Trends in EU-East Asian Trade and Their Implications for Europes ASEM Programme

This paper uses a combination of empirical models to investigate how much of a problem the removal of barriers on trade between the ASEM countries is likely to pose for adjustment in the EU economies. While existing revealed comparative advantage and the relative height of barriers suggest that much of the increase in imports will fall in industries where the EU has limited exposure much of the remainder is likely to be highly concentrated and hence costly to absorb. However, a continuation of intra- rather inter- industry specialization seems likely which will reduce the expected costs. Effects on the EU are unlikely to be disproportionate as trade is neither disproportionately restricted in total nor by category. Increases in export demand from the Asian countries will help offset the costs for the EU as a whole but not necessarily for the particular firms and employees affected by the growth in imports. The recent Asian crises may have slowed growth but the prospects from liberalization for both partners are still likely to be above average compared to expansion of trade in the world as a whole.