Working Paper: CEPR ID: DP1739
Authors: Andre Sapir
Abstract: Many observers have noted a recent proliferation of regional trade agreements primarily centred in or on Europe. The paper analyses the causes and consequences of EC regionalism. It begins by examining the development and importance of the phenomenon. It finds that although the EC maintains preferential trade arrangements with virtually all countries, preferential trade accounts for no more than 25% of total EC trade. The paper investigates the causes of EC regionalism, focusing on the determinants of both the demand by third countries and the supply by the EC. Lastly, it examines future options.
Keywords: trade liberalization; preferential trading arrangement; political economy
JEL Codes: F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| domino effects (C69) | demand for RTAs from third countries (F15) |
| EC integration (F15) | demand for RTAs from CEECs (R22) |
| demand for RTAs from CEECs (R22) | credible commitment devices for economic reforms (E61) |
| EC’s supply of RTAs (R59) | regional stability (F55) |
| EC’s supply of RTAs (R59) | discriminatory market access (J70) |
| regional trade dynamics (F14) | domestic policy reforms in CEECs (E69) |