András Inotai and Judit Kiss
Following the political and economic transformation in Central and Eastern Europe (CEECs), 1 the ‘trade geography’ of the old continent has changed fundamentally. While abolishing the CMEA trade bloc, the transforming economies have institutionalised their trade relations within Europe in three directions. Key importance was attached to the European Union (EU) with which association agreements (AA) were signed. Free trade treaties created the framework of trade relations with EFTA countries. In addition, the Central European transforming countries established their own free trade area (CEFTA). As a result, the agreements are set to create a large free trade area including most European countries by 2001.
At the same time, substantial changes have also been characterising the development of the global trading system.
On the one hand, a new pattern of continental (or even transcontinental) regionalism started to emerge as a result of the creation of large trading blocs (see Chapter 1). In Europe, the single internal market, the European economic space and, most recently, the enlargement of the EU to three EFTA countries, as well as political and economic discussion about future (Eastern) enlargement exacerbates this trend. In the Western hemisphere, the Initiative of the Americas, NAFTA and Mercosur, as well as a number of regional cooperation agreements indicate similar developments. Also in Asia, mainly in and among the Pacific Rim countries, different patterns of regional cooperation have been elaborated in the last years.
On the other hand, growing regionalism has been accompanied by efforts of global trade liberalisation, featured by the successful conclusion of the GATT’s Uruguay Round negotiations and the creation of a new institution, the World Trade Organization (WTO).
The integration of Central and Eastern Europe into the global trading system is mainly conditioned by two external factors, namely the development