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The European Community and the seven countries comprising
the European Free Trade Association (EFTA) have agreed on
the establishment of an European Economic Area (EEA) with
effect from January 1, 1993, creating thereby a free trade
area of 380 million consumers. The European Economic Area,
the world’s biggest free trade zone, would stretch
from the Arctic to the Mediterranean, and from the Atlantic
Ocean into Central Europe. Obstacles to the free flow of
Goods, Services, Capital and Labour are expected to be abolished,
with the exception of the sensitive agricultural sector.
It is possible that certain member countries
of the EFTA, such as, Austria, Sweden, Finland, Switzerland
and Norway, who are not at present members of the European
Community, will seek to join it in the near future; the
same could be true of the former socialist countries of
East Europe. Some less developed countries too, such as
Turkey, Malta and Cyprus have also indicated an interest
in seeking membership in the European Community. Hence there
is the likelihood of a very large trade association emerging
in Europe, which could have a significant impact on trade
the world over, including Sri Lanka.
In the wake of the Single Market in 1993
and the envisaged enlargement of the Community, an economic
and political union is also expected to emerge. Of significance
is a move for a single currency, by 1999 at the latest-a
beneficial effect of which is foreseen as an increase in
trade among the members of the Community, with the elimination
of currency fluctuations. Whether this will be so in actual
practice remains to be proved. What could prove undesirable,
however, is a loss of independence in the management of
monetary policy at the national level. Among other proposals
towards further integration, are the establishment of a
single central bank, a single foreign and defence policy,
and uniform rules and regulations for the management of
labour, industry and the environment.
Those opposed to European integration have
warned against the emergence of a federal Europe and an
European super-state, which is in danger of threatening
and ending national sovereignty. Such opposition was evidenced
in Denmark, for example, where the country voted against
European union.
However, the Maastricht Declaration for
greater European integration and cooperation, which was
adopted by the 12 states of the European community in December
1991, appears on the road to success. The ratification of
the Maastricht Treaty will be followed by formal negotiations
for the enlargement of the Community.
Table of Contents:
- Introduction
- Historical Background
- The Single European Market
- The External Dimensions of the Single Market: Trade
Policy Regarding the Third World
- EC Policies Regarding Imports
- The Impact on Textiles
- The Impact on Food Products
- Implications of the Single Market for Sri Lanka
- The European Economic Area (EEA)
- Concluding Remarks
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