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Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade

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  • Baldwin, Richard

Abstract

This paper addresses the final steps to global free trade – what they might look like, what sort of political economy forces might drive them, and what the WTO might do to guide them. Two facts form the point of departure: 1) Regionalism is here to stay; world trade is regulated by a motley assortment of unilateral, bilateral and multilateral trade agreements; 2) this motley assortment is not the best way to organise world trade. Moving to global duty-free trade will require a multilateralisation of regionalism. The paper presents the political economy logic of trade liberalisation and uses it to structure a narrative of world trade liberalisation since 1947. The logic is then used to project the world tariff map in 2010, arguing that the pattern will be marked by fractals – fuzzy, leaky trade blocs made up of fuzzy, leaky sub-blocs (fuzzy since the proliferation of FTAs makes it impossible to draw sharp lines around the big-3 trade blocs, and leaky since some FTAs create free trade ’canals’ linking the big-3 blocs). The paper then presents a novel political economy mechanism – spaghetti bowls as building blocs – whereby offshoring creates a force that encourages the multilateralisation of regionalism. Finally, the paper suggests three things the WTO could do to help.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5775.

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Date of creation: Aug 2006
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Handle: RePEc:cpr:ceprdp:5775

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Keywords: domino effect; juggernaut effect; multilateralism; regionalism; RTB unilateralism; trade;

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References

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  1. Preferential trade and economic efficiency
    by jdingel in Trade diversion on 2011-03-05 20:57:05
  2. Multilateral, regional, bilateral: which agreement is best?
    by Jeffrey Wilson, Fellow of the Asia Research Centre at Murdoch University in The Conversation on 2013-11-15 00:20:51
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