Trade Tools: holding the fort or declaring open house?
The European Union is the world’s largest trading entity, accounting for 19.4 per cent of world exports and 18.9 per cent of global imports in 1995 (OECD 1998b, p.207). With the implementation of the Single Market Programme, the EU has emerged as one of the most affluent and liberal markets in the world. European producers are major players in a variety of markets ranging from agricultural goods, automobiles, and pharmaceuticals to satellites. The EMU project will further strengthen the Union’s place as one of the two economic superpowers of the world economy alongside the United States. As with other traders, the European Union’s trade and industrial policies are linked. In the contemporary political economy, states are sensitive to how their domestic economic arrangements, such as tax policies and research and development spending, affect the competitive prospects of their firms. Likewise, states are aware that the industrial policies of foreign states can have consequences for the competitive position of domestic firms. Thus, international trade politics has come to focus more on ‘behind-the-border’ issues and in doing so has touched upon areas typically associated with industrial policy.
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