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the advanced industrial countries see their comparative advantage, they tend to undermine their own future compe- titiveness.
Selective approaches, sector by sector and product by product, have lost much of their effectiveness and cohe- rence in solving problems, as these problems are in- creasingly assuming trans-sectoral and trans-national di- mensions. This will be true a fortiori in the post-1992 EEC.
Most importantly, this protection doesn't use the advan- tage of international trade. They miss chances on the import side (insufficient use of competitive inputs for their own production and thereby loss of international competitiveness) and on the export side.
Finally its risks trade frictions with the U.S. The market share of the NIEs in the EEC varies from a third to a fourth of that in the U.S. This fact can hardly be explained by the more fragmented European markets or different import elasticities in the U.S. alone.
bb. Imports
Parallel to their surging exports, the NIES' import absorption
capacity has been expanding. Hardly noticed, they have become
the most important importers in the third world. The EEC
members, however, have since 1965 lost half of their market
shares in the Pacific Basin and, more significantly, their
losses have been biggest in the SITC groups machinery and
transport equipment. The argument of high access barriers to
the domestic NIES' markets apparently has not withheld
American and Japanese competitors as much as the European
ones. A fresh look at these markets seems appropriate, as the
NIES have gradually liberalized market access and their exchange systems since 1980:
Korea announced in 1984 a 5-year adjustment program of tariff cuts and selective import liberalization to en- hance competition. A Fair Trade Act was initiated to re- duce monopolistic practices, and controls on direct in- vestments and service transactions have been reduced as well. However the Korean liberalization policy should be pursued and should give the same access to the Korean market to all trade partners.
Taiwan removed nearly all foreign exchange controls in 1987. Tariff rates for 40% of the products in Taiwan's tariff schedule have been cut. Property right protection