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The consequences of free trade in manufactures between Israel and the EEC

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  • Pomfret, Richard

Abstract

In 1975 Israel and the EEC signed a preferential trade agreement, which included provision for free trade in manufactured goods between the signatories by 1989 at the latest. The present study examines the economic consequences for Israel of such a free trade area. Although political factors are clearly important in determining the course of EEC-Israel relations, analysis of their economic aspects is facilitated by abstracting from the political issues. Within this framework, the free trade area can be seen as a case of mutual preferences between a large economically developed bloc and a small semi-industrialized country. During the 1960s economists and policy-makers, dissatisfied with the results of industrialization by import substitution, began to advocate the export of manufactures according to comparative advantage as a suitable development strategy for the less-developed countries (LDCs). A major obstacle to the success of this strategy was considered to be the tariff barriers existing in the high-income countries, where the largest markets lay, and the UN Conference on Trade and Development expended much energy between 1964 and 1971 in negotiating a system of preferential tariffs to be offered to LDCs. The intention was that eighteen developed countries would participate in the common system, but lack of agreement led to each country or bloc adopting a separate scheme. The individual preference systems which have emerged have come under a great deal of criticism, because they exclude some manufactured goods (usually the ones in which the LDCs have a comparative advantage) and place ceilings on preferential trade in other goods.

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 51.

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Date of creation: 1976
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Handle: RePEc:kie:kieliw:51

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  1. Dunning, John H, 1973. "The Determinants of International Production," Oxford Economic Papers, Oxford University Press, vol. 25(3), pages 289-336, November.
  2. Murray, Tracy, 1973. "How Helpful is the Generalised System of Preferences to Developing Countries?," Economic Journal, Royal Economic Society, vol. 83(330), pages 449-55, June.
  3. Simón Teitel, 1974. "Economies Of Scale And Size Of Plant: The Evidence And The Implications For The Developing Countries," Journal of Common Market Studies, Wiley Blackwell, vol. 13(2), pages 92-115, December.
  4. Harry G. Johnson, 1960. "The Cost of Protection and the Scientific Tariff," Journal of Political Economy, University of Chicago Press, vol. 68, pages 327.
  5. R. Pomfret, 1975. "Some interrelationships between import substitution and export promotion in a small economy," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 111(4), pages 714-727, December.
  6. Bela Balassa, 1965. "Tariff Protection in Industrial Countries: An Evaluation," Journal of Political Economy, University of Chicago Press, vol. 73, pages 573.
  7. James Riedel, 1975. "The nature and determinants of export-oriented direct foreign investment in a developing country: A case study of Taiwan," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 111(3), pages 505-528, 09.
  8. Basevi, Giorgio, 1970. "Domestic Demand and Ability to Export," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 330-37, March-Apr.
  9. Krauss, Melvyn B, 1972. "Recent Developments in Customs Union Theory: An Interpretive Survey," Journal of Economic Literature, American Economic Association, vol. 10(2), pages 413-36, June.
  10. W. Giles Mellon, 1967. "Discussion," Journal of Finance, American Finance Association, vol. 22(2), pages 192-194, 05.
  11. Mordechai E. Kreinin, 1973. "Some Economic Consequences Of Reverse Preferences," Journal of Common Market Studies, Wiley Blackwell, vol. 11(3), pages 161-172, 03.
  12. W. M. Corden, 1957. "The Calculation Op The Cost Op Protection1," The Economic Record, The Economic Society of Australia, vol. 33(64), pages 29-51, 04.
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Cited by:
  1. Richard Pomfret, 1978. "The economic consequences for Israel of free trade in manufactured goods with the EEC," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 114(3), pages 526-539, September.
  2. Donges, Juergen B., 1979. "Towards Spain's accession into the EEC: Trade, growth, and policy reform implications," Kiel Working Papers 94, Kiel Institute for the World Economy.

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