March 19, 2006

Our Project: An Outline

The European Union (EU) has a number of preferential bilateral trade agreements with third parties that allow these countries more favorable trading terms and access to the European market. What is more, bilateral trade agreements are never just simply that; they also address issues of economic cooperation and development, and are often conditional on the meeting of specific political and institutional criteria. The Cotonou Agreement, its precursor the Lomé Convention, and the “Barcelona process” of Euro-Mediterranean integration, are just a few examples of this sort of agreement. Given the seemingly obvious economic benefits, why have most of the world’s states not already signed such an agreement with the EU?

Whereas it seems, a priori, that economic considerations do play a role in the EU’s bilateral trade agreements, political and strategic factors are, in fact, very heavily at play. As a result, this project will attempt to reconcile both an economic approach to the question with one focusing on political economy.

Firstly, we will undertake an econometric analysis of the EU’s trade patterns with third parties to attempt to discern any possible economic motives in its signing of bilateral trade agreements. We hope to be able to determine a relationship between several variables, basing ourselves on existing models such as the “Gravity Theory of Trade.” This will include an examination of the markets of states both benefiting from and lacking bilateral trade agreements with the EU, the nature of such states’ trade with the EU, and possible economic interests in formalizing (and institutionalizing) a particular commercial relationship through a bilateral agreement.

This latter element of our more conventional economic analysis will lead into a more critical examination of the motives prompting both parties to sign (or not sign) such agreements. Having formulated an econometric model of trade between EU countries and a variety of trading parties, we will then undertake a much more detailed case study of the nature of the trade patterns for a bilateral trade agreement with the EU and for one which is not the subject of such an agreement, where special heed will be taken of political and other non-economic interests that condition the EU’s trade agreements. Through subsequent inference, hopefully an insightful conclusion will be reached as to what factors weigh more heavily in the EU’s and third parties’ decision-making processes when they consider the drafting and signing of trade agreements.

Given the wide range of approaches inherent to this project, several different analytical tools will be used: statistics, obtained from the European Union’s statistical service EuroStat, will be analyzed; key EU documents will similarly be examined, including the texts of significant trade/cooperation agreements; several European functionaries in both the Commission and the Council will be interviewed on policy considerations when considering the EU’s external trade.

- One comment Not publicly viewable

  1. Weisegeld

    European laws like other developed countries are protectionist by priority..
    good luck on your project

    21 Oct 2006, 04:23

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