In Discussion Paper No. 1044, Patrick Messerlin asks: why did it take only a couple of years for the CEECs' ostensibly liberal trade regimes to be significantly undermined by piecemeal protectionism? He argues that the essential obstacle to stability in the trade regime is the failure of CEEC trade laws to take `substitutability' properly into account. First, CEEC trade policies were based on the belief that regional disciplines were a good substitute for non-discriminatory world-wide disciplines. But relying on the Europe Agreements and neglecting GATT disciplines has led the CEECs to grant ever expanding privileges (preferential tariffs, then privileged investment deals, then preferential non-border measures) to an ever narrower set of partners.

Second, CEEC trade laws ignore the potential substitutability between instruments of protection, an issue particularly acute in the case of contingent protection (anti-dumping, safeguards, and anti-subsidy). If a CEEC government wants to adopt contingent protection laws, national laws should do more than incorporate all the GATT provisions. The paper reviews a few suggestions, including the replacement of all the existing contingent protection under the Europe Agreements with the more economically sound Treaty of Rome Articles 91 and 92–93. By signing these portions of the Treaty of Rome, the CEECs will become immediate (yet partial) members of the Union, an important political step.

Central European Countries' Trade Laws in the Light of International Experience
Patrick A Messerlin

Discussion Paper No. 1044, November 1994 (IT)