Explaining formation and design of EU trade agreements: The role of transparency and flexibility

Abstract

What political factors explain the selection of countries for preferential trade agreements by the European Union? I argue that when forming a trade agreement the EU is more likely to target countries that have a higher degree of political and economic transparency than other developing countries. In highly transparent countries the EU is able to monitor effectively whether or not these countries follow its forms of conditionality, which is the main rationale of EU regionalism. Moreover, economic and political transparency plays a particularly important role in determining the degree of flexibility in trade agreements. Evidence based on data from 138 developing countries supports these arguments.