In Discussion Paper No. 1017, László Csaba argues that both the opening of the CEEC economies in 1988–90 and its partial reversal in 1991–4 were reflections of the domestic balance of forces. Commercial policy considerations in general and the Europe Agreements in particular have played a supplementary role at best. Both macro analyses of market shares and micro approaches based on case studies purport to establish the claim of extreme damages caused by liberalization in Central Europe. Meanwhile, the re-emergence of old lobbies in agriculture and industry, reinforced by the new ones (such as small private business and the political clientele of the new elites taking over some of the commanding heights of the economy), provide sufficient explanation for the neo-protectionist tide in Central Europe. This calls for retaining or creating a special governmental agency for free trade which would not be part of any other governmental department.

The author argues that harmonization of laws, coordinated surveillance of competition policies, technical assistance to remodel agriculture and market opening may be the most important ways the EU can help counteract retrogressive tendencies. Short of full EU membership, however, these and other limited and technical measures will probably prove insufficient to roll back the mounting and multidimensional pressure for procedural and other non-tariff protection. This may result in a non-transparent and internationally uncontrollable trend towards neo-protectionism in Central Europe for quite some time to come.

The Political Economy of Trade Regimes in Central Europe
László Csaba

Discussion Paper 1017, October 1994 (IT)