Do EU Trade Policies Help or Hurt Developing Countries Essay

Do EU Trade Policies Help or Hurt Developing Countries - Essay Example In numerous developing countries, the trend is shifting from trade liberalisation to economic independence (Candau & Jean 2006). The multilateral trading system is enduring from the instability of the economy while preferential agreements keep on flourishing. Nowadays, no developing country is withdrawing from this development. Even if the European Union (EU), which began with the enforcement in 1958 of a customs union, has been putting into effects preferential agreements for several years, other developing countries, particularly those in East Asia, did not aid the increase in the prevalence of preferential agreements (Hoekman & Prowse 2005). Nevertheless, in the recent decades, developing economies, such as China, have further strengthened this risky development. Because of the failure of the Geneva ministerial convention in 2008, there will be heightened need for PTAs (Hoekman & Prowse 2005). The issues raised in the recent decade will occur again. The absence of growth in the mu ltilateral stage will be considered as the major justification for preferential agreements and, apparently, this claim is currently more compelling than before (Falvey & Reed 2002). With the absence of any possible settlement on the Doha Development Round, the international economy is seasoned once again for a new batch of preferential agreements. However, policymakers should understand the risks that PTAs create for developing countries. Theoretically, preferential agreements rule out countries (Candau & Jean 2006). Liberalisation is PTAs’ deal and countries make compromises in them, yet these are exclusive to the signatories. Hence, preferential agreements exclude (Evenett 2008). Given this fact, the first most favourable solution would be to remove preferential agreements in general. Countries, without preferential agreements, could either agree in multilateral discussions on liberalisation plans or have unilateral trade regulations (Hoekman et al. 2008). Nowadays, neverth eless, this is not a possible suggestion. All countries would have to concur with the restrictions of PTAs. Hence, the challenge at present is to enforce mechanisms that lessen the unfavourable effects of PTAs, in particular on developing countries. This issue will be thoroughly discussed in this paper. Preferential Trade Agreements: Favourable or Unfavourable to Developing Countries? Several studies have investigated the effect of the trade preferences of EU on imports from developing nations. Majority have reported favourable outcomes, specifically for the preferences provided to the African, Caribbean and Pacific (ACP) states (Persson and Wilhelmsson 2007), which are aiming for sustainable development and reduction of poverty levels. Evenett (2008) emphasises that the effect of the EU Generalised Scheme of Tariff Preferences (GSP), which guarantees that exporters from developing countries are charged with lesser duties, relies on which of the EU GSP agreement that is concerned an d that the organisational expenditures related with acquiring level of preferences to that margins of preference of not below 4.5% are non-utilised (Nilsson & Matsson 2009, 5). Other scholars, such as Cipollina and Salvati (2008), study the effect of preferences of the EU in the industry of agriculture. These scholars reported that the preferential schemes of