EUROPEAN ECONOMIC COMMUNITY TOWARDS 1992 AND ITS IMPACT ON THE ASIAN NEWLY INDUSTRIALISING ECONOMIES

Abstract

In June l985, the European Commission submitted a White Paper to the European Council calling for the removal of internal barriers, leading to the formation of a single, integrated Europe by 1992. Since then, the pace of developments has been accelerated, with more than half of the 285 directives already passed. This represents a milestone in European history as 1992 represents a concerted effort to realise the original aims set out in the Treaty of Rome. As this will change the way businesses are conducted in the Community, it is of great significance to the Asian Newly Industrialising Economies (NIEs) since the European Community (EC) is one of their main trading partners. The subject scope is vast, and it covers plans from liberalising public procurement to the removal of physical barriers to the realisation of a Monetary Union. In this limited study, this Academic Exercise does not seek to examine all the aspects of the White Paper, rather it focuses on the impact of the 1992 programme on the conduct of merchandise trade as well as financial services and their underlying implications to the NIEs. The objective of this study is to infer from present trends and developments, the likely outcome of the 1992 plan as well as its resultant impact on the Asian NIEs. The conclusions are largely based on a fusion of ideas from my discussions with industry officials, as well as my own interpretations and assessments of available literature and data. In so doing, I trust that I have made an objective appraisal while bringing in the NIEs' perspective to the issue. Chapter I gives a brief historical overview of the developments of the EC. The rationale for the 1992 plan and its implications for Europe are also discussed. Chapter II examines the economic structure of the Asian NIEs. Their main structural characteristics as well as sources of growth will be discussed. Chapter Ill deals with the impact of 1992 on international trade. The implications to the NIEs, their reactions as well as some relevant trade theories will be discussed. Trade and investment go hand in hand. Chapter IV examines the impact of 1992 on investment. Here we shall discuss the reasons for investment flows into the EC as well as the impact of investment flows into the NIEs. The developments in financial services and how 1992 affects banking will be discussed in chapter V. The main findings of this paper will then be summarised in the concluding chapter VI.