Regional Integration and Development in Small States

Maurice Schiff

doi:10.2139/ssrn.286762

Abstract

The author examines the impact of various trade policies for small developing states in the face of changing international trends - including globalization, the proliferation of regional integration agreements, the changing relationship between African, Caribbean, and Pacific (ACP) countries and the European Union (EU), the erosion of ACP preferences in the EU market, the Everything-But-Arms Initiative (a 2001 EU initiative providing forty nine developing countries free access to EU markets), and the negotiations on the Free Trade Agreement of the Americas. The author concludes that: 1) The participants in South-South regional integration agreements should further reduce their external trade barriers. 2) The trade component of the Cotonou Agreement between the ACP countries and the EU is likely to harm those countries. The ACP countries should liberalize their trade regimes to reduce the size of transfers to the EU. 3) Small states should sign free trade agreements with the rest of the Organization for Economic Cooperation and Development (OECD), and pursue multilateral liberalization. 4) Small states, and other developing countries should intensify South-South regional cooperation in the area of regional public goods. 5) The EU, and other OECD countries should provide country-specific technical assistance forbehind the borderreforms in small states - something specified in the Cotonou Agreement for ACP countries - as well as assistance in implementing their commitments under World Trade Organization agreements.

Highlights

Small states differ from other economies in a number of aspects, including their greater vulnerability to changes in the external environment
Recent changes in the external environment include the change in the relationship between the EU (European Union) and the ACP (African, Carribean and Pacific) countries, the erosion of ACP preferences in EU markets, negotiation of the FTAA (Free Trade Area of the Americas), and the general proliferation of trade blocs
This paper examined the options for small states facing a changing external environment

Summary

Summary findings

Schiff examines the impact of various trade policies for small developing states in the face of changing international trends-including globalization, the proliferation of regional integration agreements, the changing relationship between African, Caribbean, and Pacific (ACP) countries and the European Union, the erosion of ACP preferences in the EU market, the Everything-But-Arms Initiative (a 2001 EU initiative providing 49 developing countries free access to EU markets), and the negotiations on the Free Trade Agreement of the Americas. O The trade component of the Cotonou Agreement between the ACP countries and the European Union is likely to harm those countries. The ACP countries should liberalize their trade regimes to reduce the size of transfers to the European Union. The findings, interpretations,and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Execltive Directors, or the countries they represent. Sistema Econ6mico Latinoamericano UN grouping of "Small Island Developing States" South Pacific Regional Trade and Economic Cooperation Agreement Sanitary and Phyto-sanitary Standards Union Economique et Monetaire Ouest-africaine (West African Economic and Monetary Union) UN Conference on the Laws of the Sea UN Conference on Trade and Development United States Unilateral Trade Liberalization World Trade Organization

Introduction

Conclusion

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