EU Preferential Trade Arrangements and Developing Countries

T HE European Union, or the European Community (EC) as it continues to be called in the WTO parlance, has had the most extensive network of preferential trade areas (PTAs) of any WTO member. Prior to the current wave of PTAs, christened ‘New Regionalism’ by Bhagwati (1993), the EC was a participant to half of such arrangements. Thus, according to the WTO list current at the time of writing, a total of 32 PTAs, notified to GATT/WTO prior to 1990, were still in force. The EC was a participant to 16 of these arrangements. The New Regionalism saw the PTAs form with vengeance with their number rising to a staggering 172 by early 2002. The EC remained a major player in the game with membership in 33 additional arrangements. To be sure the EC PTAs have not been confined to developed countries. The EC has made a conscious effort to forge preferential trade arrangements with developing countries as well. Thus, it maintains special economic relations with its 12 developing Mediterranean neighbours, namely, Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, Mauritania, Syria, Tunisia, Turkey and the Palestinian Authority. Recently, it has also forged FTAs with some far away trading partners, notably Chile and Mexico in Latin America and South Africa in Africa. The EC also maintains a complex web of one-way trade preference to all developing countries under the Generalised System of Preferences (GSP) and to a large number of African, Caribbean and Pacific (ACP) group of countries under the so-called Lome Convention, recently succeeded by the Cotonou Agreement. In this paper, I offer an overview and qualitative assessment of the EC preferential trade arrangements with developing countries. My main conclusion is