The EFTA option for Eastern Europe: Towards an economic reunification of the divided continent

Wojciech Julian Kostrzewa and Holger Schmieding

No 397, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Eastern Europe is in the midst of a radical change. In order to increase the chances of success of their Perestroika, the reformers, especially those from Hungary, Poland and the Soviet Union, are striving for closer links between their countries and the economically-advanced Western , Europe. Thus, an economic reunification of the divided continent has become a real possibility - unless a misconceived Internal Market 1992 dashes this chance and leads instead to an isolation of Western Europe from the East. The purpose of this article is, firstly to demonstrate the importance of the economic relations with the West for the East European reform states, secondly to describe the dangers of a Single Market 1992 limited to the EC only and thirdly to show a way to a pan-European economic integration. The proposal to overcome the economic division of Europe consists of three keypoints : (1) the European Community refrains from the construction of a Fortress EC and gives a liberal character to its Internal Market 1992; (2) the EC and the European Free Trade Association (EFTA) extend their current mutual free trade agreements for industrial products to the trade of services and to factor movements in such a way that the Internal Market 1992 includes the EFTA and the EC in all economically relevant domains; and (3) the EFTA invites all the reform states from Eastern Europe fulfilling certain economic conditions to secure themselves free access into the whole west European market by means of joining this revitalized EFTA.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:397

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