WINNERS AND LOSERS IN EC 1992: THE COUNTERINTUITIVE IMPACT OF REGIONAL TRADE AGREEMENTS AND PROTECTIONISM ON GLOBAL COMPETITIVENESS

The intent of EC 92 (European Community, 1992) is to unite Europe into a gigantic trading block and turn it into the dominant world trading partner. Presumably European corporations will then be able to compete head to head with Japanese and American firms. We predict, however, that instead of being a boon to European competitiveness EC 92 will have the opposite effect. Our prediction is based on three assertions: (1) a unified Europe will become protectionist, thereby encouraging foreign direct investment and increased competition in its home markets; (2) a new, unified Europe is a far more favorable business environment for American and Japanese multinational corporations (MNCs) than for European companies; and (3) most European firms are not strategically or operationally equipped to compete in the new EC environment.