International subcontracting and outward-processing trade between European Union's and Eastern European countries

International subcontracting with outward-processing trade (OPT) is characterized by the exportation (from a European Union's country) of intermediate goods or spare parts linked to a re-importation of finished or semi-finished products. The regulations and tariffs applying to OPT with Eastern European countries (EECs) as well as the pros and cons for both home and host countries for this sort of trade are studied along with the determinants underlying European firms' strategies for relocating production in the East and the temporary nature of OPT as a means for penetrating Eastern European markets. The empirical evidence exhibits - for the whole EU - that OPT with the EECs has declined from 1993 to 1997, and has concentrated on four host countries and a few industries (above all textile and clothing). Beyond the overall trend of developing OPT in low-tech and labour-intensive industries, a statistical analysis reveals deeper differences in OPT specialisation depending on the specific EEC.