European Integration and Trade with the Developing World

Abstract

European economic integration is proving to be good for most developing countries. Overall, the creation of the European Community (EC) has imparted a liberalizing trend on the trade policies of most of its members, by lowering tariffs and reducing nontariff barriers. The single market project, initiated in 1985, will complete the process of market integration for most goods and services. Market unification will improve external access and accelerate growth in EC incomes - increasing import demand. Higher growth should also help to contain protectionist pressures within the European Community. EC policies toward developing countries are not perfect - far from it. But the effects of European integration must be compared to what would have happened in its absence. Generally, moves to strengthen integration - in the early 1960s and since 1985 - have been accompanied by reductions in external-trade barriers, while periods of slow integration have also witnessed a resurgence of protectionism and introduction of new trade barriers. However, macroeconomic conditions - such as period of flow growth or wide fluctuations in exchange rates - have been more important determinants of trade patterns and protectionist pressures. Agriculture is perhaps the only sector where EC membership may have contributed to an upward drift in protection.