| || || Kaufmann, Uwe.|
| || || Gains from trade versus adjustment costs : the economic partnership agreement and the Pacific agreement on closer economic relations |
Institution: University of the South Pacific.
Call No.: pac In Process
Copyright:Under 10% of this thesis may be copied without the authors written permission
Abstract: The Pacific Island Countries (PICs) are finally in the wake of trade liberalization. In December 2007, Fiji and Papua New Guinea signed an Interim Partnership Agreement (IPA) with the European Community (EC), which promises gradual trade liberalization between the two Pacific countries and the EC. The IPA triggers the Pacific Agreement on Closer Economic Relations (PACER). PACER, similar to IPA promises gradual trade liberalization between PICs and Australia and New Zealand. One of the best known issues of trade liberalization is the reduction and/or elimination of tariffs. The resulting tariff revenue losses of the developing countries are used, more and more often, to criticize advanced, developed countries for their demand of freer trade. Instead, the real impact of trade liberalization, of IPA (EPA) and PACER, remains undetected and also underestimated. This may have several reasons. For once, because it serves the protected industries to build up a negative picture of the agreements due to the threat of tariff revenue loss. Also, NGOs simply do not understand the obstacles to trade many PICs face. Therefore, both agreements IPA and PACER are analyzed. It is found that they precisely address all common barriers to trade identified by the World Trade Organization. This thesis argues that trade liberalization offers the possibility for these Pacific countries to overcome trade and economic constraints, which hinder sustainable development. Existing empirical studies have found the Pacific nations as being trade open economies, making the goal of trade liberalization questionable. If the PICs are open to trade, no need for trade liberalization would exist, and the PICs would perform well. Unfortunately, the PICs have one of the lowest average growth rates of all developing countries and therefore, the thesis argues that the common used trade openness measurements are inappropriate. It is claimed that the PICs are not as open to trade as often predicted. If the trade openness measurement is used inappropriate, the results in an empirical study will be biased.