Preferential trade agreements: The EU and developing countries

Abstract

“The principal object of negotiations of Preferential Trade Agreements (PTA) of the European Union with the developing countries has traditionally been securing trade relations, which often translated into tariff measures. Nowadays, the trade landscape has significantly changed. The provisions negotiated under these agreements are being more and more complex broadening the scope of action. Depending on the level of integration, the European Union’s trade agreements are classified into several layers from Preferential Trade Agreements to Economic and Monetary/Political Union. The proliferation of the PTAs in the international fora has arisen questions about the incentives and impacts of these agreements on the developing countries. Are their main objectives achieve and what do the economic indicators reveal; Under the Cotonou Partnership Agreements, a PTA of the European Union with the African, Caribbean and Pacific Countries (ACP) that expires in 2020, the trade and economic performance of the ACP group is examined. Key findings suggest that amendments have been made towards the trade performance of the ACP group, with the total trade flows among ACP and EU having almost doubled from the signing of the CPA in 2000 till today, 2018. The EU is the main trading partner of the ACP block, with the trade flows concentrated into restricted countries merely being consisted of African ones. Trade diversification has not significantly changed, exports of the ACP countries are still dependent on the primary sector. Real GDP growth has been consistently positive under the Cotonou era, even during the global financial crisis. While there have been progressions in several parameter connected with attracting investment, the overall business climate still scores highly in the rank of World Bank Doing Business Index. In order to foster the ACP integration into the world economy and overcome the asymmetries the ACP countries, the CPA included provision of “tailor-made” economic partnership agreements (EPA), the impact of which is awaited to show in the future.”