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

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  • Richard Baldwin

Abstract

This paper addresses the final steps to global free trade -- the political economy forces that might drive them, and the role the WTO might play in guiding them. Two facts form the departure point: 1) Regionalism is here to stay; 2) the motley assortment of regional trade agreements 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 3 big blocs, and leaky since some FTAs create free trade ’canals’ linking the 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 multilateralise regionalism.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12545.

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Date of creation: Oct 2006
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Publication status: published as Richard E. Baldwin, 2006. "Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade," The World Economy, Blackwell Publishing, vol. 29(11), pages 1451-1518, November.
Handle: RePEc:nbr:nberwo:12545

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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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