European Agreements

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54 Another concession – the authorization of the CEECs to use a customs disadvantage – was a mixed blessing. In general, free trade agreements do not allow all signatories to apply a refund rule, i.e. the reimbursement of tariffs on imported inputs. Since tariffs may vary from country to country, this could confer an additional benefit on an exporter shipping its products to another country. The EU wanted to strengthen the competitiveness of the CEE countries by reducing the negative effects of EU episuries and providing them with an additional instrument to attract foreign investors38. This has encouraged investors from non-member countries to invest in the CEE countries and not in the EU. An external investor targeting EU markets and investing in a CEE could save tariffs on imports, as a similar investment in the EU would be subject to tariffs on input imports. With some amendments this provision was maintained until the end of 1998. In 1999, the CEE countries will no longer be able to reimburse exporters for import duties, as pan-European accumulation is based on a “no-drawback” principle. In recent history, these agreements have been signed within the framework of two EU policies: the Stabilisation and Association Process (SAp) and the European Neighbourhood Policy (ENP). 36 Until 1988, there were no significant differences in the access of THE European CAEM countries to EU25 markets. The differentiation of treatment began when the EU began diplomatic relations with Hungary and Poland and signed non-preferential trade and cooperation agreements with them. The agreements set a deadline for 1994-1995 for the elimination of specific quantitative restrictions.

However, in response to the fall of communism in Central Europe in 1989, the European Commission overturned these agreements. 69 While it is impossible to assess the value of preferential market access in terms of contributing to the expansion of exports from the CEECs, the impact appears to have been considerable. Since the CEE countries were not negotiated with the West until 1989, there would have been a considerable reorientation with or without preferential agreements. However, this alone probably does not explain the magnitude of the increase. For example, the value of total exports from the Czech Republic, Hungary and Poland doubled between 1989 and 1993.

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