Kiel Working Papers, Kiel Institute for World Economics
No 1264:
EU Integration and its Implications for Asian Economies – What we Know and What Not
Rolf J. Langhammer and Rainer Schweickert
Abstract: In this paper, we analyse effects of EU integration on
Asian countries. Since the early 1990s, it is especially the trade creation
effect of monetary integration (so-called Rose effect) which is heavily
debated in the literature. Recent papers seem to indicate that the Rose
effect seems to be significant especially for countries like the old EU
members which are already highly integrated in terms of trade and factor
mobility. The potential discrimination effect against trade with third
countries tends to increase with new member states entering EMU and could
also affect Asian economies’ exports to Europe. At the same time, so-called
overlap or similarity indices for trade patterns show an increasing
similarity between EU, US, and Japanese exports to Asia on the one hand and
Asian and European exports to industrialized countries on the other hand.
These observations are consistent with recent policy responses, i.e., the
focus of European contingent protection on Asian competitors, the desire of
Asian countries to negotiate free trade agreements (FTA) with the US and
Japan, and the EU’s response by probably entering into FTA negotiations
with Asian countries, including ASEAN.
Keywords: Trade, Monetary Integration, Protection, FTA, Overlap Index, Europe, Asia; (follow links to similar papers)
JEL-Codes: F13,; F15,; F31,; O52,; O53; (follow links to similar papers)
31 pages, January 2006
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