Asia and EC 1992: The missing link

Abstract

The EC 1992 program to complete the Internal Market by the end of 1992 has received a great deal of attention in the popular press, trade and academic journals, and elsewhere. Indeed, the Atlantic Economic Journal in its September 1990 edition focused on several aspects of the t992 program, all dealing with the "Impact of 1992 Europe." These contributions are all useful in that they treat the multidimensional nature of this impressive and ambitious movement toward vertical economic integration. However, discussions of the effects on developing countries are frequently lacking, and implications for developing Asia in particular are ignored. Yet, developing Asia constitutes a critical region that is likely to experience important changes as a result of EC 1992. The developing countries in Asia are unique in that they represent a group which, with the exception of a few, have embraced outward-oriented development strategies. Some have long based their economic policies on international trade and investment (e.g., the Asian NIEs) and some have recently launched radical liberalization programs (e.g., Indonesia). These policies have been instrumental in the many success stories of the region. Latin American and African countries are now looking to Asia for an alternative model of development. Yet, the flip side of an outward-looking policy is the need to become more interdependent with the international marketplace. Hence the question: How will EC 1992 directly affect Asian developing countries through changes in its preferential structure and other discriminatory treatment inherent in the formation of economic blocks and indirectly through its effects on the openness of the international marketplace itself?. For example, what would an EC common commercial policy look like once non-tariff barriers are community-wide? What will happen to the Common Agricultural Policy as the EC absorbs Spain and Portugal? How will the countries with close economic, political, and security ties to the EC and who already receive preferences be compensated and how will the compensation affect non-preferential countries such as those in the Asia-Pacific area? Even if the optimistic economic predictions of studies such as the Cecchini Report are realized, itis importantto consider the microeconomic aspects of the EC 1992 program and the possible changes in commercial policy affecting Asian developing countries who are at the bottom of the ladder of the EC pyramid of preferences. The world is entering a new era of developeddeveloping country relations based on partnership. Retaining and enhancing the integrity of the. global trading system is thus critical. While the historical implications of EC t992 are being and should continue to be highlighted, economic integration in Europe, as well as elsewhere in the developed world, needs to be viewed in light of global ramifications in general and impacts on developing countries in particular. As these questions are addressed, confidence in the predictions will commensurately improve.