and
Allen to focus on the question of the origins of these rankings and
the process by which payoffs are generated. The analysis is thus
deemed to detail how the negotiating countries would rank the four
outcomes identified by the theoretical setup.
 A simple model of strategic structure in international trade is
presented by Conybeare (47). It is based on the partners' bilateral
trade structures, which may depict complementarities or similarities.
Trade complementarities imply low elasticity of demand for each
other's products, and high costs to a trade war because costs of
disrupting trade are severe; the partners by consequence prefer
cooperative solutions. Countries with similar economic structures
would have substitutes for each other's products and a higher
elasticity of demand for imports; in this case, the conflict would be
more easily absorbed.
A more appropriate methodology would be, following
Bennett, to integrate game theory with other perspectives and
endorse an eclectic methodology (20). Snidal embraces a similar
view as he suggests assorted analytical tools as, for example, incor-
porating different perceptions, conflict dynamics, multi-level games,
many moves (31), and testing different forms of complexities (39).
For Lichbach, several questions remain however open, as
those regarding the payoff structure, the extent of mutual and
conflicting preferences, and the types of interactions. The analysis
on the particular case is indicative of the preferred course of actions.
The proper shortcut from the theoretical validity to practical
relevance could be thus appropriately defined by the logic of
situation: the choice of strategy constrained by a country's or an
actor's relative power.

5.Summary
The topic of economic integration has been received a
heteroclite treatment with respect to the potential conflict and
strategic options which emerge during negotiations. Despite the
widely accepted framework of analysis, the traditional arguments
have received only minor support from a practical viewpoint, that is,
what a nation's representatives actually pursue during trade
negotiations, from both theoretical and empirical studies. The
empirical research rather highlights the theoretical ambiguities than
underpins different scenarios.
The complexity inherent with the decision-making process
receives important support from research. The game-theoretical
literature provides much help in understanding the logic of
interaction, that is, how the game is played. Different strategic
structures of interaction are illustrative of the players' constrained
behavior. The perception of rivalry and cooperation in the
marketplace finally directs the researcher toward a predictable
order of preferences and hence to frame a game-theoretical based
context of interaction.

IV
Research methodology

T his study does not consider the accession of the CEECS into
the EU as a relevant issue of negotiations. Clarifications are to
be presented in the next chapter. For the time being, it is suffice to
say that even if time sequence of entry for the applicants varies,
that does not induce any major change as to the membership
aspirations. The scope of negotiations extends much further
beyond the political decision of enlargement; evidence of official
statements and present record of results show that the main
concern of both sides actually resides in the terms negotiations are
concluded.
The literature review suggests a host of situational variables,
which point to the strategic options to reach a certain outcome of
accession. It is this latter aspect of negotiation, which defines the
integration game to be elucidated under the present investigation.
The analytical model proposed here follows in the steps of
other attempts (e.g. Conybeare; Aggarwal and Allen; Aggarwal
and Cameron; Brams and Kilgour; Lichbach) in the recognition
that no standard methodology exists as different authors chose to
adjust the research design to the particular context under review.
The theoretical framework is adapted to the three-level analysis of
situational variables just sketched in the previous chapter and
develops an original interpretation of its elements in the context of
the EU enlargement.
The variables reveal economic, political or social constraints
of strategic conduct and provide information on the extent the
negotiating countries are willing to make concessions. Their
predicted positions on particular issues reveal a certain structure of
preferences on foreseeable outcomes in the process of negotiations.
In this perspective, the present methodology is so constructed that
it generally applies to any issue of strategic interaction, which
involves two distinct parties with sufficiently conflicting interests.
The topic of agriculture is an application that presents the
advantage of a game of negotiations rich of contextual details.

A. Background on Community decisional mechanism

The enlargement negotiations were initiated and advanced to
the CEECS out from a complex EU decisional mechanism. It is for
this reason that this internal decision-making process has
fundamentally structured the carrying out of the negotiations.
The institutions entrusted by the founding treaties (The
Rome, Maastricht & Amsterdam Treaties, Articles 189-280) of the
EU to carry out the provisions therein contained are: a European
Parliament, a Council of Ministers, a Commission of the European
Communities, a Court of Justice, and a Court of Auditors. The
Parliament, the Council, and the Commission are usually known as
„policy-making institutions„, and adopt legislative acts based on
the integration strategy periodically outlined by the European
Council, an institution that convenes since 1974 at the highest
representative level of the EU member states. The way each of the
three institutions gets involved in the decisional mechanism
particularly influences the interaction during negotiations.
The European Commission (EC) wields a highly visible
presence in operational functioning of the Community. It may
formulate recommendations or deliver opinions to ensure that the
provisions of the successive treaties establishing the EU are
applied, or take the required decisions in exercise of the powers
conferred on it by the Council. The Commission performs its
current duties through the administrative work of Directorates-
General (DG). In the context of the eastwards enlargement, the
activity of coordinating the draft negotiating positions under which
each applicant country would join the European Union fell within
the competence of the DG Enlargement (DGE).
The European Parliament (EP) echoes the national interests
in the most participative mode: it consists of representatives of the
peoples of the Member States. By exercising its powers into five
main areas - amending legislation; controlling the budget; control
over the executive; appointing personnel to other institutions; and
the right to dismiss the Commission (Warleigh 62) – the
Parliament may or may not help configure a certain institutional
stability of the EU functioning.
The Council has power to take decisions on all EU
legislative proposals, and therefore plays the pivotal role in the EU
decision-making process. It consists of a representative of each
member state at ministerial level, authorized to commit the
government of that member state. Although the specific procedures
may differ, the main routine of policy-making process implies that
the Council receives and analyzes legislative proposals submitted
primarily by the Commission and takes the final decisions. The
Council authorizes the Commission to open the necessary
commercial negotiations with one or more States or international
organizations.
The Council reaches decisions by simple majority (SM),
qualified majority (QM), or by unanimity (The Treaties). Although
majority voting constantly increased its acceptance as a rule rather
than an exception, the working assumption remained that if
objections were raised, the veto would apply (Yataganas 15).
Traditionally, the qualified-majority threshold (QMT) established
at about 70% of the voting rights since the creation of the
European Community.
According to Bobay, given the political nature of the
European Community project, the founding members considered
justified to establish each member's voting rights on a functional
political equilibrium, while contingent circumstances like relative
economic weight, population or contribution to the Community
budget would have to be only of secondary importance (10). The
main question was thus not to decide how much voting rights each
Member State would be endowed with, but to define which groups
of countries should be able to block Community decisions. Bobay
concedes that an acceptably balance of power among EU Member
States has represented a critical issue from its inception (9). The
scale of the member States' relative voting weights in the EU-6 of
1957 is about the same as that of the EU-15 of 2000. EU
enlargements have progressively shifted the initial balance of
power to the advantage of small member States and to the
detriment of the large members as a consequence of the structure
of enlargement, which have mostly encompassed small States.
Founding countries agreed that a blocking minority would be
attained by the coalition of a large member (France, Germany, or
Italy) with a small one (Belgium or the Netherlands), while the
coalition of a large member with only a very small one
(Luxembourg) was considered insufficient to block a decision.
From that agreement it could be figured out the respective voting
rights and the majority threshold. The last enlargement
negotiations however compelled the EU members to ponder over
the proper allocation of voting power inside an enlarged and
increasingly heterogeneous Union.
The result was the conclusion of the Treaty of Nice in
February 2001 with the introduction of several innovations. In the
new system, with some exceptions, a decision is adopted if the
member States supporting the proposal represent at least the
threshold of weighted votes increased to nearly 74% for the EU-27,
half of the total number of members (the simple majority threshold,
SMT), and 62% of the EU population (Yataganas 39).
Some observers (e.g. Bobay, Yataganas) find the new rules
more favorable to the use of political influence by means of both
increased discrepancy among voting rights and easiness of the
formation of blocking coalitions or, alternatively, winning
coalitions.
On the other hand, in the EU-27, the higher QMT means an
enhanced opportunity to form alliances based on individual issues
to oppose decisions that have the support of a larger group. The
role candidate countries will play in the process is engrossed by the
magnitude of the enlargement. Yataganas sees their predictable
influence tied to the decisional realm because „they understand that
their interests will be better protected in a political Union, than in
an economic area open to a degree of competition they cannot
match or adopt“ (56).

B. Situational variables and constraints

1.The international level of dependence
The likely perspective of accession makes the enlargement
negotiations a particular game of interaction in which the degree of
dependence rests on the power deduced from the functioning of the
future decision-making mechanism. In this sense, a member state's
or candidate country's power is defined as its capacity to influence
the outcome of the decision-making process within the enlarged
EU.
This first assumption about overall power constraints is
supported by evidence in the context of EU previous enlargements
or likewise decisions. In studies like those of Baldwin et al.,
Moravcsik it is documented how crucial decisions on the allocation
of funds could be explained by using the anticipated voting power
of the new entrants.
Several studies (e.g. Bobay 14; Laruelle and Widgren 3;
Baldwin 78) enlarge the view and support the opinion that the
number of votes a country has does not measure alone its power.
Estimates of integrating countries' decisional capacity are usually
argued to depend on the probability of coalition formation (Algaba
et al. 15; Laruelle and Widgren 3). This literature proposes two
standard assumptions on a country's capacity to exercise its power.
Under the first assumption, all coalitions have an equal probability
of formation. Under the second assumption all the coalitions of a
given size have the same probability of forming. The first
assumption leads to the non-normalized Banzhaf index, while the
second one leads to the Shapley-Shubik index.
In spite of their different mathematical constructs, both
indices evaluate a country's vote as pivotal when the addition of its
vote to a particular coalition switches that coalition from losing to
winning (Algaba et al. 3; Baldwin 76). A winning coalition is
defined as that which can make a decision without the vote of the
remaining players (Laruelle and Widgrén 2). They prove useful in
the sense that they measure power as the relative number of times a
country is „pivotal“, i.e. changes a losing coalition into a winning
coalition. An index of 0.020, for instance, indicates that the
probability of influencing the result of voting is 2 per cent.
The two alternative approaches are likely to give a first
assessment of the impact of the EU enlargement on power. Table 2
below summarizes the findings from literature and discriminates
among several types of decisional power.

Table 2
Estimations of relative decisional power within the enlarged
EU-27 Council
Range of
Type of Range of
Countries Shapley-
decisional Banzhaf
(Voting rights) Shubik
power indices
indices
Strong Germany (29), France (29), I: 0.0778 I: 0.0871-
United Kingdom (29), Italy II: 0.0665 0.0870
(29) II: 0.0837-
0.0836
Moderately Spain (27), Poland (27) I: 0.0742 I: 0.0799
strong II: 0.0631 II: 0.0767
Moderately Romania (14), Netherlands I: 0.0426- I: 0.0399-
weak (13), Greece (12), Czech 0.0218 0.0196
R. (12), Belgium (12), II: 0.0407- II: 0.0394-
Hungary (12), Portugal 0.0263 0.0208
(12), Sweden (10),
Bulgaria (10), Austria (10),
Slovakia (7), Denmark (7),
Finland (7), Ireland (7),
Lithuania (7)
Weak Latvia (4), Slovenia (4), I: 0.0125- I: 0.0110-
Estonia (4), Cyprus (4), 0.0094 0.0082
Luxembourg (4), Malta (3) II: 0.0198- II:0.0131-
0.0177 0.0106
Source: Algaba et al. for indices; Treaty of Nice for allocation of voting
rights in the Council.

Table 2 presents two estimates for indices: 'I' stands for the
first decision rule – the weighted triple majority corresponding to
votes (QMT), countries (SMT), and population; 'II' stands for the
second decision rule - the rule I except for a qualified majority of
2/3 of the countries. The computations show a remarkably
similarity between the two indices, but sufficiently discriminate
among groups of countries as to their relative power.
The analysis however has not the accuracy to indicate that a
„moderate“ position could be meaningfully considered apart from
the larger group, which it belongs to, either „strong“ or „weak“.
Nevertheless, the results confirm the dichotomy between „large“
and „small“ Member States widely accepted in the literature on
voting power indices as suggested by Plechanovova, which without
exceptions parallel those countries in the table with „strong“ and
„moderately strong“ power, and „moderately weak“ and „weak'“
power, respectively.
At the same time, as the EU acts as a bloc and demonstrates
the capacity to structure the negotiations, it normally plays 'strong'.
The indices are instead particularly indicative of each candidate
countries' influence. Given the current weighted voting system,
Poland is the only country of the group which can play 'strong' at
the international level, while other countries, some more
economically advanced than others, are only able to play 'weak'.
The information gathered at this level specifically outlines
the concept of absolute power with the meaning Leap and Grigsby
refer to: „the power of an individual party irrespective of the other
parties' power“ (206). Its analytical value should be precisely
understood to the extent this measure of power tells, „how
powerful a country is likely to be on a randomly chosen issue“
(Baldwin 78; italics added). Possible coalitions are likely to form
on specific negotiating issues and national preferences could thus
reveal a mixture of interests in various instances. The other two
levels of analysis are thus required to overcome this kind of limit
the indices display.

2.The national level of independence

The widely acceptance of the quality of institutional change
for positive economic outcomes has been lately reflected in the
proliferation of cross-country indices measuring various aspects of
governance. Studies like those of Kushnirski, Easterly and Levine,
Weder make a positive correlation between credible and stable
institutions, on the one hand, and high levels of governance or
institutional indicators, on the other hand.
Kaufmann et al. construct probably the most laborious index
of governance broadly defined as „the traditions and institutions by
which authority in a country is exercised“ (Governance matters).
Specifically, the methodology aggregates estimates of three aspects
of governance: the process by which those in authority are selected
and replaced; the capacity of the state to implement sound policies;
and the respect of citizens and the state for the rules which govern
their interactions.
The authors' research draws on 17 separate sources of
subjective data on perceptions regarding the quality of governance
in different countries, which include international organizations,
political, and business risk rating agencies, think tanks, and non-
governmental organizations (Governance matters II). Six aggre-
gate governance indicators - „Voice and Accountability“, „Political
Stability“, „Government Effectiveness“, „Regulatory Quality“,
„Rule of Law“, and „Control of Corruption“ – are then computed
within a range from –2.5 to 2.5, such that higher values correspond
to more credible and more stable institutions.
A cautious note the authors themselves put forth should
qualify the use of their findings for the present analytic purposes.
Because it is difficult to discriminate among the majority of
countries with any degree of confidence, it is advisable to sort
countries into broad categories according to their levels of
governance (Aggregating Indicators 3).
Further, as the individual countries' indicators are metho-
dologically transferable in aggregate ones, an aggregate index for
the EU is computed as a weighted average of Member States'
institutional indicators. Similar methods are used, for example, in
the works of Kushnirsky to construct an 'institutional index of
transition' (6), or of Quaisser and Hall to compute a 'market
economy index' (17).
For the present purpose, the national indicators are given
weights corresponding to each member state's representation in the
European Parliament. The choice is supported firstly by the faithful
representation of this elective body of the national electorates. Due
to the Parliament's ascending role over Commission, its
composition is thought to reflect more appropriately the influence
of the domestic politics of the Member States. Secondly, the
discussions engendered by the enlargement as to the new compo-
sition of the Members of European Parliament (MEP) convincingly
show the growing importance of Parliament in the EU deci-
sion-making process. Yataganas considers the case indicative of a
still persistent interference of national policies in European
integration which proliferates to the composition of the Commi-
ssion as well (42, 24).
The aggregate indicator for the EU is computed as a
weighted average of individual indicators, where the weighs
correspond to the share of each Member State in the EP. During
enlargement negotiations (2001), Parliament's composition has
been as follows: Germany 99 (15.8%), UK, France and Italy 87
(13.9%), Spain 64 (10.2%), Netherlands 31 (5.0%), Greece,
Portugal and Belgium 25 (4%), Sweden 22 (3.5%), Austria 21
(3.4%), Denmark and Finland 16 (2.6%), Ireland 15 (2.4%), and
Luxembourg 6 (1%) out of a total 626 MEP (Yataganas 18). A
synthetic table is presented below.

Table 3
Estimates of indices of institutional stability

Country/Partner 2000/01 1997/98

European Union 1.12 1.22
Bulgaria 0.12 -0.01
Czech Republic 0.64 0.68
Cyprus 0.95 1.01
Estonia 0.85 0.49
Hungary 0.80 0.87
Latvia 0.36 0.28
Lithuania 0.39 0.27
Malta 0.72 0.85
Poland 0.59 0.70
Romania -0.15 -0.10
Slovakia 0.45 0.24
 Country/Partner 2000/01 1997/98
Slovenia 0.85 0.85
Source: Country estimates are calculated as simple average of the six
aggregate governance indicators from Kaufmann, Kraay, and Zoido,
Governance matters II, 2002.

A cautious note is required in interpreting data in Table 3 as

well. First, the indicators are suggestive when applied to individual
cases rather than comparing different national estimates. For
example, a decrease of the EU indicator from 1.22 to 1.12 in the
period under consideration indicates a loss in institutional stability,
but the values are not statistically significant in contrast with other
close estimates. Second, discrimination between broad categories
does make a difference as regards the influence of domestic
politics. According to Kaufmann et al., an acceptable classification
would consist of top, middle and bottom terciles as measured
against the -2.5 / +2.5 interval. That means that the parties
considered by this study could be assigned the following
institutional 'labels': 'stable'/'credible' for the EU and 'moderately
stable/credible' for both Poland and Romania because of their
closer distance to the first tercile.

3. The issue area of interdependence

Supplementing the power relationships in dependence and
independence with interdependent interaction completes the
analytical framework. A country may either agree upon mutually
advantageous terms or try to shape the course of negotiations
disproportionately to its benefit. The issue-specific outcome is
additionally constrained by factors specifically related to the
negotiating issues.
The model of Leap and Grigsby develops a theoretical
framework to consider power in a certain bargaining context (205-
206). The essential distinction they and other authors like Schelling
make consists in viewing bargaining power as the ability to exploit
potential power a country/partner is endowed with. Reminding of
the fable of the tortoise and the rabbit, an outcome looks more or
less promising according to how the negotiators transform issue-
area capabilities in effective control of the specific bargaining
problem.
The analysis proposed by Leap and Grigsby rests on
observational measurements of sources of potential power and the
transformational factors which actually configure it in enacted
bargaining power. The general concept of the sources of potential
power is constructed on the degree of control a negotiator –
organization or people – may exert on the various elements of the
negotiating environment. Three categories of resources are
considered to dominantly influence potential bargaining power:
• Uncontrollable (U): public policy, economic conditions,
industry structure, elasticity of product demand, political-social
context;
• Controllable in the long run (CLR): amount and type of
information, technological change, formal bargaining structure,
pattern bargaining, presence of fixed and variable sum
components, attitudinal structuring;
• Controllable in the short run (CSR): bargaining team
composition, negotiation setting, pre-impasse bargaining tactics,
concession behavior, cost assessments of a dispute.
The general theoretical model should be adapted and
supplemented with particular factors pertaining to the negotiating
issue. For reasons that will become evident in the next chapter,
discussion on each resource among those mentioned above may
prove redundant as they can be conveniently combined in either
existing elements or new ones. Such cases include especially CLR
resources where 'policy formation' and 'decision-making process'
regroup more aptly the original suggestions of Leap and Grigsby.
Moreover, 'public policy' as regards the agricultural negotiations
proves rather a 'controllable' event in the long run, with
components variably influencing both 'policy' and 'decisions'.
Similarly, 'concession behavior' may also refer in the present
context to 'cost assessment', 'bargaining team composition', and
'pre-impasse bargaining tactics'. On the other hand, some
resources, e.g. 'elasticity of product demand' and 'technological
change', are thought irrelevant for the present topic, while, e.g.
'industry structure', would go much beyond the scope of the study.
 These qualifications change the analytical framework into
the following structure:
• Uncontrollable (U): economic conditions and political-
social context;
• Controllable in the long run (CLR): policy formation and
decision-making process;
• Controllable in the short run (CSR): concession behavior
and negotiation setting.
The extent these resources are exploited hinges on the
transformational factors a negotiator faces in the specific context.
The innovation the model of Leap and Grigsby suggests is that
disparate such factors proposed by the literature are thought to
produce simultaneous effects on potential power and thus to
provide a more accurate evaluation of the strength or weakness of
bargaining power.
Three factors are deemed essential to make use of and
transform potential power: commitment to a bargaining issue;
perceived alternatives of reaching the same outcome; and infor-
mation available to each party. An analytical depiction of the
process appears in figure below.

SOURCES OF POTENTIAL BARGAINING

POWER
Transformational factors

Controllable in the
Controllable in the
Uncontrollable (U) long run (CLR)
short run (CSR)
Economic conditions Policy formulation
Concession behavior
Political-social Decision-making
Negotiation setting
context process

Short-run and long run

Commitment power adjustments
Alternatives
Information

ENACTED BARGAINING
POWER

Bargaining outcomes
Manifestations of
Mutual consensus
bargaining power
Winning
'Cooperate' strategy
No consensus
'Not-cooperate' strategy
Other party's winning
 Figure 1. Theoretical Model of Bargaining Power in Strategic
Negotiations
Adapted from Leap and Grigsby (209)

A dynamic perspective is introduced when considering

short-run and long run adjustments of potential power. Bargaining
provides a continuous opportunity for the players to learn about
each other and to react in a way to strengthen their own positions.
It is thus evolving an ongoing examination of the determinants of
power, more realistically perceived than in ex post investigations.

C. Instrumentation
Ghemawat aptly describes the methodology of formulating a
specific model: „pick a particular case and then cast around for
game-theoretic models developed by others that can be extended or
adapted„ (17). Once embarking on an accepted method, problems
remain, though, for the type of the games the actors are involved
may not be as readily noticeable as presumed.
Constraints and corresponding strategic choices lay the
grounds for a model of strategic interaction. A strategic interaction
modeled as a game consists of: relevant players; strategies;
outcomes; and preferences for payoffs associated with each
outcome. The players are the negotiating parties, i.e. the EU and
each CEEC for the present purpose. The strategies represent the
possible courses of actions, provided that the behavioral options
perceived by the players may be plausibly reduced to cooperation
('C') or non-cooperation ('~C') on a given issue.
A process of exposing the basic situations of interaction has
been developed in the works of Aggarwal and Allen (AA),
Conybeare (C), and Brams and Kilgour (BK). This study uses an
adapted game model of strategic interaction for integration
negotiations. A generic two-person, symmetric normal form game
of strategic interaction is presented in the Figure 2 below.

Player B
 Cooperate(C) Not cooperate (~C)

Cooperate (C) Mutual consensus B prevails (BP) in

(MC) in issue area issue area
Player A

A prevails (AP) in No consensus (NC)

Not cooperate (~C) issue area in issue area

Figure 2. A generic game of strategic interaction

Based on and adapted from Aggarwal and Allan 11; Brams and Kilgour 7.

The set of possible outcomes of the game are given by

considering all the combinations of strategies that the players could
choose. Four possible outcomes are depicted in the figure above.
From the point of view of actor row they are: CC (mutual
consensus); ~C~C (no consensus); C~C (other's player winning);
and ~CC (winning).
The preference set specifies how good or bad each outcome
is for each player. The way preferences are deduced is fundamental
for finding the predicted conclusion of the negotiations in the form
of one the four possible outcomes. General rules are hard to find,
as they usually are acknowledged by some authors, but discarded
by others. For example, cardinal scales of measurements are found
more informative (Bacharach 21), but at the same time largely
irrelevant for game theory applied to international relations (Snidal
46).
Zürn suggests a principle to sort out this kind of dilemma.
He says preferences should be estimated independent of conflict
behavior lest they lead to ex post facto rationalization of historical
cases (298). A typically minimal level that could warrant a valid
definition of the game structure is provided by ordinal measures of
preferences. Aggarwal and Cameron, for example, value different
policy formulations of the actors in utility functions, but then
convert cardinal payoffs to ordinal rankings in empirical analysis.
Utility scales illustrate a preference order for each player, in which
the four possible outcomes are simply ranked from best (4) to
worst (1).
 The following assumptions are made about the relationships
among each player's preference order for payoffs under the three
situational variables exposed earlier. Arguments from the literature
review shortly explain the choice and the approach similarly
suggested by the adopted models is indicated next. The
corresponding structures of strategic interaction are indicated
further in Figures 3 and 4.
a. Institutional stability
a1: each player prefers mutual consensus to no consensus
when institutionally stable (CC > ~C~C) AA
a2: each player prefers no consensus to mutual consensus
when institutionally unstable (~C~C > CC) AA
The quality of institutions at home is a good indicator as
regards the states' propensity to avoid or accept a confrontational
stance in negotiation, i.e. allow for the occurrence of 'CC' vs.
'~C~C'. A climate of stability is generally thought to provide a
larger room for maneuver and increased willingness to seek for
mutually advantageous solutions. Institutions do not however
provide enough information to presume a country's behavior as to
its capability to prevail over the other party's demands.
b.Overall power
b1: each player prefers no consensus to the other player's
winning when power strong (~C~C > C~C) AA
b2: each players prefers the other player's winning to no
consensus when power weak (C~C > ~C~C) AA
A purely asymmetric relationship favorable to a player
results in obvious preference for escalation of conflict ('~C~C'). A
strong position makes available superior resources to withstand a
conflict. On the contrary, a big degree of dependence makes
indulgence ('C~C') the most reasonable option. A weak player is
always supposed to see conflict as a destructive choice.
c. Issue-area bargaining power
c1: each player always prefers winning when issue-strong
(~CC is best) AA+BK
c2: each player prefers winning to no consensus or the
other's playing winning when issue-weak (~CC > ~C~C or C~C)
AA
 Prevalence in negotiations, that is reaching an outcome that
exactly matches own agenda, is probably the only common
objective for both parties irrespective of their constraints in issue-
area. The difference appears when the issue-strong player plausibly
sees no other alternative. For the issue-weak player, the preference
is more constrained and should accordingly allow for possible
mutually advantageous solutions as the best outcome.

d.Interactive effect of overall power and issue-area

bargaining power
d1: each player prefers winning to mutual consensus when
power strong and issue-strong (~CC > CC) BK+C
d2: each player prefers the other player's winning to mutual
consensus when power weak and issue-weak (C~C > CC) C
In contrast with the model of Aggarwal and Allan, which
consecrated this approach, this study finds more appropriately to
allow for the combined effect of both general and specific
capabilities to exercise power in interaction, instead of integrating
the effects of overall power and stability. The rationale is twofold.
First, institutional stability is arguably a more general variable of
independent nature. Its influence becomes manifest rather directly
than in combination. Second, exercise of power in interaction is
better perceived through a doubled influence both at the general
and specific level. In economic terms at least, because of tangled
woven of disparate interests, it would be impractically to discern
the impact from each origin.
A strengthened position in negotiations provides incentives
to evaluate conflict escalation better even than consensus. This
position offers the highest probability to win out the opponent in
interaction. Conversely, a weakened situation is presumed to allow
for the lowest level of compromise: accepting the other party's
demands at the expense of the consensual outcome.
 Institutional stability
Stable Unstable
Issue resources
and overall power a1: CC > ~C~C a2: ~C~C > CC
Issue strong
c1: ~CC is best C~C ~CC>C~C>~C~C>CC
~CC> or >~C~C Hero
Power weak CC
b2: C~C > ~C~C Chicken or
Leader
Issue weak
c2: ~CC > ~C~C or ~CC CC
C~C or >~C~C>C~C ~CC>~C~C>or
CC C~C
Power strong Prisoner's Dilemma or Deadlock or
b1: ~C~C > C~C Stag Hunt Deadlock analogue

Issue strong &

power strong ~CC>CC>~C~C>C~C C~C
d1: ~CC > CC Prisoner's Dilemma ~CC>~C~C>or
CC
c1: ~CC is best Deadlock or
b1: ~C~C > C~C Deadlock analogue
Issue weak & power
weak ~CC>C~C>CC>~C~C ~CC>C~C>~C~C>CC
d2: C~C > CC Leader Hero

c2: ~CC > ~C~C or

C~C
b2: C~C > ~C~C
Figure 3. Deduced constrained preference order from Row’s
Perspective (for column, ~CC is replaced by C~C and conversely)

Institutional stability
Stable Unstable
Issue resources
and overall power
Issue strong Chicken Hero
Power weak 3,3 2,4 1,1 3,4
4,2 1,1 4,3 2,2
 Leader
2,2 3,4
4,3 1,1

Issue weak Prisoner's Dilemma Deadlock

Power strong 3,3 1,4 2,2 1,4
4,1 2,2 4,1 3,3
Stag Hunt Deadlock analogue
4,4 1,3 1,1 2,4
3,1 2,2 4,2 3,3

Issue strong & Prisoner's Dilemma Deadlock

power strong 3,3 1,4 2,2 1,4
4,1 2,2 4,1 3,3
Deadlock analogue
1,1 2,4
4,2 3,3

Issue weak & Leader Hero

power weak 2,2 3,4 1,1 3,4
4,3 1,1 4,3 2,2

Figure 4. Deduced symmetric ordinal games

D. Data collection
The proposed model of strategic interaction applies to the
issues specific of enlargement negotiations on agriculture. The EU
and each of the CEEC exchange concessions and settle on various
matters like production quotas, level of subsidies, and rural
developmental funds. When the negotiations end, the issue is
provisionally closed until the applicant country becomes a Member
State. In this model, such an event occurs when the two partners
reach one of the four possible outcomes.
Data are gathered to illustrate one of the two facets of the
bargaining position given certain levels of overall power, as well as
of quality of the domestic politics environment: a partner may play
'strong' or 'weak' on a specific issue when it is institutionally either
stable or unstable and when it enjoys 'strong' or 'weak' capabilities
to influence overall decisions. The country's assessment of overall
power and institutional stability follows the mentioned findings in
the literature.
The research design requires original data on each partner's
capacity to play 'strong', when it favorably appropriates against its
own value systems the conclusion of negotiations, or to play
'weak', when the enacted power makes the more preferred behavior
difficult to carry out. The terms of reference for data collection are
provided by the Leap and Grigsby's construct of bargaining power.
Two methodological considerations support an observational study
for the purpose of this assessment. First, the emergence of
decision-makers' interests during negotiations depends on a
continuous process of interaction and learning from agreements on
previous issues. There is no other way they become manifest but
through successive offers and counter-offers which are not
plausibly foreseen before the negotiations.
Second, estimates should be collected from various
documents reflecting the actual stance a country embarks on. Zürn
suggests that that could be „the best material available„ because
politicians or decision-makers are often „ambiguous in the public
realm„ (300). Additionally, search of library collections and
observation of the actions of prevalent groups of interests
supplement the analysis.

E. Data analysis
Analysis aims at predicting the possible strategic options of
the partners when the integration agreement frames the general
objectives, but the negotiations on specific issues have not a
predetermined settlement.
Two eastern countries experiences are observed in the
application, in both cases the agriculture topic being of sensitive
importance to the negotiators. The first case is that of Poland, one
of the countries that completed the negotiations in December 2003
and became a Member of the EU on May 1st, 2004. The second
case is that of Romania, a country that concluded its accession
negotiations in December 2004. An historical treatment of the
interaction is found appropriate in order to test the predictive
power of the proposed model.
 Finding a strategic option is further complemented by
considerations on reasonable alternatives so that each partner
improves its own position. The model offers sufficient room to
deepen the analysis in this direction: 'Stag Hunt' is the only
strategic structure which allows for a mutually advantageous
equilibrium, while in all the other types of interaction a partner
may wish to take on certain strategic moves in order to reach its
most preferred outcome.

V
Bargaining power: resources and constraints

B argaining power is transformed from potential to enacted, that

is, „the effective influence„ a party can wield during
negotiations, by transformational factors. Analysis of these factors
in the next chapter is illustrative of the bargaining strength or
weakness on the issue and helps square the determinants of
strategic interaction.
This chapter introduces preliminary findings on the
bargaining power as applied to the agricultural dossier in the
process of the EU eastward enlargement. The interest is focused on
the evaluation of the potential bargaining power by answering two
questions: Where have the partners got the power resources from
to support their baseline negotiating positions? How have they
been constrained in doing so?

A. The agriculture dossier

In June 1993 during the Copenhagen European Council, the
European Union (EU) defined the criteria, which Central and
Eastern European Countries (CEECS) would have to meet before
their membership application could be accepted. These criteria
concern political and economic facets of the applicants' functioning
regimes, as well as adoption of the acquis communautaire. The
European Commission's opinions on the extent the candidate
countries prepare for accession in compliance with these criteria
are reflected in annually published Regular Reports. Launching
this screening process, the Commission stressed „the potential
benefits of enlargement for peace and security and economic
growth and development throughout Europe„, but noted that the
prerequisite for accession was the adoption of the Community
acquis (Enlargement: Preparing for Accession).
The basic principle of the negotiations has thus become that
all the candidate countries must approximate their legislation to
that of the acquis. In the simplest sense, the acquis defines the
rights and obligations all EU members have under EU law, i.e. the
legislative body expressed in the EU founding treaties; the
secondary legislation - detailed laws and rules adopted on the basis
of those treaties; and the policies of the Union.
There were identified 31 chapters of the acquis, which
practically correspond to the negotiating substance as regards all
policies of particular interest to the first two accession criteria. The
whole process of harmonization is meant to duly ensure the smooth
functioning of the EU policy mechanism at the accession date.
Bilateral accession negotiations based on the Europe
Agreements (EAS) opened in 1998 with the so-called 'first-wave'
countries – the Czech Republic, Cyprus, Estonia, Hungary, Poland,
Slovenia - and extended in 2000 to the 'second-wave' applicants –
Bulgaria, Latvia, Lithuania, Malta, Romania, and the Slovak
Republic. In April 2003, ten CEECS – all of the above excluding
Bulgaria and Romania – signed the Accession Treaties (AT) to the
EU and thus enlarged the EU membership from 15 to 25 effective
from May 1st, 2004.
The agricultural dossier has evolved gradually as a result of
the complex evolution of the newly established political and
economic relations between the EU and CEECS after 1990. One of
the first measures was the extension of the EU Generalized System
of Preferences (GSP) to the CEECS to include tropical products
and some types of pork and poultry meat with a 50% levy
reduction on limited quantities (Josling and Tangermann). From
this fairly small compromise to the controversial discussions over
the functioning of the CAP a decade later, the bridge to gap looks
impressive in retrospective by any negotiations' standards.
The EAS were first to provide a consistent rethinking of the
principle of trade liberalization, even though when applied to
agriculture the main provisions were detailed in a separate protocol
to ensure only a progressive reduction of barriers to trade.
Preferences granted under the EAS took the form of a schedule for
liberalized tariff quotas based on actual exports to the EU in a past
reference period. Products not exported to the EU in the past, such
as cereals, many diary products, sugar and many sugar products,
were thus not included in the preferential arrangements.
By 1996, membership applications based on the EAS had
been received from all CEECS; the EU had been functioning as a
single market for 3 years; enlargement to include three new
members (Austria, Finland, and Sweden) and the WTO Uruguay
Round Agreement on Agriculture (URAA) had just taken effect in
1995. These challenging developments prepared the stage for a
renewed approach to negotiations.
In July 1997, the European Commission adopted an action
program known as Agenda 2000 to reform major policy areas, and
also delivered in this context its first opinions on applicants'
compliance with the membership criteria. The Berlin European
Council reached a political agreement on Agenda 2000 in March
1999, a decision that was to shape fundamentally the accession
process in general, and the agricultural negotiations in particular.
The consequences engendered for the latter reveal a much broader
impact than for many other issues.
There was first the issue of further trade liberalization. Under
Agenda 2000, further concessions ranged from full and immediate
liberalization for the least sensitive products, such as horses for
slaughter, fat livers of geese, or horse radish, to an assortment of
more or less restrictive trade policy measures decided on specific
requests made by the CEECS and agreed on a case by case basis
(EU and Enlargement; Bergschmidt and Hartmann 13).
There was then the agreement on a new financial framework
(FF) for the period 2000-06. Two new pre-accession instruments
were created – a structural instrument (ISPA) and an agricultural
instrument (SAPARD) – in order to cope with widespread poverty
and archaic rural development in Eastern Europe, which had
acutely become a thorny aspect of enlargement.
The Agenda 2000 initiative however rose to prominence in
the enlargement context mostly because it signaled the readiness of
the EU to bring in the accession negotiations Chapter 7 on
agriculture, one of the most important chapters of the acquis. This
status has been reached thanks to two particulars. First, the acquis
in the field of agriculture with ca. 40% of the EU legislation
represents by far the most voluminous negotiating chapter
(Delegatia, Fisa de sector). Second, agriculture belongs to those
areas where legislation and policies mix up negotiable and non-
negotiable issues alike in an extremely demanding negotiating
setting.
The non-negotiable part of the acquis is mainly framed by
legislative acts and institutionalized practices. A substantial part
was initially presented in the 1995 White Paper (Preparation of the
Accession Countries), a Commission document containing all-
inclusive references to the legislation relevant to the internal
market. The applicants were indicated here the regulations
concerning the veterinary, plant health and animal nutrition fields
and agricultural commodities subject to specific marketing
standards.
Another non-negotiable component of the acquis consists of
institutional requirements referring to the establishment and
functioning of the Common Market Organizations (CMOS), which
are essential to the proper operation of the agricultural markets.
Detailed legislative and institutional presentations are subjects of
subsequent accession documentation such as Agenda 2000 and
annual EC's Regular Reports on each candidate country's progress
towards accession.
The negotiations on the Common Agricultural Policy (CAP)
mechanism however make the agriculture dossier highly
controversial. The negotiable aspects construct a classical
bargaining game built on exchanges of concessions, divergent
arguments and situations of conflict. The reason is that CAP
involves policy measures with important budgetary impact for both
partners alike: for the EU, this financial envelope covers about half
of the total budget; for the CEECS, it represents approx. 70% of
the total value of their agricultural output.
Even from a general perspective, handling the agricultural
dossier proves difficult for reasons of manifest dissimilarities both
among the CEECS themselves, and among these countries and the
EU, which in turn give rise to different assessments of how the
available resources could be best put at work in agriculture.
Several studies emphasize that agricultural trade intervention in the
CEECS ranges from discriminating against the agricultural sector,
as is the case on some product markets in Bulgaria and Romania,
to considerably protecting agriculture, as happens in Poland and
Slovenia (Bergschmidt and Hartmann 6; Swaminathan et al. 5).
Against this complex setting, the negotiations in agriculture
officially began when the countries in the „Luxembourg Group“
presented their negotiation positions on agriculture in November-
December 1999. Soon after, the EU adopted its common positions
and opened negotiations on the agricultural chapter in June 2000.
Bulgaria and Romania were the last to open their Chapter 7 in
2002. The European Council in Nice in December 2000 declared
that the EU was ready to receive new members from 2004
onwards. As a result, candidate countries concentrated on
concluding their negotiations before the end of 2002, as the latest
date for a candidate acceding in 2004.

B. Bargaining position of the European Union

1.Uncontrollable sources
a.Economic conditions
Several analyses (Patterson, Agricultural Policy; Field and
Fulton; Urff) ascribe the formation of the EU agricultural policy to
a compromise between liberalism and interventionism within the
larger architecture of European integration. It is not less true that a
general concern for security of food supply was recognized by the
Commission to strengthen the case in favor of continued policies
of exemptions and regulations of the agricultural sector (Our
farming future).
The CAP objectives were given appropriate formal
consideration in the Treaty of Rome, which included agriculture
and trade in agricultural commodities as a core component of the
Common Market - art. 38 (32 after the revision of Amsterdam) -
and provided for the introduction of a Common Agricultural Policy
(CAP).
By the 1970s, as a result of its protective and supportive
agricultural policy, the EU had become „a farm fortress“: its world
trade share increased; a sizeable degree of self-sufficiency in near
all staple products had been achieved; and big-sized companies
emerged as a result of considerable increases in farm productivity.
b. Political-social context
The agriculture was given support at the expense of
continuously inequitable and highly controversial costs. The
problem of growing productivity and static and easily predictable
demand has become an enduring characteristic of the agricultural
environment generating food surpluses and ever barely sustaining
costs. Eloquent for the tension created is the 1988 agreement on
reform which was reached only after Commission had threatened
to take the member states to the European Court of Justice for not
producing a budget (Patterson, Agricultural Policy).
The disputes evolve around social, economical, and political
issues. The income gap between the highly productive minority
and the economically less efficient, but socially important majority
of farmers, continued to widen. Farmers are frustrated because the
CAP has failed in achieving its aim of enabling farmers to earn an
income that by and large reflects the general income development
and allows them a standard of living comparable to other groups of
the society (Urff 38; Pelkmans). In this regard, the eastward
enlargement exerts probably the most direct and challenging
impact. Frohberg and Hartmann mention „strong opposition from
EU farmers„ to give reasons for the protracted trade liberalization
towards candidate countries.
2.Controllable in the long-run (CLR) sources
a.Policy formulation
The CAP mechanism rests on the creation of CMOS for
products that account for roughly 95% of the EU agricultural
production. The European Agricultural Guidance and Guarantee
Fund (EAGGF) supports the accompanying financial scheme. This
mechanism implies various forms of market monitoring and farm
support with the aim to ensure competitive advantages and
financial incentives for farmers and rural inhabitants. The
agricultural funds are spent in proportion of 90% for market
organizations and 10% for rural development (The Common
Agricultural Policy. 2000 Review).
The CAP expenditures are set to cover three purposes:
• Market interventions to support EU farm prices through
intervention purchases, storage, and export subsidies. In 2000, the
EU spent €10.6 billion on agricultural market support, i.e. 12% of
the total EU budget.
• Direct payments (per hectare or per animal) to subsidize
vegetal and animal production. In 2000, the EU spent €25.6 billion
on direct payments to farmers, i.e. 30% of the total EU budget.
• Co-financing programs to support rural development over
a broad spectrum of activities out of which national and regional
authorities can select those that they consider most appropriate. In
2000, the EU spent €4.2 billion on rural development measures, i.e.
5% of the total EU budget.
The last decades have witnessed marked transformations in
respect to the PAC objectives and by implication to the
destinations of agricultural funds. In the beginning, the EAGGF
absorbed more than 70% of the EU budget (Urff 33) against 47%
these days.
Rural development expenditures only became significant
after Agenda 2000, but the change mainly concerned the other two
destinations which replaced in time each other's roles in the
agricultural budgetary outlays: the share of direct payments
increased from less than 10% in 1991 to close to 60% in 1997,
while the importance of market interventions has declined from
over 90% in 1991 to less than 40% in 1997 and is predicted to fall
to close to 20% by 2006 (Swinnen 3).
Agenda 2000 initiated a sweeping reform which finally was
agreed on 26 June 2003, when the EU farm ministers adopted
measures acclaimed „to completely change the way the EU
supports its farm sector“ from 2004 - 2007 at the latest. The key
elements of the reform consist in:
 • Single farm payment independent from production; limited
coupled elements may be maintained but this payment will be
subject to a range of environmental conditions („cross-
compliance“).
• Reduction in direct payments („modulation„) for bigger
farms to finance the new rural development policy.
• A mechanism for financial discipline to ensure that the
farm budget fixed until 2013 is not overshot.
• Revisions of the market policy for the milk sector, cereals,
rice, durum wheat, nuts, starch potatoes and dried fodder sectors.
b.Decision-making process
Decisions with respect to agricultural markets are first taken
at the national level, where the government of each member
country examines the benefits and costs to itself and to political
parties, regions, and interest groups within the country (Field and
Fulton).
The second stage occurs at the EU level, where compromises
and bargains among member countries are worked out. The
Council of Ministers is composed of the ministers from individual
member states who are relevant to the policy proposal under
consideration. For example, the Council of Agriculture Ministers
usually makes decisions about the CAP, but is not charged with
formal responsibility for the budgetary consequences of price
policy decisions.
The agriculture ministers in the member states who form the
Council of Agriculture Ministers represent national interests and
must approve any EU agricultural reform package at the
Community level. The Agriculture Council traditionally has taken
decisions by unanimous vote even though the Treaty of Rome
allows qualified majority voting (Patterson, Agricultural Policy
Reform). Although the fact should reinforce a Member State's
general power position, a secretive attitude to the decision making
process has made the compromise instrumental in the policy
reform (The Economist).

3.Controllable in the short-run (CSR) sources

 a.Concession behavior
The considerable share of agriculture in the CEECS eco-
nomies has made from the beginning apparent that the financing of
the enlarged Union would somewhat follow a formula described as
„power politics dictate the EU budget„ (Baldwin et al. 159). The
visible part of this behavior opposed the EU member countries to
the candidate countries over such issues as extending the direct
payments to CEECS farmers.
According to Karlsson, the center stage has been instead
occupied by intense political disputes between present Member
States identified as net receivers from and net payers to the EU
budget. The issue however ignited under circumstances
independent from enlargement. Some net payer members - the
United Kingdom, Germany, the Netherlands, Sweden and Austria -
were granted disproportionately lower contributions to the budget
and they generally oppose any undue increase in the financial
burden. That might make the present net receivers - France is the
major net beneficiary of CAP - request some compensation for
expected diminishing financial benefits as a result of enlargement.
The result was that the candidate countries' requests in the
areas of direct payments, production quotas and other supply
management instruments, and rural development were delayed and
elusively referred to until a Common Financial Framework (CFF)
was finally issued in January 2002 (Enlargement and Agriculture).
That happened just several months before the negotiations should
have been concluded according to the Nice calendar and made
some commentators ascribe this procedure to a „take it or leave it“
attitude (Karlsson 33).
From an internal perspective however, the CFF tried to
accommodate financial control with non-discriminatory
enlargement. On the restrictive side, the proposal favored gradual
payments to the candidates till 2013 when the new member states
would reach 100% of „the support level then applicable“, that is, a
level estimated by Karlsson to be 20% lower than what the present
system would give (60). On the conciliatory side and according to
past practices of reform inside the EU, a budgetary compensation
reserve was earmarked to ensure that no new Member State should
find itself in a net budgetary position that is worse than the year
before enlargement. Transitional periods for the adoption and
implementation of certain parts of EU legislation were also
accepted for specific and exceptional instances.
There was neither required nor offered any alternative as
regards the revenue side of the EU budget, and the new Member
States were thus supposed to contribute fully to the EU resources
from accession.
b.Negotiation setting
In addition to constraints pertaining to internal policy
workings, the scope of concessions has been also shaped by
international commitments undertaken under the WTO umbrella.
The EU expectedly transferred internationally the compromising
approach and exercised it for long during the negotiations of the
Agreement on Agriculture of the Uruguay Round (AAUR) and of
the ongoing Doha Round (DR).
Benefiting from a strong influence on the world market -
around 85 per cent of the value of world export subsidies
(Matthews 9) – the EU pressed for important concessions in other
areas of concern (Patterson, Agricultural Policy Reform) and in
spite of concerted international opposition in fact managed to
provide as much protection at the end of the Uruguay Round as did
non-tariff barriers in the late 1980s (Matthews 5).
The consequences for the enlargement process are twofold.
First, the EU afforded proposing a stable framework for
negotiations by assuming that URAA commitments remain
unchanged over the 2003-2010 period (Prospects 7) although the
DR was initially supposed to be closed by the end of 2004.
Countries in the next enlargement wave should expect by
consequence a different horizon for CAP formulation.
Second, the result of maintaining a generous financial
support to agriculture has been achieved at the expense of drastic
redistributions of payments to WTO compliant destinations. The
Commission’s recommendations for direct payments, quotas and
other supply management measures have been designed so as to be
in line with the EC comprehensive negotiating proposal which was
adopted by the Agricultural Council on 20-21.11.2000, in
particular, as regards the reduction of the Community’s aggregate
support and the retention of the concept of the 'blue' and 'green'
boxes (Agriculture and Enlargement 23). That considerably
narrowed the offer to the candidate countries as regards the levels
of support that could have been admitted without conflicting with
the restrictions on subsidized exports or domestic support resulting
from URAA.
The baseline negotiating position included the following
main elements:
• Direct payments: Direct income subsidies for farmers in
candidate countries should be phased in over a 10-year period,
starting at 25% of those paid in the existing Union in the first year
of accession. In order to facilitate the appropriate adoption of the
CAP mechanism, the CEECS were presented the option to choose
between the standard direct payments system and a simplified
approach for a limited period in the form of a decoupled area
payment applied to the whole agricultural area.
• Production quotas and other supply management
instruments: It has been stated that the quantitative reference levels
should be determined on the basis of past performance, i.e. to
reflect actual production in a recent year, 1995-1999. The
Commission provided detailed proposals on production in all the
sectors with a market organization, relevant for the candidate
countries.
• Rural development: The candidate countries have been
already presented the opportunity to gain experience in the design
and implementation of a co-financed policy through the pre-
accession instrument SAPARD. Supplementary accompanying
measures will be implemented upon accession.
• Risk of deflection of trade: At the request of Poland, the
Czech Republic and Slovakia for introduction of an import
safeguard clause, the EU favored transitional measures to be
decided before accession under the appropriate procedure.
• A scheme of flat-rate payments: A group of self-
subsistence farms should be assisted over a definite period.
The Commission's negotiating position is presented in
Appendix A.

C. Bargaining position of Poland

 1.Uncontrollable sources
a.Economic conditions
The prevalence of private ownership in the agricultural
sector has always distinguished Poland among other CEECS. The
private sector (share of the total arable land) reached 92.3% in
1998 from 80% in 1990 (Note). Poland also weighs as the most
agricultural country providing 59% of the Gross Value Added
(GVA) of the five countries of the 'Luxembourg Group' (Pouliquen
7).
Apart from that, available analyses (Gwozdz; Josling and
Tangermann; Gorton) does not differentiate Poland from the other
candidate countries in respect with the low performance of the
sector. Estimates place the Polish agriculture at least 30 years
behind the level achieved by the EU (Gwozdz 32).
This bleak portrait is mostly explained by inadequate
proportions depicting a poorly developed market economy: 70% of
rural population employed in agriculture; 43% of total agricultural
output accounts for un-marketable production; approx. 2/3 of the
present employment is projected as labor surpluses; supply
contracts (concluded between a producer and food processing
plants) discipline only few crop deliveries (sugar beets, rape seed,
flower and vegetable seeds); only 3% of the agricultural area
represent holdings of between approx. 50 and 100 hectares
(Gwozdz; Note; Pouliquen).
The share of agriculture in GDP (including hunting and
forestry) is 4.8% as compared to 12% in 1988. The average
employment in agriculture (including hunting and forestry) reaches
25.8% of the total labor force. Cereals are the main produce
providing over 20% of the total agricultural output value, followed
by the production of pigs (17%), and milk (14%).
Processed food products have a relatively high share in
exports, where meat and meat products, fruit and vegetables as
well as processed fruit and vegetable products are major items. The
products that cannot be grown domestically, i.e. coffee, tea, citrus
fruit as well as fish, fats, and oils of plant origin, fodders, dominate
imports.

b.Political-social context
 Agriculture has made up a prominent theme in the Polish
public life for long. In 1860, the National Union of Farmers,
Agricultural Circles and Organizations (KZRKiOR), a political
representative of all farmers, was established. The rural voice
strengthened with the creation in the communist regime of the
Communist Peasants' Party (ZSL), predecessor of the present
Polish Peasants' Party (PSL), and Solidarnosc agriculture, a side
effect movement of the social upheaval of the 1980s. All theses
parties held a constant presence in the legislative or executive after
1989, but they more notably were joined by Samoobrona (Self-
defense), a radical and popular movement of small farmers
founded in 1992. This latter party is currently credited with 20-
30% of popular support (Gwozdz 1; The Economist) thanks to
such promises that Poland will „begin the process of secession“
from the EU if not granted important concessions to agriculture or
other struggling sectors.
The issues related to agriculture find indeed strong appeal to
the Polish citizens. The food expenditure is with approximately
37% about twice as high than in the average for the EU-15 with
17.4% (Country Report on Poland 6). The income measured as Net
Value Added (NVA) per active employed person reaches only
6.7% (1999) of the comparable EU-15 level (12).
2.Controllable in the long-run (CLR) sources
a.Policy formulation
Embryonic policies of the EU mechanism were already in
place at the time of negotiations. The Agricultural Market Agency
(ARR) was created early in 1990 as the main intervention
organization under the supervision of the Ministry of Agriculture
and Food Economy. Since 1994, the sugar sector has been subject
to market arrangement similar to the EU market organization for
sugar. Policy instruments included guaranteed prices, import and
export mechanisms for key commodities, notably cereals, milk
products, pork and beef, and a broad range of intervention policies
(Agenda 2000 71; Gwozdz 10).
A coherent agricultural policy began emerging in the mid-
1990s with the „Strategy for Poland„ program in 1994 which
included rural development as a priority, shortly followed up by
three other rural strategies designed for the long term perspective
of accession (Gwozdz 16). In that context, two other institutions
were created – Agency for Restructuring and Modernization of
Agriculture (ARMA) and Foundation for Aid Programs to
Agriculture (FAPA) – for a better administration of EU financial
support (Gwozdz 16-19). Chambers of Agriculture have been
established at provincial (voivodship) and national level under the
Act of Chambers of Agriculture (April 1996) (Agenda 2000 73).
The budget expenditure for the agricultural sector amounted
to 9% of the total government budget in 1994 (Agenda 2000 72),
but more than 70% represents expenditures for social security
(Gwozdz 34). A small budget in absolute terms nevertheless
contained the protectionist impact: the PSE (producer subsidy
equivalent) for Poland, calculated by the OECD, was 21% in 1995
compared to 49% for the EU.
Market and support prices in Poland are about half the EU
prices for most products with the exception of the intervention
price of wheat and pig-meat which stabilized at ca. 80% over the
1995-96 period.

b.Decision-making process
The beginning of accession negotiations gathered the
negotiation competences around three bodies, Ministry of Foreign
Affairs, Chancellery of Prime Minister, and Office of the
Committee for European Integration (UKIE). At the same time,
European integration departments or units were created in each
ministry.
The Negotiation Team was headed by the Chief Negotiator
who was originally responsible to the Prime Minister and after
October 2001 reported directly to the Minister of Foreign Affairs.
The Team's task was to prepare the negotiation positions of the
Polish Government, and to collaborate with line ministries in
charge of particular chapters to be negotiated.
The agriculture issues were dealt with by the Minister of
Agriculture and Rural Development as a member of the Committee
for European Integration. Institutional arms also included the
National Council of European Integration, set up in December
1999 with the role of territorial consultations in particular in rural
areas (Pyszna and Vida 19), and two diplomats in charge with the
agricultural affairs at the Polish Mission to the EU (Pyszna and
Vida 28).
Formulation of negotiation positions was a challenge for
such newly formed decisional mechanism. A visible weakness
consisted in ineffective intra- and inter-ministerial cooperation at
the level of civil servants due probably to a post-communist
heritage (Pyszna and Vida 37). The Polish administration counter-
balanced this insufficiency by keeping a tightly centralized
decisional mechanism related to the process of integration. It is
remarked that in the years 1997-2001, there were no more than
four key-actors and principal references (Pyszna and Vida 19-23).
Their high-quality background, with important international
connections, ensured Poland self-confidence and openness to
negotiations allegedly on an equal level with EU counterparts. The
EU officials are said to have remarked a „very aggressive [attitude]
on their national interests“ on behalf of the Polish negotiators (The
Economist).

3.Controllable in the short-run (CSR) sources

a.Concession behavior
The imprint of the rural electorate has been especially made
visible in political life. Besides Samoobrona, the Polish Families
League (LPR), a catholic party, advocates „a nostalgic comeback
to the past era“ and „closed borders“ (Gwozdz 28-29). At the same
time, moderate positions of other political parties have not been
able to converge on common grounds: PSL policy of promoting
domestic market protection and a slower pace of privatization
process has clashed with those of the socialist Democratic Left
Alliance (SLD) or the center-right Civic Platform, which focused
more on the link between the market and drastic modernization of
the sector.
In the economic realm, these concerns translated with the
same ambivalence. The predicable result has been one of „the most
protectionist policies among the other candidate countries“
(Gwozdz 3). The arguments were also fed by estimates like those
presented by Chevassus-Lozza and Unguru which show that the
adoption of the EU tariffs will increase Polish imports with a
remarkably 16.5% against 1998 (7).
On the other hand, organized initiatives developed relatively
late. They mostly appeared in relation to the necessary institutional
preconditions to comply with some CMOS, like for instance the
producers' organizations supported by the legal framework adopted
in September 2000. This fact is suggested by FAPA estimations,
which indicated approx. 500 such organizations in 2002 (Gwoydz
9), with half of them in the fruit and vegetables sector that is where
financial support is mostly dependent on them.

b.Negotiation setting
The Polish Government adopted 31 December 2002 as the
date on which Poland will be prepared for accession to the
European Union. While it agreed to implement in full the acquis,
the Polish side expressly asserted its willingness to incorporate the
full range of CAP and structural instruments as a pre-condition for
assuming obligations concerning the quotas of agricultural
products that are subject to quantitative limitations (Poland's Reply
Jan. 2001 4).
The indecisiveness on the EU part as regards its common
position next to a host of other circumstantial reasons were even
invoked to reserve „the right to justified modification of the
position paper … before the end of negotiations“ (Government).
In the framework of the accession negotiations Poland has
solely raised requests in relation to the taking over by the
Community of stocks existing at the date of accession and bought-
in under Poland's own intervention policy (cereals, butter, milk
powder and beef). The Community engaged in taking over of
public stocks on the condition that the storage and marketing costs
for stocks artificially accumulated in the Candidate Countries prior
to accession would not be acceptable (Agriculture and
Enlargement 20).
The Poland's baseline negotiating position consisted in
(Government):
• Introduction of necessary protective measures during the
first few years of the membership, if trade between Poland and one
or several EU Member States leads to a justified threat of serious
disturbances in the Polish agricultural market.
• Direct payments: In its reaction to the EU proposal of
January 2002, Poland exposed a more relaxed position and
accepted a gradual introduction of the financial support over an
only three-year transitional period (2004 – 2006). The initial
installment of 25% of the EU level was considered „decisively too
low“ (Gwozdz 38).
• Production quotas: The most important negotiation
problems were referred to the production of milk, white sugar and
isoglucose, potato starch, dried fodder and raw tobacco. Poland
expected a flexible approach as regards the reference crop on
justification pertaining to the potentially superior land productivity,
as well as maintaining of jobs and income sources in the
agricultural sector.
• Temporary authorizations for establishments processing
and placing on the domestic market raw milk and milk based
products, as well as meat and meat products for which production
has not been fully compliant with all EU veterinary requirements.
• Establishment of a new common market organization in
table potatoes and for expansion of the list of agricultural products
covered by the EU financial support, such as herbs.
• Temporary financial support (3 years from the date of
accession) for expenses borne in connection with the establishment
of the Integrated Administration and Control System (IACS) up to
50% of the total cost of the System.

D. Bargaining position of Romania

1.Uncontrollable sources
a.Economic conditions
Romania is the only CEEC that continues to benefit a
developing country status on a multilateral level. This status is
largely explained by the importance agriculture still plays in the
Romanian economy. The contribution of agriculture and forestry to
the GDP was constantly significant and increasing from 13.7% in
1989 to 18.6% in 1992, but reversing to 11.4% in 2000. The
number of the active population employed in this sector also
showed an ascending trend and reached a record 42% of total
employment in 1999 compared to 27.5% in 1989 (Romania's
Position), similar only with the beginning of the 1970s. With 4.9
million people working in agriculture, fishery and forestry,
Romania will have the highest employment in agriculture in the
EU-27 (Country Report on Romania 6).
Until 1989 private farmers held 25% in agricultural
production and increased the share to 87% in 1996. The period of
1990-91 witnessed the break-up of the former regime's agricultural
cooperatives and the introduction of a new system of land tenure.
The good auspices for reform were impeded by an impractical
legislative action, which was amended for its most part from 1991
to 1998. The process delayed the formation of a market for land
and hence led to severe fragmentation of land and animal
production. An „exceptionally high„ 80% of the utilized
agricultural area (UAA) is occupied by individual holdings not
exceeding 2.4 ha UAA (Pouliquen 39; Leonte et al. 32), whereas
95% of milk-cow farms hold 1-2 heads as compared to the EU
average of 17.5 heads (Academia Romana, Restructurarea 90).
The value of the global agricultural production constantly
remained to a level of 95-98% of its 1989 value, the smallest
decrease among the CEECS except Albania. The record was
explained by the sheer importance of self-consumption, which may
reach 50% for pigmeat, fruit and vegetables, 38% for milk, and
33% for poultry (Academia Romana, Impactul 131-2, Implicatiile
17, Restructurarea 90, 111).
The export consists mainly of unprocessed agricultural
products with low added value, such as live animals, cereals and
oilseeds, while Romania is a net importer for each of the
agricultural products groups.

b.Political-social context
The rural habitat is emblematic for the huge tasks Romania
has to confront domestically on the way to accession. The main
agricultural regions exhibit particularly low degree of
modernization: the self-employed and unpaid family workers
account for over 70% of the employed population; persons with
primary and secondary education account for 60% of the total
employed population in the rural area; university graduates
working in the rural area may account for as low as 0.8% in some
regions; 57% of farmers are poor and as much as 56% of incomes
per peasant household are in kind (Leonte et al. 20-24).
The statistics depicts a bleak landscape, which is also
suggestive of the modest living standards in Romania. The average
citizen has to spent on food approximately 58% of its total income
which is about 3.3 times higher than the average for the EU-15 of
17.4% (Country Report 6).
The relative availability of food has particularly worsened
during the communist regime, which neglected agriculture, supply
conditions and rural development all together. The only political
party representative for farmers – the Christian Democratic
National Party (PNŢCD) – was banned in 1947, while its
personalities were arrested or went in exile. In 1990, it resumed
activity and even formed a coalition government from 1996 to
2001, but its representation of the peasants' goals and interests has
reached little visibility. Currently, its popular support hovers
around symbolic figures.

2.Controllable in the long-run (CLR) sources

a.Policy formulation
Apart for land reform, the reorientation to market economy
has not purposefully turned attention to the problems of
agriculture. First rural development initiatives appeared in 1998 as
a result of the beginning of enlargement negotiations (Tesliuc 138).
Ideology has provided a shaky foundation for policy reform;
opinions have been widely dispersed among proponents of market
liberalization or supporters of group interests. As documented by
Tesliuc, the obvious inexperience with the workings of a market
economy has made agricultural producers made constant recourse
to centrally planned indicators.
Policy instruments were extensively used but only to
underscore once more an apparent lack of definite objectives.
Schemes of support such as direct aid, subsidized inputs (seeds,
fertilizers), preferential credits, stocking interventions, guaranteed
minimum purchase prices greatly favored state-owned enterprises
or farms supplying all or part of their production to state agencies
at prices lower than on the open market (Academia Romana,
Restructurarea 18; Tesliuc 122, 131).
The reform proceeded at an accelerated pace after 1997 with
initial help from the World Bank. In a first phase, the formulation
of policy was fundamentally shaped by acute structural
impediments. Especially the early decisions of the Romanian
government seeking out of social concern to oblige producers to
sell cheaply through the state distribution network turned out to
have created a „devastating influence“ (Romania's Position). The
resulting price scissors affected the sector a long period, between
the liberalization of industrial products prices in 1992-1993 and the
liberalization of agricultural products prices in 1997.
In a second phase beginning with 2000, the authorities began
elaborated increasingly consistent programs and regulations mainly
in relation to the harmonization of the Romanian legislation with
the EU legal framework (Country Report 02). Strategies for the
development of agriculture, the food industry and forestry for the
period 2001-2005 and beyond were elaborated and specific
policies, structures, and legislation required to comply with the
CAP were identified.
In 2001, the allocation from the state budget for agriculture
and forestry was more than €400 million, but the level of domestic
budget support for agriculture - about €332 million in 2001 -
remained steady in real terms over 2000-2003 (Country Report;
Regular Report 2003).

b.Decision-making process
The imperative of accession has led to institutional
development and co-ordination of the activities of integration both
at central and local level. The Ministry of European Integration
(MIE) was established in 1997 and assigned the tasks of a former
Department within the Ministry of Foreign Affairs (MAE).
Departments of European integration were set up within the
ministries and in the local public administration structures.
MIE coordinates the negotiation process. The Chief-
Negotiator has the rank of Minister-Delegate. At the level of each
ministry, the accession preparation is coordinated by Directorate of
European integration (Scarlat and Popescu 19).
 The agricultural trade tasks have been kept by the same
hierarchy within the Ministry of Agriculture, Food, and Forestry
(MAAP) during the post-transition period. The Ministry was still
perceived in 1997 as an institution of the „state farms„ (Tesliuc
135) and easily influenced by the producers' lobby (144). By
consequence, in 2002, needs for „conceptual work“ and necessary
procedures to prepare the administrative structures were at „very
early stage“ (Scarlat and Popescu 37). Specific targets have been
identified lately with the administration of the CAP. Loosely
developed inter-ministerial working cooperation in this area makes
the more so necessary a timeframe long enough before accession in
order to experiment and effectively wield the required CAP
instruments (Ciupagea et al. 28). For instance, many financial
commitments were often contained because of the opposition from
the Ministry of Finance (Tesliuc 145).

3.Controllable in the short-run (CSR) sources

a.Concession behavior
The inexistence of any viable political back up has not been
offset expediently by the organization of agricultural professional
associations. The necessary adoption of some CMOS, especially
for fruit and vegetables, has compelled the Government to issue a
specific law in 2001 and apply for international aid to speed up the
process. The efforts have been hardly satisfactory: according to
some estimates (Academia Romana, Restructurarea 52), 85% of
producers do not belong to any professional association.
A national commercial presence on food markets is similarly
just emerging. Imports from the EU increased dramatically in the
last years, while processed products have still to pass the necessary
quality standards for export. For example, Romania has no
authorized company to export sausages on the Community market
and only five slaughterhouses for poultry meat are licensed to do
so in 2004 (Ziarul Financiar). These circumstances make the
nascent commercial interests not too visible and by consequence
create no credible conflict between the Romanian side and the EU.

b.Negotiation setting
 The Romanian officials have not clearly made known a
certain concern for agriculture. A protectionist stance was adopted
during the URAA with resulting average binding tariffs of 143.5%,
one of the highest in Eastern Europe, whereas the officials have
constantly leveled down the applied tariffs to levels similar to
those of the most liberal CEECS as the Czech Republic. Given the
general adverse conditions for the development of agriculture, it is
barely discernable what the likely effects of this liberal stance
could have been expected. Yet both multilateral and enlargement
negotiations are to provoke further market openness.
As a developing country under its WTO commitments,
Romania chose to limit the level of domestic support to 10% of the
value of its production. Although that is by no means very
restrictive in relation to providing support or export subsidies to its
agricultural products, Romania lacks the real financial means to
provide this kind of support. In 2000 for instance, export subsidies
were about €5.4 million for wheat and maize and about €185,000
for chicken and pork (Country Report 02). In 2004, when its
present status expires, Romania however has to revoke its present
derogations and presumably negotiate reductions in the value and
quantity of the subsidized exports.
Romania has higher import duties than the Union on most
products and consequently the adoption of the Customs Common
Tariff (CCT) will lead to a lower protectionist level. As regards
deflection of trade, important share of imports, e.g. sugar and
bananas, exempted from duties through PTAS will not pose any
problems because the partners submitted to preferential trade are
excluded from compensatory payments.
Romania put forward the following baseline negotiating
position (Romania's Position):
• Transitional periods of 5 years from the date of accession
to adopt safeguard measures for the import of agricultural products
from one or more Member States;
• Transitional periods for complying with various
Community regulations regarding veterinary and phytosanitary
issues in the production for wine, pig, meat processing, and milk;
 • Direct payments: the adoption of the period 1985/9 –
1990/1 to determine the base area, and the reference period 1990 -
1994 for rice.

E. Summary
The agricultural dossier contains a substantial 'bargaining
area' of negotiable components that frame strategic games between
the EU and each candidate country. The stakes in these games are
engendered by various constraints with variable degrees of control
the partners may exert upon. Depending on their capability to
wield a certain influence on these variables, a potential bargaining
power emerges in the issue area.
The potential bargaining power is manifest in the way the
countries put forth their negotiating objectives. The EU has been in
the position to structure the negotiations from the beginning as to
their scope, legislative framework, and subjects of bargaining. As
regards the agricultural aspects, the EU and the two candidate
countries selected for discussion considered clearly discernable
even if largely opposite objectives in the areas of production
quotas, direct payments, base area and transfers to modernize rural
areas.
As is normal in negotiations of this type, the conclusion on
the issue of contribution to the budget was left until the last
moment: 2002 for Poland and 2004 for Romania. In effect, as
Josling et al. suggest, this tactic acted as a balancing item, with
payments to the prospective members (or reduced collection of
funds from them) used to compensate for the „losses„ in the
negotiation process (25).
 VI
Formulation and solutions
of strategic negotiations

A. Assessment of issue bargaining power

1.Enacted power for EU
a.Commitment

T he EU has spent most of its negotiating effort to make obvious

that the interplay of demands and concessions during
negotiations rests on a two-pronged argument: that enlargement
should proceed in observance of the needs to preserve the social
functions of agriculture; and that the economics of integration
plays a complementary role in formulating the basic negotiation
positions.
As regards the first part of the argument, the three basic CAP
pillars - CMO, Community preference and financial solidarity -
withstood any major revision on strongly defended social
arguments (Our Farming Future 15; COPA). In spite of
ambiguous economic justification of the CAP objectives
(Pelkmans), problems with support for production were
permanently answered by a compromise to reorganize the
destination of funds away from production and toward
maintenance of the rural habitat. The decades following the
completion of the common agricultural market in 1968 witnessed a
progressive shift of the financial burden towards Member States
either in the form of co-financing instruments or directly to
producers as limitations on agricultural spending.
At the same time, the agricultural lobby insists that the
solution to the world trade problems is the supply management. A
EU consumer spends approx. 12% of his budget on food, while in
the beginning of the 60s this could amount to 50%. Thus, the
consumer is not the victim of the agricultural policy as it is often
suggested (The Export Subsidies 5).
The reforms of 1992 and 2003 probably represent the most
practical responses in favor of more support for non-productive
rural activities. There have been found new destinations and goals:
compensatory aid payments to farmers for the associated loss of
income, limits on arable land for large farms, and an amalgamated
list of such rural policy measures as soil amelioration, agro-
environmental schemes, promotion of tourism and handicraft. Net
payers played an important role during the negotiations of Agenda
2000 when they successfully achieved to redirect budget
expenditures in a more restrictive direction than before (Karlsson
29).
The newly prevailing social concern of the Community has
come to be known as „the European model of farming“ (Fischler;
CAP 2000 Review), a concept so aggressively defended
internationally that it substantially shaped the strategic options
during the current multilateral negotiations. Fierce opponents of
agricultural protectionism like the Cairns group have eventually
had to indulge in the EU argument and adopt a more cooperative
approach (Urff 39).
As for the second part of the argument, the EU officials were
concerned that the CAP could make ineffective the economics of
integration by overestimating the CEECS capacity to absorb the
EU funds. In its position papers, the EU has constantly toned down
its partners' claims to increased financing by arguing that large
inflows of money into the CEECS rural economies would
potentially cause serious social imbalances and slow structural
transformation. Since experience shows that it will be at least five
years for the effects of EU programs to be felt, and at least ten for
their full impact to be seen, in the early years levels of direct
payments should remain relatively modest. As the EU officials
explained it, ten years would appear necessary before the normal
EU-level of direct payments should be reached (EC Procesul de
extindere, Analysis of the Impact 5-6).
 Swinnen observed that financial support pledged to CEEC-
10 in the agricultural area from the EU budget would amount to
more than 70% of their 1999 agricultural GDP (9). That sort of
considerations raised the question of the merit of the candidate
countries to make claims on any form of financial support. In
accordance with the Berlin FF, the issue of direct payments was
first not recognized as a negotiation issue (Poland's Reply 5),
whereas in its Common Position of 30 January 2002 (Enlargement
and Agriculture), the EU took the reform of PAC apart from the
negotiations on the agricultural dossier.
A similar issue was raised by the accession countries'
demand to consider their production potential on the basis of
historical levels, that is, pre-1989 indicators, which would have
generally biased the reference quota and payments levels towards
higher levels than those currently prevailing. The EU firmly
sustained to orientate the quotas on the much lower present
production on arguments regarding distorted statistics by the
communist regimes and a better match with the actual production
structures and consumers' preferences (Analysis of the Impact 9-
10).
The EU has been involuntarily helped by its partners in
sustaining its points. Poland and to a greater extent Romania have
not been able even to prepare conclusive statistics for some
products. Romania confronted a particular situation when it
incompletely used the export quota in its trade relations with EU.
This dismal performance was explained by the selection of the
1987-1989 reference period which „disregarded distortions created
by the communist regime“ (Leonte et al. 52).
b.Alternatives
The „no enlargement“ option would have come at a
moderate price especially because the time factor was not so
important. The date of accession was conveniently postponed from
2002 to 2004 for the first wave of candidates, and the decision for
the next enlargement does not unequivocally favor any deadline.
Baldwin et al. express a shared view when write that „Eastern
enlargement is not really about transfers and narrowly defined
economic benefits“ (168). In this perspective, enlargement was
thought not to depend essentially on agriculture dossier or any
other topics of crucial monetary importance for the CEECS.
On the other hand, the EU finds itself constrained to reform,
though in self-imposed limits of socially justifiable interven-
tionism. The ongoing multilateral negotiations make the CAP
reform inevitable and by consequence offer the EU a credible
rationale to indulge in only parsimoniously the CEECS demands
for production support. Besides, the CAP expenditures were
successively imposed to rise no faster than 74% of the Union's
GDP growth, as well as an annual upper spending limit of €40.5
billion (at 1998 prices) by the Berlin Summit. For the longer term,
it is argued (Mayhew 13) that this perspective considerably
balances the EU arguments toward more satisfactory agreement on
reference levels than on direct income subsidies to farmers.
c. Information
Various scenarios were taken into account when the
Commission presented an information note on the Common
Financial Framework (CFF) for 2004–2006 in January 2002
(Enlargement and Agriculture), but under all circumstances the
enlargement payments for the period 2004–2006 were estimated at
a maximum of 0.23% in the EU-15 budget in 2013. The sums were
also considered in the time perspective of the next Financial
Perspective, and no apparent difficulty was found as regards their
absorption by the net payers (Karlsson 66, 101).
After correcting the Berlin FF to allow for the increase in the
number of countries joining the Union (10 rather than 6 as assumed
at Berlin) and the date of enlargement (2004 instead of 2002
assumed at Berlin), the calculations showed that the sums foreseen
in the FF would be coincidentally enough to cover the cost of rural
development and market support (around 20% each). The key issue
became thus extending direct payments to CEEC farmers, which
would incur an additional cost of €6-7 billion (Karlsson 66).
Expectations converged to justify these concerns. Estima-
tions of enlargement impact showed that the CEEC-10 would
double the number of farmers under the EU subsidy scheme and
would increase the area under cultivation by 42%. Besides,
simulation models (Josling et al.; USDA; qtd. in Gacz and Wyzan,
Time Pattern) bring forward convincing evidence that the CEECS
have the potential to destabilize some markets. In fact, the EU
abandoned rye intervention altogether because of the foreseen
impact of the Polish productive capacity (Costs and Benefits).
Since, as a rule, the price level in the candidate countries is
lower than within EU-15, farmers would suffer no loss due to this
factor and hence there would be no need to pay compensation.
Besides, simulations run for the candidate countries (Analysis of
the Impact 11) show the huge task of restructuring in order to fill
the requested quota levels. For example, only after a longer
adjustment period until 2015, would milk production reach the
levels of 34.45 Mill. to., which is even below the quota level of
34.8 Mill. to. currently requested by the Candidate Countries.
A first hint to the possible balance of bargaining strength on
these areas came before the negotiations started from the
Commission's suggestion that decisions on the coming 2007-2013
FF should be made prior to accession. Budgetary negotiations on
the next financial framework were eventually agreed to start early
in 2005.
Additional particular data eased further the EU task.
Estimates of external trade effects show a EU export increase of
20.7% due to the removal of trade barriers with CEECS with
Germany the main beneficiary. The effect stems mainly from sales
of fruit and vegetables, oilseeds, cereals, meat and beverages
(Chavessus-Lozza and Unguru 9), that is markets where the
CEECS have considerable productive potential.
The alignment to the Common Customs Tariff is to affect
only slightly the relations with the third parties which would be
entitled to claim compensation according to the article XXIV of
GATT only for foods (USA, Canada, Israel) and mushrooms
(China) (Chevassus-Lozza and Unguru 12-13).
Consumers' concern about food safety (Urff 37) has received
mutually beneficial arrangement on transitional periods for the
modernization of processing establishments.

2.Enacted power for Poland

a.Commitment
Poland has proven a decisive attitude to support the rationale
behind the CAP mechanism. From the very beginning of the
negotiations on Chapter 7, in July 1999, the Polish Government
approved the structural policy guidelines - „Coherent Structural
Policy of Rural and Agriculture Development“ - that assert
Poland's support to defend the European model of agriculture
together with its multi-functional character.
In other instances nevertheless, Poland attempted to play
hard the negotiation game. That aspect has become manifest
especially in opposing organized forms of protest to trade
liberalization. Poland was unique among the other CEEC for
strongly defending its farmers’ interests by initiating an 18-month
trade war with the EU (Business Central Europe). The agreement
reached in September 2000 has been characterized as „the deepest
and widest coverage of any of the recently concluded agreements
on agricultural trade liberalization with the
CEEC„ (Breakthrough). The Commission could not stop observing
constant disturbances of the sector due to a potent lobby (Gwozdz
25-31).
The position in negotiations had in fact more nuances than
these both firm positions may suggest. The efforts were heavily
supported by the importance of rural life for the Polish society.
Kolarska-Bobinska presents the results of a survey which shows
that 60% of farmers want to pursue farming in the future compared
to 40% three years ago (3). Another survey from the Public Affairs
Institute stresses dissatisfaction with support from the State in
agriculture for approx. 85% of rural population and more than 90%
of farmers (qtd. in Gwozdz 35).
Following the EU Common Position of January 2002, the
Polish response claims for „solutions to fully compensate for the
negative impact of unequal support on the competitive conditions“
(Gwozdz 37) but could not obscure the divergent opinions between
PSL and SLD as regards more favorable concessions. The
approaching date of accession made PSL more open to
compromise as proved in the case of the transitory phase for the
sell of land plots to foreigners (Gwozdz 38).
b.Alternatives
Poland embraced the perspective of an applicant country: it
was its goal to ask for membership provided the accession criteria
are fulfilled. Whatever the role of agriculture in the Polish society,
the EU membership has been seen as a way to initiate policies and
participate in decision-making at the international level. This will
also allow Poland to have a positive influence to help solve
strategic international problems, which would not be possible
outside the Union. The country reportedly has ambitions to belong
to the „six big„ member states of the EU and to benefit from a
particularly strong position in the EU decision-making process
(Pyszna and Vida 9; The Economist).
That general position has been internally sustained on an
almost consensual basis. All key actors even from the beginning of
the transformation process pledged strongly in favor of accession
to the EU, as the only guarantee for Poland’s strong international
position and the success of transformation. A weakness of political
forces opposed to EU integration can be attributed to the fact that
their key politicians have a poor knowledge of EU policies and
poor linguistic skills (Pyszna and Vida 30).
In favor of this flexible attitude, much helped a fallback
position Poland be prepared in an advanced stage of negotiations.
The proposal insisted on topping up EU direct payments from the
national budget in addition to shifting 60 per cent of EU rural
development funding to direct farm payments. The EU considered
that if one ruled out the idea of maintaining agricultural tariffs after
Poland joins the EU, there might be „some room for negotiation on
switching EU rural development funding into direct
payments„ (Poland to back down).
c. Information
The literature on the macroeconomic impact of enlargement
in the candidate countries has just begun producing first
assessments and the commentators agree that the gains will in
general be substantial. Baldwin et al. estimated an income effect of
more than 18% in seven candidate countries, largely due to
increases in foreign investment. Breuss finds a positive impact on
GDP (average 2008–2010) of 5.65% for the Czech Republic,
8.02% for Poland and 8.4% for Hungary (qtd. in Karlsson 43).
Beyond the overall estimates, at the national level, lack of
information on costs and benefits of EU accession and a
'politicization' of the public debate largely replaced in Poland the
appropriate information. Farmers although appear informed in
proportion of 93% about the phrase „Direct payments for farmers“,
their understanding of what this term means decreased to 37% of
them. They prove to be even more ignorant against other CAP-
related acronyms like IACS and SAPARD (Kolarska-Bobinska 4-
5).
The reactions to this need varied greatly. The Agricultural
Circles took the initiative of creating an information center in
Warszawa on enlargement opportunities and costs for Poland
(Gwozdz 30). On the other hand, politicians from the center-right
and the left wing of the political scene tend to use European
integration as an argument to justify the rationale for difficult
internal reforms to the public (Pyszna and Vida 9-10).
3. Enacted power for Romania
a.Commitment
Romanians officials put much optimism on their agenda as to
the agriculture issues. At the opening of negotiations on Chapter 7,
the Chief Negotiator pledged to „negotiate till blood comes„ and
stressed „the potential of [agriculture that] will influence both the
common and international markets after accession“ (Ziarul
Financiar) amidst continuously low yields, in both absolute and
relative terms. For example, Romania's demand of a sugar quota of
500,000 to had to be compared with the average level of
production of 99,000 to in 1998 – 2002.
However a bit of realism could have been hardly thought.
Ideas of free agricultural markets and of unrealism of support for
agriculture in a poor country were spoken out (Tesliuc 142, 147) in
the milieu of an obvious lack of coherent program on behalf of the
administration. Romanian analysts have not hesitated to confirm
this perspective in comments that underscored the problem of
modest and not credible position papers (Leonte et al. 84-85).
In general terms, some background papers (e.g. Academia
Romana, Impactul, Implicatiile) justified the negotiating position
in terms of comparable positions of more advanced candidate
countries. That meant that the results would plausibly incorporate
the highest levels of payments or eligible quotas, even if intractable
problems related to statistics, market organization or credibility of
data were admitted.
 The negotiators eventually made public that the strategy of
negotiations was conceived to consist of the following focus areas:
rural development; arable land for cereals; animal breeding; wine
and vineyards; and processed foods from milk and sugar (Romania
a finalizat).
b.Alternatives
The option of non-accession to the European Union's
structures has not made any sense, if such issue had been ever put
forth. For Romania, the cultural bond, including here the
attachment to free and democratic values, has epitomized the
strongest link to Western Europe for considerably long part of its
history, and seemingly held back an equally important option to
have developed. No personality has ever credibly voiced any
counter-argument to integration irrespective of its rationale. The
economics provides substantial motives (e.g. Daianu and
Vrânceanu) to regard the integration process as a predictable event
as well.
According to a survey (Corporate Readiness), only 8% of
the firms made estimations of the accession costs and just 4%
assumed „complete knowledge„ of the acquis, whereas there is
however a remarkable 92% of the interviewed managers which
favor accession. Integration has thus come to be perceived in a
familiar sense, confirmed by one of the strongest popular support
among the other candidates, which is by no means a result of
„costs-benefits„ analyses.
c. Information
The common sense optimism was partially supported by
research estimates on the impact of enlargement. Some concerns
were concealed because, for example, data on an ever-deteriorated
position as regards agricultural trade enjoyed little visibility. Such
a study by Chevassus-Lozza and Unguru pointed out that Romania
would see an import increase of 7.3% by aligning downwards its
tariffs to the CCT (1998 base year), as well as an export decrease
of 3.5% as a result of trade diversion against 1998 (7, 9). The
general tone expressed by the authorities in such instances was of
warning instead of cooperative approach and dissemination of
information.
 The adoption of CMOS and the corresponding new
equilibrium of prices are likely to favor producers of the main
branches. There are expected gains for cereals (less wheat), sugar,
milk, beef-meat, cattle, sheep-meat, poultry-meat, tobacco, and
possibly wine, while losses are envisaged only for pig-meat, fruit
and vegetables, and possibly eggs (Academia Romana, Impactul
150-3).
The Position Papers do not differentiate between the 1986/89
and 95/99 periods and express the preference for each market for
the former. Available statistics suggest that a more detailed
perspective would have been appropriate. Thus, the recent period
has proved more advantageous for certain vegetal – e.g. cereals
(wheat, maize, and oat), oilseeds, fruit – and animal – e.g. milk -
productions (Academia Romana, Implicatiile 46-48).
Incomplete statistics has turned out to be in its turn a serious
disadvantage in formulating the negotiating positions. The last
census of 2002 was second only to the one of 1948. That made
essential data for specific market organization to be unavailable,
and the cases were plentiful: milk distribution channels, fruit and
vegetables, durum wheat, wine cadastre, cattle on age categories,
milk cows (Academia Romana, Impactul 14, 64, 142).
In general, little information has been publicly made
available. A survey (EuroBarometru) showed little preparedness as
regards the agricultural issues. Over 44% of the rural population
considers that the agriculture of Romania is not yet ready for
accession, while 29% have no opinions on the modernization of the
Romanian village. Considering that when the data were gathered
the selection of SAPARD projects had already started, the degree
of information concerning this program substantially financed by
the EU is quite low: 68% of the rural population never heard of
SAPARD; of the 32% who heard of SAPARD, only half consider
the program is addressed to them.
4.Summary
The EU plays strong on issue bargaining power. The
Commission proposals make clear that the candidate countries will
be treated unequally for at least a decade after membership. It will
continue to support the rural habitat, but is not willing to cause
imbalances in candidate countries by huge payments. It emphasizes
the functions of agriculture in addition to food production such as
preserving the cultural landscape and contributing to the economic
and social viability of rural areas. It has succeeded in maintaining
the principal objectives of negotiations:
• Progressive introduction of payments to farmers
• Reference quota levels specific to the most recent period.
Poland is determined to defend the interests of its
agriculture but nevertheless is eager to find appropriate solutions
within the general context of enlargement negotiations. Poland
plays weak on issue bargaining power although provided enough
time constraints for the EU it could have adopted a strong position.
It was quick to compromise on some issues (e.g. the transitory
period for IACS or the sale of agricultural land plots), and it has
not succeeded in persuading its partner on some issues deemed
essential by Polish negotiators:
• Equal competitive conditions
• More favorable recent yield estimates
• Potato market organization
Romania played the negotiating game until June 2004
when the Chapter 7 was provisionally closed, half a year earlier
than available estimates indicated. There are arguments that a weak
issue bargaining power accommodates at best its position: a fragile
political support, sparse informational context, heavy reliance on
food consumption, and mostly a poorly developed state of
agriculture, economically and institutionally, all converged to this
conclusion. Romania either did not formulate demands, which
were finally claimed as „successes„ of negotiations such as
• Increased funds for rural development
• Topping-up of direct payments
or extracted no result from negotiation on important initial
demands:
• Application of safeguard measures
• More favorable yield estimates

B. Assessment of general power and institutional stability

1. A qualified view on general power
 This study adopts the Nice Treaty results on decisional
power within the Council alongside corresponding game-
theoretical assessments as an adequate guide to general power.
Thus, strong general power is the attribute of the EU and Poland,
while a weak position describes Romania.
The section on the 'Agricultural dossier' strengthens the
argument on the EU position. As regards Poland and Romania,
additional observations on the Treaty of Accession and ongoing
negotiations of the new European Constitution help reinforce with
factual arguments the referred theoretical conclusions. The case of
Romania is more obvious: it had no role to play in structuring any
negotiations, nor did it raise sizeable thorny problems.
As for Poland, this candidate lived up to expectations by
having built a high profile European presence even before its
application had been approved. Its magnitude is impressive: first,
Poland joined Spain to oppose the project of Constitution mainly
on voting power grounds; second, Poland, plus Estonia enrolled a
group of EU countries – Spain, Netherlands, Portugal, and Italy –
threatened by the free will of two big Members – France and
Germany – in applying the Stability and Growth Pact; third, in
January 2003, Poland adhered to a group of eight European
governments which signed a letter of support for the US-led war in
Iraq.
Finally, after signing the Treaty of Accession, Poland counts
as the CEEC candidate which came away with the most
exemptions (43) in the form of 'transitional arrangements', and
whose particular demands (e.g. to top up direct payments from
national, as well as European funds; treasury facilities;
management of public stocks of agricultural products) made the
EU also extend them to other candidates.
2.Institutional stability
This study accepts the results of specific research on
institutional capacity in order to hypothesize on the stability of the
partners' domestic coalitions. The convergence of results admits
stable regimes for the parties concerned, i.e. EU, Poland, and
Romania.
 C. Outcomes of negotiations
The objective of the strategic analysis of negotiations is to
predict the expected outcome in the generic form of „cooperative“
and „non-cooperative“ strategies; the practical meaning refers to
„high/low concessions“ when describing the strategies' payoffs. A
cooperative approach to negotiations implies „high concessions“
while a non-cooperative approach yields „low concessions“.
Combinations between the two are also possible.
For the first wave of candidates, the general results of
negotiations could be summarized as follows (Report on the
Results):
• Transitional periods were conditionally negotiated in the
veterinary and phytosanitary sector;
• Direct payments will increase by percentage steps to reach
100% of the then applicable EU level in 2013;
• Direct payments may be topped up to a maximum of 100%
of EU level;
• Public stocks resulting from a new Member States market-
support policy will be taken over by the Community;
• Deflection of trade in agriculture will be covered by a
general economic safeguard clause provided for in the Accession
Treaty for a maximum period of three years;
• Reference quantities were agreed on the basis of recent
production and taking into account acceding country specific
situations (e.g. drought).
The discussion centers on the final terms agreed to by the
negotiators. From the Poland's perspective, these terms are
summarized under the main headings in Appendix A.
At the end of negotiations on the agricultural dossier, the
EU and Romania arrived to an arrangement that does not differ
from the one above mentioned, except for the provision on the
safeguard clause, which has not been agreed this time. For both
countries, the agreement specific to the CMOS is presented in
Appendix A.

1.The EU-Poland strategic game

 The constraints, which modeled Poland's behavior during
negotiation, determine two possible situations for this candidate as
depicted in Figure 5 below. As the EU always plays a PD game,
the solutions of negotiations are represented in two strategic
structures, (1) and (2) in Figure 6.

Issue resources Institutional stability

and overall
power
(Player) Stable
Issue weak Stag Hunt Prisoner's Dilemma
Power strong 4,4 1,3 3,3 1,4
(Poland) 3,1 2,2 4,1 2,2

Issue strong & Prisoner's Dilemma

power strong 3,3 1,4
(European 4,1 2,2
Union)
Figure 5. The EU-Poland strategic game: Representation

European Union
C ~C
C 3,3 1,4
Poland
~C 4,1 2,2
(1)

European Union
C ~C
C 4,3 1,4
Poland
~C 3,1 2,2

(2)
Figure 6. The EU-Poland strategic game: Solutions
 A Polish interpretation of the results of negotiations was that
„Poland did not succeed in reaching its negotiation target„ (Costs
and Benefits 109). The Appendix A nevertheless shows a mixed
picture of concessions and in some instances, e.g. diary production
and potato starch, there are significant differences in favor of
Poland. The solutions presented above suggest that the two
partners initially found no consensus in issue area only to
progressively reach for mutual agreement.
In situation (1), which is a symmetric PD game, both
countries have the dominant strategy of choosing a non-
cooperative approach ('~C'). The partners arrive here at no
consensus – '~C~C' - in negotiations. In situation (2), it is only the
EU which has a dominant strategy – playing '~C' – and the game
reaches the same equilibrium – '~C~C' – because Poland would
predictably also choose not to cooperate.
The interesting feature of this strategic interaction is the
prediction of the same equilibrium and the possibility to reach a
better outcome for each partner in both situations if they cooperate.
There is a mutual benefit the negotiating partners extract if they
agree on high concessions on their agenda.
2.The EU-Romania strategic game
The negotiations proceeded at normal pace and finished
sooner than expected in June 2004. The EU does not change its
behavior during negotiations and again plays a PD game. Romania
is constrained to a Leader game. The possible outcomes are
proposed according to the figures 7 and 8 below.

Issue resources Institutional stability

and overall power
(Player) Stable
Issue strong & power strong Prisoner's Dilemma
(European Union) 3,3 1,4
4,1 2,2

Issue weak & power weak Leader

(Romania) 2,2 3,4
 4,3 1,1

Figure 7. The EU-Romania strategic game: Representation

European Union
C ~C
C
Romania 2,3 3,4
~C 4,1 1,2
Figure 8. The EU-Romania strategic game: Solution

The EU alone follows a dominant strategy that expectedly is

not to cooperate. Romania would find in a cooperative approach
the best outcome given the circumstances. As a result, the analysis
leads to an equilibrium in which Romania 'cooperates' and agrees
on high concessions, while the EU 'stands firm' and maintains low
concessions.
The strategic situation does not invite the parties to find
ways to improve their gains: for Romania, it would be hardly
imaginable to attempt to arrive at '~CC', its next better payoff,
because the EU would have only to reach its worst outcome; for
the EU, the equilibrium rewards the best payoff of the game.
3.Discussion
The analysis reveals several pertinent questions to elaborate
on. A first set refers to the accuracy of results: Do the analytical
representations of real situations reflect what in fact happened
during negotiations? How did Poland and EU find ways to
cooperate?
In the case of Romania, things appear most simply to
explain. Comparison between the initial demands and the results of
negotiations clearly indicate a maximum degree of lenience on
behalf of this candidate. Only for crops and beef, the results do not
depart much from the request; for sugar, tobacco, milk, and sheep
meat the negotiated quota are about half the original demand,
whereas several other areas (e.g. rice, potato starch, fruit and
vegetables, fibers, and honey) received no mentions. This latter
treatment is also specific for some related issues, either financial
(e.g. inclusion of the Romanian varieties of flax and hemp for fiber
and registration of national tobacco varieties in view of being
included in the scheme of production premiums granted to
producers) or non-financial (e.g. a transition period of 3 years in
order to implement at national level the policy of non-vaccination
against classic swine fever).
The image is completed with the observation that in other
several areas for which agreements were eventually agreed – e.g.
seeds, hops, nuts, and partially for milk and beef - Romania stated
that it would specify later the statistics required to consider the
appropriate market support and was thus not even in position to
make a proposal. That attitude is explained by the fact that at the
time the Position Paper had been submitted, the first General
Agricultural Census after 1948 was carrying out and no reliable
data were by consequence available for the purpose of
negotiations.
The EU-Romania game however raises the intriguingly
possible occurrence of the event 'CC', because one may ask why
could Romania value it less preferably than 'C~C'? One has to
recall here the argument that a double weakened position (overall
and issue area power) engenders the lowest level of compromise,
which is well manifest in the final results of negotiations. The
economic meaning of this behavior is thus understood best in terms
of constrained limited ability to ask for and expect concessions
from the negotiating partner.
As for the EU-Poland game, both parties began negotiations
on severely intractable positions which are suggestive for the initial
'~C~C' equilibrium. Some basic principles of negotiations were
considered 'leave it or take it' issues. Poland stated for example that
„the obligations [in respect of direct payments] might be effective
only if the supportive measures for agriculture - identical to those
enjoyed by farmers in the EU Member States - are
ensured„ (Poland's Reply 6, 30). In its turn, the EU stressed that no
provision should be made for safeguard measures against imports
from EU Member States and decided „to address the risk of
deflection of trade due to Poland's accession, where necessary,
through transitional measures … before accession under the
appropriate procedure„ (Accession Negotiations Jan. 86). In fact,
both parties eventually indulged in the other's arguments and thus
found a consensual approach.
The way to a cooperative outcome has been paved with
significant concessions on behalf of both parties. Poland had to
leave aside demands that were initially put forth authoritatively.
One important example refers to the establishment of a Common
Market Organization for potatoes (Poland's Reply 52). The Polish
team emphasized that the issue of establishing the CMO of Cotton
Market was justified in the past by the enormous economic
importance of this crop for Greek agricultural producers. They
continued the argument and stressed that the market of edible
potato similarly is a considerable market for Polish agriculture and
Poland is one of the greatest potato producers in the world.
Other examples of Polish demands which did not meet the
EU approval include: financial assistance from the EU to part-fund
the employment and training of the additional personnel needed to
implement and manage the EAGGF Guarantee payment system;
inclusion of the varieties for fiber crops artemida, alba and wiko in
the list of EC flax varieties; grant of export refunds in relation to
the cereals used for production of Polish vodka exported to third
countries.
As for the EU, it had to confront one major Polish request
that the minimum requirements for the recognition of producer
organizations should be a minimum number of 5 members and a
minimum value of marketable production provided by the
members of €100,000. The EU's first reaction was that „the
application of such low thresholds in a large area as the whole
territory of Poland would not be justified„ (Accession Negotiations
Jan. 94). The final agreement (Appendix A) observes the Polish
position.
In another instance, the EU again proved conciliatory against
a Polish innovatory proposal to complement direct aid paid to a
farmer up to the total level of direct support he would have been
entitled to receive in Poland prior to accession under a like national
scheme. The EU conceded that Poland should be given that
possibility on the ground that it had applied national direct
payments to farmers before accession (Accession Negotiations
Apr. 89). That case set a pattern and was followed during
negotiations with Romania as well.
A second set of questions, which this analysis invites to,
refers to close scenarios that could have been seemed plausible in
the enlargement game: To what extent does coalitional or
institutional stability matter? How could Romania have improved
its bargaining power? The responses are suggested by different
situations of the games presented in Appendix B.
The presumption for discussion is that the EU continues to
play a PD game which is the most plausible variant given the way
the agriculture dossier was structured and negotiated. If one leaves
aside conditions (2) and (4), which were played by Poland and
Romania respectively, the remainder stands for the whole possible
range of game situations.
It is interesting to note that institutional stability matters
significantly for Poland. Under the same constraints of 'issue weak'
and 'power strong', these negotiations would have concluded in a
stalemate (condition 6) with no party being eager to make
concessions. For Romania (condition 8), the results remain
unchanged. Generally, stability maters for both candidates, as
neither party could have aspired to favorable agreement terms
when confronting unstable regimes at home.
The overall view of the possible outcomes also draws the
characteristic of this enlargement game. The only anticipation for
gains (conditions 2 and 3) comes for playing 'power strong' when
'stable'. Apparently, 'issue strong' may not help when a country
does not have the capability to influence decisions at the
international level, which is immediately evident from condition 1
or from condition 5 when the candidate is expected to make a total
compromise. 'Power strong' is conducive either to a mutually
beneficially outcome (conditions 2 and 3) or to a mutually
destructive one (conditions 6 and 7).
Additionally, one may infer that the only choice for Romania
would have been to frame the circumstances for compromise.
Although it is entirely a different subject, a suggestion this study
can make in this regard is to look for parallels with conditions
yielding the same outcomes, that is condition 1, where countries
played 'issue strong' but from a 'power weak' position. Former
candidate countries like Hungary, Slovenia or the Czech Republic
presumably fit that description.

D. Anticipation of objections
1.Objections on methodology
The choice for game-theoretical investigation is defended on
the ground of multi-layered interaction on the interests at stake in
the agriculture dossier. Policy is formed in a two-stage procedure
and reflects compromising decisions at the Community level
among member countries. The general pattern of the EU decision-
making process is further enriched by the activity of so-called
„oversight institutions„, „official advisory bodies“, and various
interest groups from both industry and civil society. Warleigh
argues that the lack of legislative power does not impede such
institutions, as for example the Economic and Social Committee
(ESC) and the Committee of the Regions (CR), to play a highly
influential role in the EU policy-making system.
This suggests a bargaining framework, which seems more
appropriate than a maximizing framework.
Yet the latter alternative approach leads to comparable
research problems. Field and Fulton use a model of a bargained
price with a Nash solution that maximizes the product of the
countries' net welfare levels. It is assumed that countries bargain
over the level of a single choice variable, namely the internal price
established under the CAP. The objective function of each country
depends on two elements: the net „utility“ obtained in the current
round, and the expected net utility in the next bargaining round.
In order to get a closer perspective of that approach, a
simulation was constructed using available data for WTO
negotiations in the field of agriculture between the EU and the
United States. Appendix C shows a game whose payoffs are
expressed in cardinal units, i.e. welfare gains, and contrasts these
results with games characterized by ordered preferences.
In general, the two methods lead to unique predictions: the
parties do not find incentives to cooperate and prefer the non-
cooperative outcome. If one assumes a context of situational
variables and the parties order their preferences, a different
prediction may be considered: either 'cooperation' or 'non-
cooperation' appears as plausible equilibria. As the discussion
suggests, the ongoing negotiations of the Doha Round match more
appropriately that strategic behavior in which the contextual detail
would eventually shift the balance one way or another.
As much reliability estimates of economic gains/losses may
present, the maximizing framework does not capture the complex
nature of issue power. Defining what constitutes a „negotiating
issue“ could be a risky process and this path may be indeed
conducive to arbitrarily estimated forecasts as Baldwin warns (75).
The case of agricultural negotiations shows however a clearly
identified setting of negotiations, in which the aspects of issue area
negotiations prove crucial for understanding strategic interactions.
The consistent interpretation of games based on 'issue-bargaining
power' model is thought to provide an insightful and enriched
approach to the topic.
What appears as „rational“ in terms of estimates may not
necessarily substantiate the bargaining process or, as the Appendix
C exemplifies, may not even be comprehensive enough for the
actual conclusion of negotiations. The application in this study
finds that cost-benefit analyses have in fact played a negligible role
in framing the negotiating context.
There is not less true that the present game-theoretical
exercise has not integrated questions that have the potential to
further enrich the understanding. For one thing, this study assumes
that information is common knowledge. The approach to 'enacted
bargaining power' attempts to offer a realistic view on the way the
parties reach and use information. Yet there might be reasonably
hypothesized that an assessment of 'institutional stability' depends
to a great extent on the existing distribution of information. The
interests coalesce domestically according to the social and political
strictures, which frame various representations of the negotiating
context. It is only in a subsequent stage that a 'quality' index can be
computed to shed light on aspects of „governance“.
The problem appears manifest when contrasting available
research as to alternative methods used to underscore the influence
of domestic coalitions. For example, in the case of Germany,
Patterson LA finds that the Democratic Union (CDU) and the
Christian Social Union (CSU) enjoyed a strong relationship with
the DBV, German Farmers' Union, whereas Field and Fulton
consider that the role the Free Democratic Party (FDP) played had
been pivotal in winning coalitions for farm support.
It is somehow ironically that the institutional indicators are
more relevantly computed for large, aggregate groups, like
'countries', where a discussion on informational constraints should
have been addressed in first place. In bargaining contexts between
individuals or small groups the role played by information in
coalition formation diminishes and so does the need for profuse
investigation of 'stability'.
An institutional index would produce less meaningful results
when used to assess partners with relatively stable societies.
According to Olson's theory on the collective action, the chances
are greater that coalitions hamper the national interest. From this
perspective, a descriptive analysis of domestic coalition formation
as used by Patterson (Agricultural Policy) and Field and Fulton
seems more appropriate. This study nevertheless emphasizes
coalitional stability over coalitions' strength.
There is also the question relative to the treatment of 'time',
which requires particular attention. As an empirical matter, a
characteristic feature of bargaining problems is that they are
dynamic. They are resolved, if at all, through time, in sequences of
offers and counteroffers or with one or both parties „holding out“
in hope that the other will make concessions (Fearon).
For negotiations similar to this application especially the
issue of 'retaliation' seems to represent more realistically the
sequence of games. Several papers include this third strategic
option only to eventually find reasonably either to consider the
games in simultaneous forms (Brams and Kilgour) or to reduce
them to the usual 2x2 strategic structures (Aggarwal and
Cameron).
A possible explanation for these analytical solutions
apparently does not point to concerns for simplified yet plausible
solutions. The option for simultaneous games appears realistic for
two reasons at least. First, the strategies of 'cooperation' and 'non-
cooperation' receive now generic, 'enriched' definition in contrast
with the strongly opposite interpretations of 'accept' vs. 'decline'.
The degree of 'concessions', which embody the strategic behavior
gradually adapts to new contexts of concurrent decisions. The logic
of each situation engenders different strategic structures and hence
renders ineffective a sequential treatment of games.
Second, the analytical framework used for this study has the
merit to incorporate sequential frames of bargaining. The
transformational factors generate incremental feedback from
enacted to potential power and thus allow for possible 'reaction'
moves. The analysis of bargaining power in itself engenders a
complex setting. How it comes to provide a solution to game-
theoretical applications is probably the most stimulating part the
model proposed here suggests.
2. Objections on analysis
If any observation on the accuracy of the assessment of
bargaining power is left aside, there is a fact that the solutions to
the games emerged smoothly, without analytical hesitations. This
apparent simplicity may cast doubts on the model's power to
comprehend the complex reality of negotiations.
There are several arguments to defend the analytical power
of the model. First, the plausibility of solutions essentially rests on
the methodology. An ample discussion on method precedes this
section, but it is worth nevertheless mentioning here that diverse
strands of thinking have been on purpose adapted and enlarged in
this study in order to offer a clearer picture of strategic
negotiations. The combination of 'bargaining power analysis' and
'game theory' is, for instance, one of the innovative proposals
referred to mainly to uncover better the contextual detail.
Second, the simple path to solutions has not to obscure the
complementary observation about their correctness. The model's
predictions closely follow the results of negotiations in every
significant detail. Moreover, the overview tableau of possible
solutions helps assess better the gains and losses from negotiations
given the interplay of interests.
Finally, a reasoned expectation is that the model is indeed
able to offer hardly discernable solutions. To get a glimpse on that,
appendix D offers solutions to a plausible variant of games where
the only change is that the EU is presumed to play 'issue weak'.
That scenario would have in fact been a strong working hypothesis
if, as adjacently touched on in the text, the CEECS had formed a
coalition to oppose the EU common negotiating position. That
choice is arguably deemed to have changed the alternatives
available to the EU; its commitment had been considerably
strengthened, making use of more resources to persuade the
partners instead of primarily informing them.
The simulation shows that Poland would have faced
unchanged alternatives to end the game, but also presents the
interesting case of 'cycling' whenever the EU has to face 'power
weak' partners. A great deal of contextual analysis of bargaining
power is required to understand a solution for this kind of games.
Pareto optimal solutions are possible in each situation, so that the
partners may envisage a negotiated solution. Would be that also
realistic? And what sort of strategic moves would be required to
influence the counter-party? It is especially in this kind of
investigation that the refinement of the 'bargaining power' analysis
becomes decisive to overcome the stalemate.

VII
Conclusions

T he conventional way of thinking about integration has

produced undoubtedly remarkable results, if only one has to
bring into discussion the topic of increased efficiency in a larger
economic space. Even if several contrasting empirical findings
were to be left aside, there is however the amounting evidence
about non-traditional gains from integration which would make the
topic increasingly complex to be satisfactorily treated with the
usual analytical tools. Here is where the game-theoretical
perspective could offer convincing insights on the way countries
look for and are capable to get the most advantageous outcomes
from integration negotiations.
The application to the agricultural dossier of the last EU
enlargement seems particularly suited both to reveal the
effectiveness of game theory to deal with problems of strategic
interactions and to provide reliable predictions as regards the
negotiation solutions.
As for the former argument, agricultural negotiations present
a highly interactive setting, rich of contextual detail, which
requires an appropriate method to reveal strategic behavior given
the partners' constrained preferences. In contrast with most of the
negotiation chapters, the agricultural dossier presents numerous
areas of conflict from the amount of production quotas to time
sequence of support and to defense of specific domestic rural
activities. The stakes in these games are engendered from three
significant levels of interaction – dependence, independence, and
interdependence – from which originates as many determinants of
decisions to cooperate or not to cooperate within a range of
possible concessions.
This study follows an already traditional path of research of
applying the theory of games with constrained order of
preferences. The model proposed here adapts the original
contributions in two important ways. First, it puts emphasis on the
'institutional stability' as a controlling independent variable, and
lets the other two – 'issue bargaining power' and 'overall power' –
intertwine in determining the preferences. The procedure attempts
to make more realistic the simplified nature of 2x2 games in
situations that involve more than 2 players. By separating the issue
of coalition stability as opposed to coalition strength, which the n-
person games usually study this model recognizes both its decisive
role in shaping nations' international behavior and the complexity
of aggregating decisions at the national level.
A second innovative part this study proposes is replacing the
freewheeling approach to 'bargaining power' in issue area with an
analytical framework that relates in a dynamic perspective
potential power to enacted power. The expected result is to bring
about more confidence in the evaluation of the influence the parties
actually exert during negotiations.
 It is also this new approach, which makes possible a closer
look to the 'rationality' of behavior during negotiations. It helps
understand what low concessions really mean and to what extent
'disagreement' in fact means 'no concessions'. The normal
representations of games of strategy do not by construction allow
for such refinements, which in real negotiations may represent the
distance from success to failure.
As for the reliability of predictions, the results prove
satisfactorily consistent with the conduct and results of the
negotiations. A behavioral pattern also appears manifest from the
overall view of the strategic games. One of the main conclusions
this pattern suggests is that negotiations with a powerful, PD-type
partner necessitates for a stable partner at least a strong power
position in order to reach both a mutually agreed and improved
outcome. The relative strength of bargaining power in issue-area
does not change the outcome.
The result may be explained by the fact that a partner is
highly motivated to keep a general strong power position intact and
use its resources exclusively to that end. This rationale seems
reasonable in integration negotiations where the membership
objective is predominantly important for small countries. On the
other hand, keeping low concession levels is sometimes the cost of
transferring large amounts of committed resources to a general
imposing position.
Poland exemplifies the case by embracing compromises on
agricultural dossier. This country enjoys a high agricultural profile
that was not used in issue negotiations but in consolidating the
general position.
Romania, by contrast, has not been able to replicate that
example in spite of quasi-similar general conditions regarding
population employed in agriculture, importance of agricultural
sectors, and rural traditions. Available and committed resources do
not allow any possibility to constrain a mutually satisfactory result.
The model also suggests that unstable coalitions are clearly
dominated by PD-type partners. They reach either fixed no
consensus equilibrium or give way reciprocally to non-cooperative
behavior. The framework seems consistent because the cooperative
approach is favored by a weak general power position, while a
strong one invariably yields no consensus.
It is beyond doubt than any advantage this model exhibits is
to be strengthened or weakened by further research. The work here
shows that its application is more appropriately suited to cases of
multiple-negotiable issues and largely interactive contexts
involving 2 partners, which may or may not lead coalitions.
There are several promising venues to provide more
insightful results in analyzing strategic negotiations. Some stem
from the inherently limited scope of this study. That is the case, for
example, with the institutional indices which this research makes
reference to. It is evident that any coalition of international
partners cannot be appropriately described that way. Besides, there
is also the problem of providing a coherent aggregate explanation
for coalition behavior. Perhaps, the economic analysis has yet to
make recourse to more intakes from the original research in
cooperative games and transpose them in meaningful descriptions.
Incidentally, it is noteworthy to mention that international
strategic interactions among many players can be meaningfully
reduced to only 2 parties. The usual solution consists in identifying
two homogeneously conflicting domains of negotiations, which is
why a negotiation context exists in the first place, and then
proceeding to find characteristics of two relevant coalitions. That
excludes by no means the possibility of three or more player
interactions whose detection is a challenging task in itself.
A second example of investigation, which would naturally
continue this study, refers to the issue of multiple strategies. There
are reasons to think that the actual pursue of negotiations involve
more than two strategic options. An argument at hand is that a
'middle' approach to concluding a deal is presumably not so rare an
occurrence. Finding the right path to formalize the order of
preference in these 2x3 games is seemingly another provoking
research objective. The researcher may be strongly persuaded to
overcome this obstacle by making recourse to payoff function
estimates. It is the purpose of Appendix D to show that this
analytical perspective, even if not misleading when carefully
constructed, is nonetheless less able to enrich the analysis or even
to get closer to more accurate predictions.
 Finally, the issue of multiple levels of interactions enlarges
further the research agenda. Although it seems convincing enough
to limit the analysis to the three levels of dependence,
independence, and interdependence it may also seems inciting to
consider supplementary sources. For example, the independence
level could be separated in domestic and international institutional
contexts; or, more readily, the domestic area conceivably
comprises areas of interaction at individual (e.g. personalities),
group (e.g. social classes), and institutional level (e.g.
governmental and non-governmental organizations).

Bibliography

Abbott, Philip C., and Panu K.S. Kallio. „Implications of Game

Theory for International Agricultural Trade.“ American Journal of
Agricultural Economics 78.3 (1996): 738-44.

Abrego, Lisandro, Raymond Riezman and John Whalley. „How

Often are Propositions on the Effects of Customs Unions Theoretical
Curiosa and When Should They Guide Policy?“ NBER Working paper
8304, May 2001.

Academia Română. „Restructurarea Pieţelor Principalelor Produse

Agroalimentare.“ Grupul de reflecţie ESEN-2, Bucureşti, 2001.

---. „Impactul Adaptării Politicii Agricole Comune asupra Pieţei

Principalelor Produse Agroalimentare Româneşti.“ Grupul de reflecţie
ESEN-2, Bucureşti, 2001.

---. „Implicaţiile Adaptării Acquis-ului Comunitar privind

Politicile Comerciale în Domeniul Produselor Agroalimentare.“ Grupul
de reflecţie ESEN-2, Bucuresti, 2001.
 Aggarwal, Vinod K., and Pierre Allan. „Preferences, Constraints
and Games: Analysing Polish Debt Negotiations with International
Banks.“ Game Theory and International Relations. Preferences,
Information and Empirical Evidence. Ed. Allan and Schmidt. Edward
Elgar, 1994. 9-49.

Aggarwal, Vinod K., and Maxwel A. Cameron. „Modelling

Peruvian Debt Rescheduling in the 1980s.“ Studies in Comparative
International Development 29:2 (1994): 48-81.

Alesina, Alberto and Enrico Spolaore. „International Conflict,

Defense Spending, and the Size of Countries.“ NBER Working Paper
5694, August 1996.

Algaba, E., J.M. Bilbao, J.R. Fernandez Garcia, and J.J. Lopez.
„Computing Power Indices in Weighted Multiple Majority Games.“
Escuela Superior de Ingenieros, Sevilla, [2001].

Allan, Pierre, and Christian Schmidt, eds. Game Theory and

International Relations. Preferences, Information and Empirical Evidence.
Edward Elgar, 1994.

Ameldung, T. „The Political Economy of Import Substitution and

Subsequent Trade Liberalization: The Case of Turkey.“ Working paper
330, Kiel Institute of World Economics, 1988.

Bacharach, Michael. Economics and the Theory of Games. The

Macmillan Press, 1976.

Bache, Ian. The Politics of European Union Regional Policy.

Multi-Level Governance or Flexible Gatekeeping? Sheffield Academic
Press, 1998.

Baldwin, Richard E. Towards an Integrated Europe. London:

Centre for Economic Policy Research, 1994.

Baldwin, Richard E., Joseph E. François and Richard Portes. „The

Costs and Benefits of Eastern Enlargement: The Impact on the EU and
Central Europe.“ Economic Policy 24 (April): 127-70.
 Benchekroun, Hassan, Ngo Van Long and Huilan Tian. „Learning-
by-Doing and Strategic Trade Policy.“ Working paper, CIRANO Centre
interuniversitaire de recherche en analyse des organisations, Montreal,
1998.
Bennett, Peter G. „Modelling Decisions in International Relations:
Game Theory and Beyond.“ Mershon International Studies Review 39
(1995): 19-52.

Bergschmidt, Angela, and Monika Hartmann. „Agricultural Trade

Policies and Trade Relations in Transition Economies.“ Discussion paper
12, IAMO, Halle, 1998.

Bhagwati, Jagdish. Protectionism. Cambridge, MA: MIT Press,

1988.

Binmore, Ken. „Nash Bargaining Theory: An Introduction.“ The

Economics of Bargaining. Ed. Binmore, Ken and Partha Dasgupta.
Oxford: Basil Blackwell, 1987. 1-46.

Bobay, Frédéric. „Political Economy of the Nice Treaty:

Rebalancing the EU Council.“ Document de travail 01-12, CEPII, 2001.
7-22.

Bottom, William P., James Wolloway, Scott McClurg and Gary J.

Miller. „Negotiating a Coalition – Risk, Quota Shaving, and Learning to
Bargain.“ Journal of Conflict Resolution 44:2 (2000): 147-69.

Brabant, Jozef M. von. „On the Relationship between the East's

Transitions and European Integration.“ Comparative Economic Studies
XXXX:3 (Fall 1998): 6-37.

Brams, Steven J. and Marc Kilgour. Game Theory and National

Security. New York: Basil Blackwell, 1988.

Brandenburger, Adam. „Judo Economics.“ Teaching note, Harvard

Business School, Boston, 1995.

---. „The Fog of Business.“ Teaching note, Harvard Business

School, Boston, 1995.
 Branderburger, Adam, and Barry Nalebuff. Co-opetition. London:
HarperCollinsBusiness, 1996.

„Breaktrough in Farm Trade Liberalization Talks with Poland.“

Press realese, European Commission, Brussels, 26 Sep. 2000.

Business Central Europe. Various issues, 2000.

Bütler, Monika, and Heinz Hauser. „The WTO Dispute Settlement
System: Playing the Game.“ Discussion Paper no. 9801, Department of
Economics, University of St. Gallen, 1998.

Caves, Richard E. „Game theory, Industrial Organization, and

Business Strategy.“ Journal of the Economics of Business 1.1 (1994): 11-
14.

Cassela, Alessandra. „Large Countries, Small Countries, and the

Enlargement of Trade Blocs.“ NBER Working paper 5365, 1995.

Chevassus-Lozza, Emmanuelle and Manuela Unguru.

„L'élargissement de l'Union Européene aux pays d'Europe centrale et
orientale. Les enjeux pour les échanges agricoles et alimentaires des pays-
tiers.“ Economie rurale, SFER, 276 (jan.-fév. 2002): 42-55.

Ciupagea, Constantin, Manuela Unguru and Valentin Cojanu.

Romanian Trade and EU Customs Tariffs and Trade Policy. Bucuresti:
Institutul European din Romania, 2002.

Conybeare, John A. C. Trade Wars: The Theory and Practice of

International Commercial Rivalry. New York: Columbia University
Press, 1987.

„COPA: The Dynamic Force of European Farmers.“ 30 Jul. 2003

<http://www.copa.be/en/cogeca_membres.asp>

„Corporate Readiness for Enlargement in Central Europe. A

Company Survey on the State of Preparations for the Single Market.“
Summary Report, Eurochambres, SBRA, Brussels, 2004.

Costs and Benefits of Poland's Membership in the European

Union. Warsaw: Centrum Europejskie Natolin, 2003.
 Daianu, Daniel, and Radu Vranceanu, eds. România şi Uniunea
Europeană. Bucureşti: Polirom, 2002.

Dyker, David. „The Dynamic Impact on the Central-East European

Economics of Accession to the European Union.“ Working paper 06/00,
Sussex European Institute, University of Sussex, 2000.

The Economist. Various issues.

Easterly, William and Ross Levine. „Tropics, Germs, and Crops:

How Endowments Influence Economic Development.“ NBER Working
paper 9106, Aug. 2002.

El-Agraa, Ali M. The European Union. History, Institutions,

Economics, and Policies. Fifth Edition, Prentice Hall, 1998.

„EuroBarometru Rural“. Fundaţia pentru o Societate Deschisă,

Delegaţia Comisiei Europene în România, Bucureşti, 2002.
<www.osf.ro>

Europe Agreements. 2000

<http://europa.eu.int/comm/enlargement/pas/europe_agr.htm.>

European Commission. Regular Report. Progress towards

Accession. Country reports on Bulgaria, the Czech Republic, Estonia,
Hungary, Letonia, Lithuania, Poland, Romania, Slovakia, and Slovenia,
2000, 2001, 2002, (2003).

---. „Report on the Results of the Negotiations on the accession of

Cyprus, Malta, Hungary, Poland, the Slovak Republic, Latvia, Estonia,
Lithuania, the Czech Republic and Slovenia to the European Union.“
Brussels, 2003.

---. Delegation of the European Commission in Romania. „Fisa de

sector. Agricultura.“, Bucuresti, Nov. 2002.

---. „Enlargement and Agriculture: Successfully Integrating the

New Member States into the CAP. Issues Paper.“ SEC 2002/95/Final,
Brussels, 30.1.2002.
 ---. „Enlargement: Preparing for Accession.“ 14.05.2001.
http://europa.eu.int/scadplus/leg/en/lvb/e40001.htm

---. „Agenda 2000 – Commission Opinion on Romania's

Application for Membership of the European Union.“ DOC/97/18,
Bruxelles, 15 July 1997.

---. „Agenda 2000 – Commission Opinion on Poland's Application

for Membership of the European Union.“ DOC/97/16, Bruxelles, 15 July
1997.

---. „Preparation of the Associated Countries of Central and

Eastern Europe for integration into the Internal Market of the Union.“
White Paper COM/95/163, Bruxelles, 3 May 1995.

European Commission. Directorate-General for Agriculture.

„Prospects for Agricultural Markets in the European Union. 2003-2010.“
Working Document, Bruxelles, June 2003.

---. „Agricultural Situation in the Candidate Countries. Country

Report on Poland.“ Working document, Bruxelles, July 2002.

---. „Agricultural Situation in the Candidate Countries. Country

Report on Romania.“ Working document, Bruxelles, July 2002.

---. „Analysis of the Impact on Agricultural Markets and Incomes

of EU Enlargement to the CEECS.“ Working Document, Bruxelles,
March 2002.

---. „Procesul de Extindere a Uniunii Europene în Domeniul

Agriculturii. Politicile Uniunii Europene.“ Brussels, Fev. 2001.

---. The Common Agricultural Policy. 2000 Review. Luxembourg:

Office for Official Publications of the European Communities, 2001.

---. „EU and Enlargement. Pre-accession Instruments: Focus on

Agriculture.“ Bruxelles, September, 2000.

---. „Agricultural Situation and Prospects in the Central and

Eastern European Countries.“ Working Document, Bruxelles, June 1998.
 European Commission. Directorate-General for Enlargement.
„Accession Negotiations. Poland. Revised Draft Common Position.“
Brusseles, 24.7.2001, 15.4.2002.

European Commission. Directorate-General for Audiovisual,

Information, Communication and Culture. Our Farming Future. Brussels,
1993.

„The EU Export Subsidies and their Impact on Developing

Countries: Not Losing Sight of the Real Priorities.“ COPA,
BOERENBOND, COGECA, [2002].

Fearon, James D. „Bargaining, Enforcement, and International

Cooperation.“ International Organization 52:2 (1998): 269-306.

Fernández, Raquel. „Returns to Regionalism. An Evaluation of

Nontraditional Gains from Regional Trade Agreements.“ Policy Research
Working paper 1816, The World Bank, 1997.

Fidrmuc, Jarko. „Strengths and Advantages of Eastern Europe-

EU’s Net Gains from Accession.“ Interim Report IR-97-019,
International Institute for Applied Systems Analysis (IIASA), Laxenburg,
Austria, April 1997.

Field, Heather and Murray Fulton. „Germany and the CAP: A

Bargaining Model of EC Agricultural Policy Formation.“ American
Journal of Agricultural Economics 76:1 (Feb. 1994): 15-25.

Fischler, Franz. „New Prospects for an Enlarged Europe.“ Opening

speech, European Agriculture Congress, Krakow, 25 Sep. 2000.

Foss, Nicolai. „Austrian Economics and Game Theory: a

Preliminary Methodological Stocktaking.“ Department of Industrial
Economics and Strategy, Copenhagen Business School, 22 October 1998.

Frohberg, Klaus, and Monika Hartmann. „Promoting CEA

Agricultural Exports through Association Agreements with the EU. Why
It Is not Working.“ Discussion paper 1, IAMO, Halle, 1997.
 Gacs, Janos and Michael Wyzan. „The Time Pattern of Costs and
Benefits of EU Accession.“ Interim Report IR-99-015, IIASA,
Laxenburg, Austria, May 1999.

Gacs, Janos and Michael Wyzan. „The European Union and the
Rest of the World: Complements or Substitutes for Central and Eastern
Europe?“ Interim Report IR-98-020, IIASA, Laxenburg, Austria, April
1998.

Ghemawat, Pankaj. Games Businesses Play. Cases and Models.

Cambridge: MIT Press, 1997.

Gibbons, Robert. A Primer in Game Theory. Hertfordshire:

Harvester Wheatsheaf, 1992.

Gorton, Matthew. „The Food Industry in Central and Eastern

Europe under Communism.“ Working paper 2/1, Wye College London,
1997.

„Government Plenipotentiary for Negotiations of the Poland's EU

Membership.“ 30 Jul. 2003
<http://www.minrol.gov.pl/eng/Reports/omowstan.html#Government>

Grabowski, Richard. „The State and Economic Development.“

Studies in Comparative International Development 29.1 (1994): 3-17.

Graham, Edward M. „Market Structure and the Multinational

Enterprise: A Game-Theoretic Approach.“ Journal of International
Business Studies 29.1 (1998): 67-83.

Greif, Avner. „Economic History and Game Theory: A Survey.“

Working paper, Department of Economics, Stanford University, USA,
1997.

Grossman, Gene M., and Elhanan Helpman. „Trade Wars and

Trade Talks.“ NBER Working paper 4280, February 1993.

Gwozdz, Katarzyna. „Le Devenir du Monde Rural Polonais en

Europe.“ Document de travail, Notre Europe, Sep. 2002.
 Hagen, Jürgen von. „The Political Economy of Eastern
Enlargement of the EU.“ Coming to Terms with Accession. Ed. Ambrus-
Lakatos, Lorand and Mark E. Schaffer. London: CEPR, Institute for East-
West Studies, 1996. 1-41.

Hallet, Martin. „National and Regional Development in Central

Europe and Eastern Europe: Implications for EU Structural Assistance.“
Doc.II/39/97-EN/rev.2, DG II, European Commission, 1997.

Helleiner, G.K. „Why Small Countries Worry. Neglected Issues in

Current Analyses of the Benefits and Costs for Small Countries of
Integrating with Large Ones.“ The World Economy 6 (1996): 750-63.

Helpman, Elhanan. „Politics and Trade Policy.“ NBER Working

paper 5309, Oct. 1995.

Hirschman, Albert O. National Power and the Structure of Foreign

Trade. Berkeley: University of California Press, (1945) 1980.

Holzman, F. D. International Trade under Communism – Politics

and Economics. New York: Basic Books, 1976.

Jervis, Robert. „Models and Cases in the Study of International

Conflict.“ Journal of International Affairs Spring/Summer (1990): 81-
101.

Josling, Tim, and Stefan Tangermann. „The Agricultural and Food

Sectors.“ Working paper 103, Berkeley Round Table on the International
Economy (BRIE), July 1998.

Josling, Tim, David Kelch, Peter Liapis, and Stefan Tangermann.

„Agriculture and European Union Enlargement.“ Technical Bulletin
1865, USDA, February 1998.

Juli, Thomas. „A Rational Choice Model of Trade Policies:

Incorporating Institutional Economics into Traditional Game Theory.“
Working paper, Department of Economics, Washington University, USA,
1993.

Karlsson, Bengt O. „Costs of Enlargement.“ Swedish Ministry of

Finance, Sep. 2002.
 Kaufmann, Daniel, Aart Kraay, and Pablo-Zoido Lobaton.
„Governance Matters II: Updated Indicators for 2000/01.“ The World
Bank, January 2002.

---. „Governance Matters.“ Working paper 2196, The World Bank,

1999.

---. „Aggregating Governance Indicators.“ Working paper 2195,

The World Bank, 1999.

Kennan, John and Robert Wilson. „Can Strategic Bargaining

Models Explain Collective Bargaining Data?“ American Economic
Review 80:2 (1990): 405-10.

Kennedy, Philip Lynn. „Agricultural Policy Decisions in the

Uruguay Round: A Game-Theoretic Examination.“ Ph.D. diss.,
University of Minnesota, Ann Arbor, 1994.

Kohler, Wilhelm. „Wer gewinnt, wer verliert durch die

Osterweiterung der EU?“ Arbeitspapier nr. 9920, Johannes Kepler
Universität Linz, November 1999. < www.economics.uni-linz.ac.at >

Kohler, Wilhelm. „Die Osterweiterung der EU aus der Sicht

bestehender Mitgliedsländer: Was lehrt uns die Theorie der ökonomischer
Integration?“ Arbeitspapier nr. 0001, Johannes Kepler Universität Linz,
Januar 2000. < www.economics.uni-linz.ac.at >

Kolarska-Bobinska, Lena, ed. „Poland's Rural Dwellers on

European Integration: Opinions, Knowledge, and Information.“ Institute
of Public Affairs, Warsaw, June 2002.

Kreps, David. Game Theory and Economic Modelling. Oxford:

Clarendon Press, 1990.

Krishna, Vijay. „Games of Strategy. An Introduction.“ Teaching

note 9-187-159, Harvard Business School, 13 April 1992.

Kushnirski, Fyodor I. „A Modification of the Production Function

for Transition Economies Reflecting the Role of Institutional Factors.“
Comparative Economic Studies XLIII:1 (2001): 1-30.
 Jervis, Robert. „Models and Cases in the Study of International
Conflict.“ Journal of International Affairs 44:1 (1990): 81-101.

Johnson, H.G. „Optimum Tariffs and Retaliation.“ Review of

Economic Studies 21 (1953/54): 142-63.

Langlois, Catherine C., and Jean-Pierre P. Langlois. „Behavioral

Issues of Rationality in International Interaction.“ Journal of Conflict
Resolution 43:6 (Dec. 1999): 818-39.

Laruelle, Annick, and Mika Widgrén. „Is the Allocation of Votes

among EU States Fair?“ Manuscript, 1 October 1996.

Leap, Terry L. and David W. Grigsby. „A Conceptualization of

Collective Bargaining Power.“ Industrial and Labor Relations Review.
39.2 (1986): 202-13.

Lehman, Howard P. „Strategic Bargaining in Brazil's Debt

Negotiations.“ Political Science Quarterly 108:1 (1993): 133-56.

Lejour, A.M., R.A. de Mooij, and R. Nahuis. „EU Enlargement:

Economic Impliations for Countries and Industries.“ CPB Netherlands
Bureau for Economic Policy Analysis, Document 011, September 2001.

Lenway, Stefanie Ann and Thomas P. Murtha. „The State as

Strategist in International Business Research.“ Journal of International
Business Studies 25:3 (1994): 513-35.

Leonte, Jacqueline, Daniela Giurca, and Virginia Câmpeanu.

Agricultura României în Perspectiva Aderării la UE. Bucureşti: Instituttul
European din Romania, 2002.

Lichbach, Mark Irving. „When is an Arms' Rivalry a Prisoner's

Dilemma? Richardson's Models and 2x2 Games.“ Journal of Conflict
Resolution 34:1 (1990): 29-54.

Lindert, Peter H. International Economics. 9th Edition, Irwin:

1991.
 Manizini, Paola and Marco Mariotti. „Alliances and Negotiations.“
Working paper 424, Queen Mary University of London, Nov. 2000.

Manski, Charles F. „Economic Analysis of Social Interactions.“

NBER Working paper 7580, 2000.

Markusen, James R., James Melvin, William Kaempfer and Keith

Maskus. International Trade. Theory and Evidence. McGraw-Hill, 1995.

Matthews, Allan. „Multilateral Trade Reform in Agriculture and

the Developing Countries.“ Trinity Economic Paper Series 10, 2000.

Mayhew, Alan. „The Negotiating Position of the European Union

on Agriculture, the Structural Funds, and the EU Budget.“ SEI Working
paper 52, Apr. 2002.

McDonald, John. Strategien und Taktiken für große Geschäfte und

Abschlüsse. Zürich: Verlag Moderne Industrie AG, 1977.

McGahan, Anita M. „Philips’ Compact Disc Introduction.“

Teaching note, Harvard Business School, Boston, 1991.

McGahan, Anita M. „The Baseball Strike.“ Teaching note, Harvard

Business School, Boston, 1998.

McMillan, John. Game Theory in International Economics. Chur:

Harwood Academic Publishers, 1986.

---. Games, Strategies, and Managers. New York: Oxford

University Press, 1992.

Miller, Ross A. „Regime Type, Strategic Interaction, and the

Diversionary Use of Force.“ Journal of Conflict Resolution 43:3 (1999):
388-402.

Milner, Helen V., and Peter Rosendorff. „Democratic Politics and

International Trade Negotiations.“ Journal of Conflict Resolution 41.1
(1997): 117-46.
 Mintzberg, Henry, Joseph Lampel, James Brian Quinn and
Sumantra Ghoshal. The Strategy Process. Concepts, Contexts, Cases. 4th
Edition, Pearson Educational International, 2003.

Mo, Jingryn. „The Logic of Two-Level Games with Endogenous

Domestic Coalitions.“ Journal of Conflict Resolution 38:3 (Sep. 1994):
402-22.

Moravcsik, Andrew. The Choice for Europe. Social Purpose and

State Power from Messina to Maastricht. London: UCL Press, 1999.

North, Douglass C. „Institutions and Credible Commitment.“

Manuscript, Washington University.

„Note on Polish Agriculture.“ 30 July 2003.

<www.minrol.gov.pl/eng/Reports/polishagriculture.html#Note>

Olson, Mancur. The Rise and Decline of Nations. Yale University

Press, 1982.

Osborne M. J., and A. Rubinstein. A Course in Game Theory.

Cambridge: MIT Press, 1994.

Pahre, Robert, and Paul A. Papayoanou. „Using Game Theory to

Link Domestic and International Politics.“ Journal of Conflict
Resolution. 41.1 (1997): 4-11.

Papayoanou, Paul A. „Intra-Alliance Bargaining and US-Bosnia

Policy.“ Journal of Conflict Resolution 41:1 (1997): 91-116.

Patterson, Lee Ann. „Agricultural Policy Reform in the European

Community: A Three-Level Game Analysis.“ International Organization.
51.1 (1997): 135-165.

Patterson, Seymour. „The Thrust to Free Trade: Conviction or

Fashion.“ International Advances in Economic Research 4.2 (1998): 115-
27.

Pelkmans, Jacques. Integrare Europeana. Metode şi Analiză

Economică. Ediţia a 2-a, Bucureşti: Institutul European din România,
2003.
 Plechanovova, Bela. „The Treaty of Nice and the Distribution of
Votes in the Council – Voting Power Consequences for the EU after the
Oncoming Enlargement.“ European Integration Online Papers, 7(6):
2003, <http://eiop.or.at/eiop/texte> 6.5.2003.

„Poland's Reply to the Common Position of the European Union in

the Negotiation Area of Agriculture.“ Conference of Accession to the
European Union-Poland, CONF-PL 6/01, Brussels, 23 Jan. 2001.

„Poland to back down on EU farm subsidies.“ Reuters, 25.9.2002

<www.isn.ethz.ch>

Pouliquen, Alain. „Competitiveness and Farm Incomes in the

CEEC Agri-Food Sectors.“ European Commission, Bruxelles, October
2001.

Putnam Robert D. „Diplomacy and Domestic Politics: The Logic

of Two-Level Games.“ International Organization 42 (1988): 427-60.

Pysyna, Dorota, and Krisztina Vida. „The Management of

Accession to the European Union in Poland and Hungary.“ Working
paper 128, Institute for World Economics Budapest, Oct. 2002.

Rao, Asha and Stuart M. Schmidt. „A Behavioral Perspective on

Negotiating International Alliances.“ Journal of International Business
Studies 29:4 (1998): 665-94.

Rapoport, Anatol, Melvin J. Guyer, and David G. Gordon. The 2x2

Game. Ann Arbor: The University of Michigan Press, 1976.

Rasmunsen, Eric. Games and Information. An Introduction to

Game Theory.2nd ed. Oxford, UK: Blackwell, 1994.

Reiner, Martin. The Regional Dimension in European Public

Policy. Convergence or Divergence?. St. Martin's Press, 1999.

Reza, German de la. „Tides of Change. Leadership and

Enlargement Agreements.“ North American Journal of Economics &
Finance 7:1 (1996). 43-54.
 Rodrik, Dani. „What Does the Political Economy Literature on
Trade Policy (Not) Tell Us that We Ought to Know?“ NBER Working
paper 4870, Sep. 1994.

„Romania Details Its Accession Terms on Agriculture And

Finance“. Enlargement Weekly, 15 June 2004
<http://europa.eu.int/comm/enlargement/docs/newsletter/latest_weekly.ht
m#C>

„Romania's Position Paper. Chapter 7 – Agriculture.“ Conference

of Accession to the European Union-Romania, CONF-ROL 1/02,
Brussels, 10 Jan. 2002.

The Rome, Maastricht & Amsterdam Treaties. Comparative texts,

Euroconfidentiel, 1999.

Romer, David. „Misconceptions and Political Outcomes.“ NBER

Working paper 6117, July 1997.

Quaisser, Wolfgang and John Hall. „Toward Agenda 2007:

Preparing the EU for Eastern Enlargement.“ Working paper 240,
Osteuropa-Institut München, February 2002.

Salvatore, Dominick. International Economics. 3rd Edition New

York: Macmillan Publsihing Company, 1990.

Scarlat, Cezar, and Daniel Popescu. Implicaţia Aderării României

la UE asupra Instituţiilor din Domeniul Public. Bucureşti: Institutul
European din România, 2002.

Schelling, Thomas C. The Strategy of Conflict. London: Oxford

University Press, 1960.

Schiff, Maurice. „Small is Beautiful. Preferential Trade

Agreements and the Impact of Country Size, Market Share, Efficiency,
and Trade Policy.“ Policy Research Working paper 1668, The World
Bank, October 1996.

Schiff, Maurice, and Alan Winters. „Regional Integration as

Diplomacy.“ Policy Research Working paper 1801, The World Bank,
August 1997.
 Serdar, Güner. „A Game Theoretical Analysis of Alliance
Formation and Dissolution: The Case Study of the Relationship among
the US, the Soviet Union, and the People's Republic of China, 1949-
1972.“ Thèse de doctorat, Université de Genève, 1990.

Snidal, Duncan. „The Game Theory of International Politics.“

World Politics 38 (1985): 25-57.
Stone, Randall W. „The Use and Abuse of Game Theory in
International Relations.“ Journal of Conflict Resolution 45:2 (2001): 216-
44.

Swaminathan, Padma V., Thomas W. Hertel, and Martina

Brockmeier. „European Union Enlargement: What are the Agricultural
Trade Models Missing?“ Paper presented at the 1997 AAEA Annual
Meeting, Toronto, July 27-30, 1997.

Swinnen, Johan F.M. „Budgetary Implications of Enlargement:

Agriculture.“ CEPS Policy Brief 22, May 2002.

Tesliuc, Emil Daniel. „Politica Agricolă: Realizări şi Provocări.“

Tranziţia Economică în România. Ed. Christof Rühl and Daniel Daianu.
Bucuresti: The World Bank, CEROPE, 2000. 117-83.

„Treaty of Nice Amending the Treaty on European Union, the

Treaties Establishing the European communities and Certain Related
Acts.“ 2001/c 80/01, Official Journal of the European Communities,
10.3.2001.

Viner, Jacob. The Customs Union Issue. New York: Carnegie

Endowment for Peace, 1950.

United States Department of Agriculture (USDA). „Agriculture in

Poland & Hungary: Preparing for EU Accession.“ Agricultural Outlook.
December 1999: 20-26.

Urff, Winfried von. „The Future of European Agricultural

Policies.“ Document de travail 01-12, CEPII, 2001. 27-48.

Ziarul Financiar. Various issues.

 Zürn, Michael. „Assessing State Preferences and Explaining
Institutional Choice: The Case of Intra-German Trade.“ International
Studies Quarterly 47 (1997): 295-320.

Wagner, Harrison R. „Economic Interdependence, Bargainign

Power, and Political Influence.“ International Organization 42:3 (1988):
461-83.
Warleigh, A., ed. Understanding European Union Institutions.
London: Routledge, 2002.

Weder, Beatrice. „Institutional Reform in Transition Economies:

How Far Have They Come?“ Unpublished. Washington: IMF, 2000.

Whalley, John. „Why Do Countries Seek Regional Trade

Agreements?“ NBER Working paper 5552, Cambridge, MA, 1996.

Wolkoff, Michael J. „New Directions in the Analysis of Economic

Development Policy.“ Economic Development Quarterly 4.4 (1990): 334-
44.

Yataganas, Xenophon A. „The Treaty of Nice. The Sharing of

Power and the Institutional Balance in the European Union – A
Continental Perspective.“ Jean Monnet Working paper 1/01, Harvard Law
School, 2001.
 Appendix A

Table 4
Negotiating agenda of the EU-Poland game
(1) Financial issues
Common Market Poland request Results of
Negotiating issues EU request
Organizations negotiations
Crops, oilseeds, (i) Establishment of base area 9,207,667 ha 9,248,000 ha 9,291,377 ha
protein crops (9,217,667 ha) (9,263,000 ha)

(ii) Establishment of reference 2.96 t/ha 3.61 t/ha 3.00 t/ha

yield

(iii) Establishment of eligibility December 31 2000 No request

of land for direct payments

(iv) Establishment of durum Fixed maximum

wheat area areas
Potato Starch Establishment of production 90,546 to 260,000 to 144,985 to
quota

Dried fodder Establishment of National 0 to (dehydrated + 160,000 to 13,538 to

Guaranteed Quantities sun-dried)
Common Market Poland request Results of
Negotiating issues EU request
Organizations negotiations
Sugar (i) Fixing of sugar production 1,665,017 = 1,866,000 = 1,674,495 =
quotas 1,590,533 + 74,484 1,650,000 + 1,590,533 +
A+B to 216,000 to 83,961 to

(ii) Fixing of isoglucose quotas 2,493 = 20,000 = 6,232 =

A+B 2,493 + 0.0 to 15,000 + 5,000 6,232 + 0 to
to (42,000 =
40,000 + 2,200)
Tobacco Establishment of production 37,933 = 70,000 (55,000) 37,933
quota Flue cured 22,000
Light air cured
12,633
Dark air cured 1,867
Fire cured 1,233
Milk Milk quota scheme T = D + 8.875.000 = 11.217.000 t 8,964,000 in
Sales 6.956.333 + (11,845,000) in 2003 up to
1.918.667 to 2003 up to 9,380,000 in
13.740.000 t in 2008 =
2008 = 8,500,000 in
10.506.000 t 2003 up to
(11,183,000) in 8,916,000 in
2003 up to 2008 +
13.176.000 t in 464,000 in
Common Market Poland request Results of
Negotiating issues EU request
Organizations negotiations
2008 + 2003 down to
711.000 t 464,000 in
(662,000) in 2008
2003 down to
564.000 t in
2008
Beef (i) Additional payments 27,393,275 € Not quantified

(ii) Slaughter premium Adult: 2,034,309 2,021,000 1,815,430

Calves: 1,200,625 1,017,000 839,518
(iii) Special beef premium 857,700 2,200,000 926.000
young bulls
(iv) Suckle cow premium 503,682 – 10% = 1,500,000 325,581
453,314
(325.581)
Sheep meat (i) Ewe premium 364,000 (335,880) 720,000 335,880

(ii) Additional payments, global 331.000 €

amounts
 (2) Non-financial issues
Poland position
Recognition of producer organizations should be a mini-
mum number of 5 members and a minimum value of
marketable production provided by the members of
€100,000.
Solution to enable the present structure in respect of the
raw materials for high wines production to be maintained
in Poland after accession.
Possibility of placing the inscription „Polish wine/
„Polskie wino owocowe„ on the fruit wine labels to
Polish wine producers, as well as for extending the list of
spirit drinks subject to the protection in respect of their
geographical origin and for protecting the trademark
names of selected spirit drinks.
Determination of the minimum raw tobacco production
volume necessary to recognize the producers' group at a
suitably low level which would facilitate group
establishment.
Introduction of a modified system of milk production
quota administration over a period of a few years after
accession.
Possibility of initiating talks on the introduction of a
modified system of milk production quota administration
over a period of a few years after accession.
Negotiation result
A 3-year transitional arrangement to set criteria for the
preliminary recognition of producer organizations in the
fruit and vegetables sector at 5 producers and a minimum
value of marketable production of €100,000
Decision to classify Poland into a wine growing zone and
obligation to register and classify the vine varieties was
postponed until accession.
Designations for alcoholic drinks (e.g. geographic,
traditional) have been agreed for the requested varieties
(Polish vodka, Polish Cherry, Herbal Vodka, Polish fruit
wine, and Polish wine).
A 5-year transitional arrangement to set the threshold for
the recognition of a producer group in the tobacco sector at
1% of the guarantee threshold for all production regions in
Poland.
Distribution of quota between deliveries and direct sales
will be reviewed on the basis of actual 2003 figures.
A transitional arrangement of one year for the allocation of
milk quota to individual producers and consequently be
exempted from the payment of additional levies in the first
quota year.
 Poland position Negotiation result
Adoption of suckle-cow premium system as it occurred A 3 year transitional arrangement relating to which
in case of the last EU enlargement. The multi-purpose additional breeds are entitled to receive the suckle cow
breed of cows to be recognized as suckle cow provided premium.
that a beef breed bull served them.
Source: Data collected from Costs and Benefits, Table 1, 109; and European Commission, Enlargement and
Agriculture.

Table 5
Negotiating agenda of the EU-Romania game
(1) Financial issues
Common Market Negotiating issues EU request Romania request Results of
Organizations negotiations
Crops, oilseeds, (i) Establishment of base area 7,013,000 ha 6,891,100 ha 7.012.666 ha
protein crops (ii) Establishment of reference yield 2.650 to/ha 3.087 to/ha. 2.650 to/ha
(iii) Establishment of eligibility of land
for direct payments
(iv) Establishment of durum wheat area
Rice (i) Establishment of base area 17,000 ha
(ii) Area payment based on national
average yield
Potato Starch Establishment of production quota 4,000 to
Dried fodder Establishment of National Guaranteed 500,000 to
Quantities + 250,000 to
 Common Market Negotiating issues EU request Romania request Results of
Organizations negotiations
otherwise dried
and grounded
(lucerne and
clover)
Sugar (i) Fixing of sugar production quotas 109,164 to 500,000 to 109.164 t
329.636 t
(ii) Fixing of isoglucose quotas 0.0 to 9.981 t
Fibers Aid for processing of straw and hemp 8,876 to:
grown for fiber 750 to long flax
fibers + 8,126 to
short flax and
hemp fibers
Processed Fruit and National and/or Community 400,000 to fresh
Vegetables thresholds/guaranteed tomatoes out of
Community area for processing aid which
50,000 to of
tomato processed
products
5,000 to net
weight for pea-
ches in syrup
and/or natural
juice
Common Market Negotiating issues EU request Romania request Results of
Organizations negotiations
1,000 to net
weight for
Williams and
Rocha pears in
syrup and/or
natural juice
Tobacco Establishment of production quota 21,300 to 12,312 t
Milk Milk quota scheme T = D + Sales 7,500,000 to for 3,057,000 to =
2007. 1.093.000 to
deliveries
1.964.000 to
direct sales
+ 188.400 to
restructuring
reserve
Beef (i)Additional payments 858.260 €
(ii) Slaughter premium 1,583,000 (adults: 1,233,000
1,498,000 calves: (adults:
85,000) 1,148,0000
calves:
85.000)
(iii) Special beef premium 725,000 452.000
(1,550,000 for
 Common Market Negotiating issues EU request Romania request Results of
Organizations negotiations
2007)

(iv) Suckle-cow premium 150,000 heads for 150,000 heads

2007.
Sheep meat (i) Ewe premium 8,900,000 5,880,620
(ii) Additional payments, global heads
amounts 6.216.782 €
Honey 1,449,000
beehives
Hops Support scheme for hops production No position 198 ha
Seeds Financial aid to seed producers Rice: 100 to
Others: 2,294
to
Nuts 1,645 ha

(2) Non-financial issues

Romania position
A transition period of 3 years for modernizing and re-
vamping the slaughtering and meat processing units,
milk processing units, as well as for the organizing the
milk collecting and standardization centers in
compliance with the Community requirements and for
complying with the Community requirements regarding
Negotiation result
Transitional periods of 3 years for modernizing and
upgrading 26 slaughtering and meat processing units,
two poultry meat processing units, and 28 milk-
processing units to meet EU requirements, as well as for
the organizing the milk collecting and standardization
centers and for complying with EU rules on dairy farms
 Romania position
cow milk farms and quality of raw milk obtained.
A transition period of 4 years for organizing the
vineyards inventory and register.
A transition period of 8 years for the removal of hybrid
vineyards (Regulation 1493/99)
Appliance of the provisions relating to the conditions for
the production, products characteristics and placing on
the market of the traditional cheese brands Nasal, Bradet,
Homorod, (smoked cheese, etc).
Negotiation result
and the quality of raw milk obtained.
Classification of Romanian wine areas in line with
Romania's proposals.
An eight-year transitional period for removing prohibited
hybrid varieties of vine.
Supplementary rights for planting vine varieties for
quality wines produced in specified regions,
corresponding to 1.5% of the total vineyard cultivated
area.
Right to add sucrose to enrich grape must so as to
increase the alcoholic strength of wines.
Recognition and protection of designation of origin and
geographical designation for a number of spirit drinks
made of plums and of wine distillate, types of milk,
yogurt, buttermilk, cheese, salami, sausages, bread,
pretzels, pie, and processed fruits.
Derogation from veterinary norms for producing by
traditional technologies 58 types of cheese and cow,
sheep and buffalo dairy products.
A transitional period of three years for the use of certain
plant protection products containing active ingredients
no longer used in the EU.
Recognition and protection of the generic designation of
 Romania position Negotiation result
a spirit drink.
Source: Data collected from European Commission, Enlargement and Agriculture; Romania Details Its Accession
Terms; and Romania's Position Paper.
 Appendix B

Table 6
Overall view on the possible outcomes when the EU plays PD
Conditions of play Games and outcomes
1
Stable 3,3 2,4 2,3 3,4
Issue strong 4,1 1,2 4,1 1,2
Power weak Chicken Leader
2
Stable 3,3 1,4 4,3 1,4
Issue weak 4,1 2,2 3,1 2,2
Power strong Prisoners' dilemma Stag hunt
3
Stable 3,3 1,4
Issue strong 4,1 2,2
Power strong Prisoners' dilemma
4
Stable 2,3 3,4
Issue weak 4,1 1,2
Power weak Leader
 Conditions of play Games and outcomes
5
Unstable 1,3 3,4
Issue strong 4,1 2,2
Power weak Hero
6
Unstable 2,3 1,4 1,3 2,4
Issue weak 4,1 3,2 4,1 3,2
Power strong Deadlock Deadlock analogue
7
Unstable 2,3 1,4 1,3 2,4
Issue strong 4,1 3,2 4,1 3,2
Power strong Deadlock Deadlock analogue
8
Unstable 1,3 3,4
Issue weak 4,1 2,2
Power weak Hero
 Appendix C 1

This material attempts to shed light on the methodological

topic of payoff assessments. There are constructed strategic games
of multilateral negotiations relative to agricultural trade
liberalization, which is an ongoing issue on the WTO agenda.
These games involve 2 players, the EU and the US, and 2
strategies, 'Agreement' and 'Disagreement' on one of four
submitted proposals to reduce support to farmers and exporters,
namely 'Status Quo (Uruguay Round Agreement)', 'Conservative
scenario', 'Ambitious scenario', and 'Harbinson scenario'.
The first part of simulation is to evaluate cardinal payoffs by
using a political payoff function proposed by Abbott and Kallio.
Their model assumes that governments set export subsidies
to maximize political payoff in a manner corresponding to the
agreement in place. The payoff – each player's objective in the
game - is a weighted sum of producer surplus, consumer surplus,
and government budgetary expense, less agricultural support.
Political payoff functions are given by the absolute gains
relative to the base scenario ( ∆Wi ):

∆Wi = γ p ,i ⋅ ∆S p ,i + γ c ,i ⋅ ∆S c ,i − γ g ,i ⋅ ( ∆Sub i + ∆Ai ), i = {1,2}

Where player 1 is the European Union (EU); player 2 is the

United States of America (US); γ p , i , γc , i , γg , i are welfare
weights which governments assign to groups of producers,
consumers, and own expenses, respectively; S p , i , S c , i are
producer surplus and consumer surplus for player i, respectively;
1
The author gratefully acknowledges the research assistance from Ms. Irina
Ramniceanu, Assistant Lecturer with the School of International Economics and
Business at the Academy of Economic Studies in Bucharest. Ms. Maria Patru,
graduate student of the School of Informatics, Cibernetics at the Academy of
Economic Studies Bucharest, also provided assistance in an earlier phase of
research.
 Sub i , Ai are forms of government support, i.e. export subsidies
and domestic direct aid, respectively. The weights coefficients are
suggested by Abbott and Kallio as γ p ,1 =1.30; γc ,1 = 0.90;
γ p , 2 = 1.15; γc , 2 = 0.85; and γg ,i = 1 (the numeraire) for
government budget expense. When welfare weights equal one it is
assumed that income redistribution is not a policy goal.
The forms of government support to be considered are
constrained by the available database. This simulation uses the
levels of subsidies and domestic aid found in the UNCTAD
database2. These amounts have to be modified during the game
according with specific variations each scenario proposes.
The strategic interactions among players give rise to
differing payoffs depending upon opponents' strategies. The
computations are made with the help of Agricultural Trade Policy
Simulation Model – ATPSM, static, deterministic, partial-
equilibrium model, which has been developed by UNCTAD in
1988 and applied since to multilateral trade negotiations.
ATPSM estimates economic indicators like demand,
supply, and trade flows for various commodities and countries, and
then presents projects for the results of negotiations according to
the assumptions made on countries' commercial policies. It makes
thus possible to estimate ∆Wi by incorporating in the payoff
function the necessary data for consumer surplus, produces
surplus, and agricultural support under the four scenarios. The
results are presented below.

Table 7
Estimations of payoffs with Agricultural Trade Policy
Simulation Model (ATPSM)
∆W 1 ∆W 2

Results of multilateral negotiations

Status Quo (Uruguay Round Agreement) -2.8 +1.9
Conservative scenario -3.3 +2.4
Ambitious scenario -5.0 +6.6
2
Handbook on the UNCTAD Agricultural Trade Policy Simulation Model-
ATPSM. C++ Version 2.2. April 2003. <www.unctad.org/tab>
 Harbinson scenario -7.5 +2.8
Results of EU unilateral negotiations,
While the US sticks to status-quo
Conservative scenario -3.5 +2.1
Ambitious scenario -7.5 +3.8
Harbinson scenario -7.2 +3.5
Results of US unilateral negotiations,
While the EU sticks to status-quo
Conservative scenario -2.8 +2.1
Ambitious scenario -2.4 +2.2
Harbinson scenario -2.1 +1.5
Explanatory note: Data are expressed in USD billions.

If both players disagree on a given scenario, the interaction

leads to the failure of negotiations and to the implementation of the
current Uruguay Round provisions (Status Quo). Likewise, a
negotiating partner's sole agreement means that it unilaterally
liberalizes trade on the proposed scenario's terms, while the other
party sticks to the currently agreed multilateral solution (Status
Quo). That leaves three strategic games that corresponds to three
scenarios proposed with a view to helping the negotiations during
the Doha Round make progress. These games are represented in
Figure 9 below.
a) Conservative scenario
Player 2: US
Agreement Disagreement
Player 1: Agreement -3.3; +2.4 -3.5; +2.1
EU Disagreement -2.8; +2.1 -2.8; +1.9

b) Ambitious scenario
Player 2: US

Agreement Disagreement
Player 1: Agreement -5.0; +6.6 -7.5; +3.8
EU Disagreement -2.4; +2.2 -2.8; +1.9

c) Harbinson scenario
 Player 2: US
Agreement Disagreement
Agreement -7.5; +2.8 -7.2; +3.5
Player 1: EU
Disagreement -2.1; +1.5 -2.8; +1.9

Figure 9. Simulation of multilateral strategic negotiations in

agricultural trade with cardinal payoffs

The simulations predict that the negotiations are blocked by

disagreements either from both parties, or only from the EU side in
all foreseeable scenarios. Equilibrium is stable as the parties
choose their dominant strategies in all games they play. The results
are a good representation of the actual negotiations: after deciding
on an impressive schedule to finish the negotiations by the end of
2004, the parties find themselves deadlocked in pros and cons of
liberalization measures and unable to reach a compromise.
An interesting part of these games is that no party sees any
feasible incentive to depart from the existing equilibrium without
leaving the partner in a worse condition. In other words, there is no
predictable chance that the multilateral negotiations are to
conclude successful given the negotiating scenarios.
Another point worth mentioning is that the payoff estimation
takes into account significantly large discrepancies between the
parameters relative to reductions of export subsidies and domestic
aid, which range from complete elimination ('ambitious') to more
or less moderate decreases of 45% and 55%, or 70% and 20%,
respectively. Although acceptable in the terms of ATPSM, it would
be economically meaningless, as this methodological stance
persuasively implies, to search for those estimates – of tariff
reductions, welfare effects and so on – which could make parties
agree. It is the analysis of negotiations that should tell what the
numbers are and not the other way round.
The second part of simulation is meant to bring into
discussion that kind of elements of negotiations' 'contextual detail'.
For the purpose of the current topic, these could refer, for instance,
to motivations to resume talks after a long impasse; to political
influences each party has to face at home; or to the balance of
power among the negotiating actors.
Using the original model of three-level interaction proposed
by Aggarwal and Allan, it is estimated an order of preference
relative to the four possible outcomes depending on how parties
decide to mutually or unilaterally agree or disagree. Because both
the EU and the US occupy dominant positions in the world trade
with agricultural products, the overall power – the interaction level
of dependence - is evaluated to 'strong' for both players.
Evaluations of the other two conditions of play – 'issue bargaining
power' and 'coalitional stability' – corresponding to the interaction
levels of interdependence and independence, respectively, are
suggested by the proceeds of negotiations. The representation of
games is given below.

a) A PD Game
Player 2: US
Agreement Disagreement
Player 1: Agreement 3,3 1,4
EU Disagreement 4,1 2,2

b) A Deadlock Game
Player 2: US
Agreement Disagreement
Player 1: Agreement 2,2 1,4
EU Disagreement 4,1 3,3

c) A Stag Hunt Game

Player 2: US
Agreement Disagreement
Player 1: Agreement 4,4 1,3
EU Disagreement 3,1 2,2
Figure 10. Simulation of multilateral strategic negotiations in
agricultural trade with ordinal payoffs

The variant (a) of the game is suggestive of the conditions of

play at the start of negotiations. Both the EU and the US came to
negotiations on strong footholds, committed to individually
reasoned yet conflicting proposals. Their representatives submitted
for discussion opinions of almost exclusively domestic interest
with only scant regard to other WTO members' objectives. The
interaction leads to a PD game, in which the parties try to dominate
the game and consequently choose the second-to-best outcome not
to cooperate.
Both the subsequent mediation within the WTO and the
more assertive negotiation positions of the other parties however
changed the character of the game. Several net-importing countries
like Japan, Norway, Switzerland, and some African countries
joined the EU in an effort to temper the liberalization zest and thus
to keep the international price at low levels. On the other side, the
US enjoyed the support from several developing countries,
especially those assembled in the CAIRNS group, to push further
on the reductions in agricultural support agreed at the Uruguay
Round.
The resulting game is one in which the two parties continue
to play 'strong', both overall and in issue area, but nevertheless
have to contemplate frail, accidentally formed coalitions coalesced
around their exposed interests. The interaction is captioned by
variant (b) of the game. This Deadlock game still does not make
the players escape from the continued impasse, but, in contrast to a
PD game, leaves them no alternative for a mutually improved
outcome.
The Doha Round with its ambitious schedule put much
pressure on the negotiating parties to speed up the liberalization
process. The parties were forced to make their proposals more
coherent and credible. The coalitions became more stable, but
another noteworthy side effect was that the two protagonists
diminished visibly their stature during negotiations. The coalitional
force played therein a role too, although the increasingly
constrained agenda setting probably explains most of the turn of
the event.
The new conditions of interaction depict now in variant (c) a
Stag Hunt game. The two players have to recognize the benefits of
cooperation in order to reach a stable equilibrium of 'agreement' or
otherwise prolong the impasse. This prediction provides a better
description of the ongoing negotiations than the representation
based on payoff functions. Indeed, the parties succeeded in finding
ways to a compromise, which materialized in a document, sketched
during the Cancun ministerial meeting in September 2003.
Although the compromise does not depart significantly from the
initial positions, the result is remarkably significant from the point
of view of this analysis. The prediction confidently emphasizes an
equilibrium continuum between 'agreement' and 'disagreement',
which in fact is a perfect match with the current state of affairs.
There are still as many promising commitments to a negotiated
conclusion as disbelievers and second thoughts continuously arise
from both sides.
 Appendix D

Table 8
Overall view on the possible outcomes when the EU plays 'issue weak'
Conditions of play Games and outcomes

Stable 3,4 2,3 2,4 3,3

Issue strong 4,1 1,2 4,1 1,2
Power weak

Stable 3,4 1,3 4,4 1,3

Issue weak 4,1 2,2 3,1 2,2
Power strong

Stable 3,4 1,3

Issue strong 4,1 2,2
Power strong

Stable 2,4 3,3

Issue weak 4,1 1,2
Power weak
 Conditions of play Games and outcomes

Unstable 1,4 3,3

Issue strong 4,1 2,2
Power weak

Unstable 2,4 1,3 1,4 2,3

Issue weak 4,1 3,2 4,1 3,2
Power strong

Unstable 2,4 1,3 1,4 2,3

Issue strong 4,1 3,2 4,1 3,2
Power strong

Unstable 1,4 3,3

Issue weak 4,1 2,2
Power weak
 Index

A Enlargement1, 2, 3, 5, 10, 54, 72, 73, 79,

Acquis communautaire......................121 81, 86, 96, 97, 122, 124, 125, 126,
Agenda 2000..73, 74, 77, 83, 84, 95, 126 127, 129, 131, 134, 135, 136
B Enlargement(s)..................................134
Banzhaf index......................................56 Enlargement(s)........................................
Behavior..............................28, 131, 134 waves of...............................39, 55, 96
C Enlargements...........................................
Central Eastern European Countries wave of............................................18
(CEECS).....15, 17, 18, 19, 20, 21, 39, Europe Agreements (EAS) 18, 39, 72, 73
40, 52, 53, 64, 69, 71, 72, 73, 75, 79, European Agricultural Guidance and
81, 82, 87, 88, 92, 95, 96, 97, 98, 99, Guarantee Fund (EAGGF), The.....76,
105, 117, 126, 134 77, 111
Coalitions.............................44, 123, 133 European Commission (EC)...19, 20, 39,
Coalitions................................................. 53, 60, 74, 80, 95, 111, 127
cooperative behavior...............65, 127 European Council..............53, 71, 73, 75
winning............................................56 European Parliament (EP).............54, 60
Commitment............48, 94, 98, 101, 133 European Union (EU)...1, 2, 3, 4, 5, 6, 7,
Common Agricultural Policy (CAP). .73, 8, 9, 10, 11, 12, 15, 17, 18, 19, 20, 26,
74, 75, 76, 77, 78, 79, 80, 81, 86, 90, 27, 29, 38, 39, 40, 52, 53, 54, 55, 56,
91, 94, 95, 97, 98, 101, 113, 125, 127 57, 58, 59, 60, 61, 64, 69, 70, 71, 72,
Common Agricultural Policy (CAP)....... 73, 74, 75, 76, 77, 78, 79, 80, 81, 82,
Common Market Organizations 83, 84, 85, 86, 87, 88, 89, 90, 91, 93,
(CMOS)...............................94, 111 94, 95, 96, 97, 98, 99, 100, 103, 104,
Common Customs Tariff.....................98 105, 106, 107, 108, 109, 110, 111,
Concessions.............................79, 85, 91 112, 113, 117, 118, 122, 123, 124,
Conflict.....122, 123, 129, 131, 132, 133, 126, 127, 128, 129, 130, 131, 132,
135, 136 134, 135, 136
Constraints.........................7, 40, 64, 122 European Union (EU)..............................
D budget..............................................19
Development 84, 99, 122, 125, 128, 129, F
137 Financial framework............................73
Development........................................... Financial Framework...73, 79, 96, 97, 98
agriculture........................................20 Founding treaties, the..........................53
gap.......................................18, 26, 43 G
rural. .19, 74, 77, 81, 84, 99, 125, 128, Game-theoretical approach..................24
130 Generalized System of Preferences
Direct payments...................................78 (GSP)...............................................72
Doha Round.........................3, 6, 80, 114 Governance..........18, 45, 58, 59, 61, 114
E I
Independence...........................................
 domestic politics........35, 37, 133, 134 117, 119, 124, 125, 126, 127, 128,
Interaction............................................24 130, 134, 136
Interdependence.....1, 2, 3, 131, 132, 137 Preference order.............9, 50, 65, 66, 68
Interdependence....................................... production quotas....2, 6, 69, 79, 93, 118
issue-specific...................................47 Production quotas..................1, 2, 4, 5, 7
L R
Luxembourg Group.............................75 Rivalry.......................................124, 131
M Romania5, 7, 8, 9, 10, 12, 14, 15, 18, 19,
market interventions............................77 21, 57, 60, 61, 70, 72, 75, 87, 88, 89,
Methodology.......................................24 90, 91, 92, 93, 96, 101, 102, 103, 104,
N 105, 106, 108, 109, 110, 112, 119,
Negotiations.4, 8, 29, 80, 84, 86, 91, 134 124, 125, 126, 131, 135
accession.......10, 14, 72, 74, 105, 106, S
111, 112, 125, 126, 127, 128, 129, Shapley-Shubik index..........................56
134, 135, 136 Single European Market......................39
Accession64, 111, 112, 122, 125, 127, Strategy........83, 124, 127, 130, 133, 135
128, 131, 132 Strategy....................................................
bargaining power in negotiations. 7, 8, 2 x 2 games of..................................50
16, 21, 36, 50, 64, 71, 75, 81, 87, 2x2 games of....................................21
123, 127, 130, 131, 133 games of.......................36, 41, 50, 117
gap...................................................27 T
model.........................................21, 49 Theory......................................................
multilateral.........................35, 36, 132 game............20, 22, 24, 25, 28, 29, 31
outcomes.............................................. institutional economics..............23, 47
outcomes......................................24 of economic integration.20, 25, 27, 32
outcomes of...............................21, 67 of international trade........................23
strategic aspects of....1, 2, 3, 8, 36, 64, quantitative aspects..........................39
123, 130, 131, 132 scales of measurement.....................65
terms of............................................27 Treaty of Nice........55, 57, 134, 136, 137
P U
Poland. 1, 4, 7, 12, 18, 20, 21, 57, 58, 60, Uruguay Round 1, 2, 3, 6, 73, 80, 81, 92,
61, 70, 72, 75, 81, 82, 83, 84, 85, 86, 130
87, 93, 96, 98, 99, 100, 101, 104, 105, V
106, 107, 108, 109, 110, 111, 112, Voting power.........................35, 57, 134