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Regionalism versus multilateralism

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Author Info
Winters, L. Alan
Abstract

The author focuses on whether regionalism sets up forces that encourage or discourage evolution toward globally free trade. Although models can be built suggesting either conclusion, these models are still so abstract that they should be viewed as parables rather than sources of testable predictions. This paper presents more conclusions about research strategy than about the world we live in. Among the conclusions reached is that the term multilateralism needs to be defined in every instance. Also, sector-specific lobbies are a danger if regionalism is permitted because they tend to stop blocs from moving all the way to global free trade. While regionalism's direct effect on multilateralism is important, the indirect effect is more because it changes the ways in which groups of countries interact and respond to shocks in the world economy. Furthermore, regionalism, by allowing stronger internalization of the gains from trade liberalization, seems likely to facilitate freer trade when it is initially highly restricted. Lastly, the possibility of regionalism probably increases the risks of catastrophe in the trading system because it essentially coerces trading partners to come to the multilateral negotiating table and regionalism, being motivated by insurance incentives and"shiftable externalities."

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1687.

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Date of creation: 30 Nov 1996
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Handle: RePEc:wbk:wbrwps:1687

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Keywords: Rules of Origin; Environmental Economics&Policies; Economic Theory&Research; Trade Policy; Payment Systems&Infrastructure; Economic Theory&Research; Environmental Economics&Policies; Trade Policy; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Trade and Regional Integration;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  5. Bhagwati, J. & Panagariya, A., 1996. "Preferential Trading Areas and Multilateralism: Strangers, Friends or Foes?," Discussion Papers 1996_09, Columbia University, Department of Economics.
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  11. Campa, Jose Manuel & Sorenson, Timothy L, 1996. " Are Trade Blocs Conducive to Free Trade?," Scandinavian Journal of Economics, Blackwell Publishing, vol. 98(2), pages 263-73, June.
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  27. Richard Baldwin, 1993. "A Domino Theory of Regionalism," NBER Working Papers 4465, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  38. Richardson, Martin, 1995. "Tariff revenue competition in a free trade area," European Economic Review, Elsevier, vol. 39(7), pages 1429-1437, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Olarreaga, Marcelo & Soloaga, Isidro & Winters, L. Alan, 1999. "What's Behind Mercosur's CET?," CEPR Discussion Papers 2310, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Bond, Eric W & Syropoulos, Costas & Winters, L. Alan, 2000. "Deepening of Regional Integration and Multilateral Trade Agreements," CEPR Discussion Papers 2480, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Portes, Richard, 2001. "A Monetary Union in Motion: the European Experience," CEPR Discussion Papers 2954, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Carlo Pietrobelli & Silvia Nenci, 2007. "Does tariff liberalization promote trade? Latin America in the long run (1900-2000)," Working Papers 0704, CREI Università degli Studi Roma Tre, revised 2007. [Downloadable!]
  5. Anonymous & Jones, Elizabeth A., 1998. "Regional Trade Agreements and U.S. Agriculture," Agricultural Information Bulletins 33661, United States Department of Agriculture, Economic Research Service. [Downloadable!]
  6. Schiff, Maurice, 2000. "Multilateral trade liberalization and political disintegration - implications for the evolution of free trade areas and customs unions," Policy Research Working Paper Series 2350, The World Bank. [Downloadable!]
  7. Jong-Wha Lee & Innwon Park & Kwanho Shin, 2005. "Proliferating Regional Trade Arrangements: Why and Whither?," International Trade 0501010, EconWPA. [Downloadable!]
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  8. Constantinos Syropoulos, 2002. "On Tariff Preferences And Delegation Decisions In Customs Unions: A Heckscher--Ohlin Approach," Economic Journal, Royal Economic Society, vol. 112(481), pages 625-648, July. [Downloadable!] (restricted)
  9. Park, Innwon & Park, Soonchan, 2006. "Reform-creating regional trade agreements and foreign direct investment: applications for East Asia," MPRA Paper 1817, University Library of Munich, Germany, revised Jan 2007. [Downloadable!]
    Other versions:
  10. Arvind Panagariya & Rupa Dutta Gupta, 2003. "Did the Multi-fiber Agreement Make the NAFTA Politically More Acceptable? A Theoretical Analysis," International Trade 0308010, EconWPA. [Downloadable!]
  11. Goto, Junichi, 1997. "Regional economic integration and agricultural trade," Policy Research Working Paper Series 1805, The World Bank. [Downloadable!]
  12. Giorgia Albertin, 2007. "Will a Regional Bloc Enlarge?," IMF Working Papers 07/69, International Monetary Fund. [Downloadable!]
  13. Burfisher, Mary E. & Robinson, Sherman & Thierfelder, Karen, 2000. "Small countries and the case for regionalism vs. multilateralism," TMD discussion papers 54, International Food Policy Research Institute (IFPRI). [Downloadable!]
  14. Arvind Panagariya, 2003. "The Regionalism Debate: An Overview," International Trade 0309007, EconWPA. [Downloadable!]
    Other versions:
  15. Horn, Henrik & Mavroidis, Petros C, 2001. "Economic and Legal Aspects of the Most Favoured Nation Clause," CEPR Discussion Papers 2859, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. Mattoo, Aaditya & Fink, Carsten, 2002. "Regional agreements and trade services - policy issues," Policy Research Working Paper Series 2852, The World Bank. [Downloadable!]
  17. Itai Agur, 2007. "The US Trade Deficit, the Decline of the WTO and the Rise of Regionalism," Economics Working Papers ECO2007/17, European University Institute. [Downloadable!]
    Other versions:
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