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The political economy of Eastern European trade with the European Community: why so sensitive?

The political economy of Eastern European trade with the European Community: why so sensitive? SummaryEC trade with Eastern EuropeJim Rollo and Alasdair SmithDespite agreements to open trade with Eastern Europe, the European Community has retained a substantial degree of protection against imports of ‘sensitive’ products, notably agricultural products, textiles and clothing, and steel. This article investigates how sensitive these products really are. It is true that the targeted products are important to the EC economy, particularly in the poorer or declining regions. Yet trade with Eastern Europe only amounts to a very small proportion of the size of these sectors. When a large increase in imports is simulated, the overall effects on the Community are not insignificant, but are well within the range of the normal experience of economic change. Even without taking into account the fact that Eastern markets for EC goods would also grow, trade liberalization is welfare-increasing, particularly far Eastern Europe. Thus ‘contingent protection’, which may seriously deter investment in Eastern Europe, may simply be protectionism in any sector in which Eastern Europe is successful. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economic Policy Oxford University Press

The political economy of Eastern European trade with the European Community: why so sensitive?

Rollo, Jim; Smith, Alasdair
Economic Policy , Volume 8 (16) – Apr 1, 1993
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References (4)

Publisher
Oxford University Press
Copyright
© CEPR, CES, MSH, 1993
ISSN
0266-4658
eISSN
1468-0327
DOI
10.2307/1344570
Publisher site
See Article on Publisher Site

Abstract

SummaryEC trade with Eastern EuropeJim Rollo and Alasdair SmithDespite agreements to open trade with Eastern Europe, the European Community has retained a substantial degree of protection against imports of ‘sensitive’ products, notably agricultural products, textiles and clothing, and steel. This article investigates how sensitive these products really are. It is true that the targeted products are important to the EC economy, particularly in the poorer or declining regions. Yet trade with Eastern Europe only amounts to a very small proportion of the size of these sectors. When a large increase in imports is simulated, the overall effects on the Community are not insignificant, but are well within the range of the normal experience of economic change. Even without taking into account the fact that Eastern markets for EC goods would also grow, trade liberalization is welfare-increasing, particularly far Eastern Europe. Thus ‘contingent protection’, which may seriously deter investment in Eastern Europe, may simply be protectionism in any sector in which Eastern Europe is successful.

Journal

Economic Policy – Oxford University Press

Published: Apr 1, 1993

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