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Regionalism versus multilateralism

Listed author(s):
  • Winters, L. Alan

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
Handle: RePEc:wbk:wbrwps:1687
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References listed on IDEAS
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  1. Kyle Bagwell & Robert W. Staiger, 1993. "Multilateral Tarriff Cooperation During the Formation of Regional Free Trade Areas," NBER Working Papers 4364, National Bureau of Economic Research, Inc.
  2. Grossman, G.M. & Helpman, E., 1992. "Protection for Sale," Papers 21-92, Tel Aviv.
  3. Elhanan Helpman, 1995. "Politics and Trade Policy," NBER Working Papers 5309, National Bureau of Economic Research, Inc.
  4. Raymond RIEZMAN, 2013. "Customs Unions and the Core," World Scientific Book Chapters, in: International Trade Agreements and Political Economy, chapter 3, pages 33-43 World Scientific Publishing Co. Pte. Ltd..
  5. Grossman, G.M. & Helpman, E., 1993. "The Politics of Free Trade Agreements," Papers 14-93, Tel Aviv.
  6. Konstantine Gatsios & Larry Karp, 1991. "Delegation Games in Customs Unions," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 391-397.
  7. Bond, Eric W. & Syropoulos, Constantinos, 1996. "The size of trading blocs Market power and world welfare effects," Journal of International Economics, Elsevier, vol. 40(3-4), pages 411-437, May.
  8. Winters,L. Alan & Venables,Anthony (ed.), 1993. "European Integration," Cambridge Books, Cambridge University Press, number 9780521435277, May.
  9. Gatsios, Konstantine & Karp, Larry, 1995. "Delegation in a general equilibrium model of customs unions," European Economic Review, Elsevier, vol. 39(2), pages 319-333, February.
  10. Levy, Philip I., 1999. "Lobbying and international cooperation in tariff setting," Journal of International Economics, Elsevier, vol. 47(2), pages 345-370, April.
  11. Kemp, Murray C. & Wan, Henry Jr., 1976. "An elementary proposition concerning the formation of customs unions," Journal of International Economics, Elsevier, vol. 6(1), pages 95-97, February.
  12. Carlo Perroni & John Whalley, 2000. "The new regionalism: trade liberalization or insurance?," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 1-24, February.
  13. Frankel, Jeffrey & Stein, Ernesto & Wei, Shang-jin, 1995. "Trading blocs and the Americas: The natural, the unnatural, and the super-natural," Journal of Development Economics, Elsevier, vol. 47(1), pages 61-95, June.
  14. Baldwin, Richard, 1993. "A Domino Theory of Regionalism," CEPR Discussion Papers 857, C.E.P.R. Discussion Papers.
  15. Richardson, Martin, 1993. "Endogenous protection and trade diversion," Journal of International Economics, Elsevier, vol. 34(3-4), pages 309-324, May.
  16. Jeffrey A. Frankel & Ernesto Stein & Shang-Jin Wei, 1993. "Continental Trading Blocs: Are They Natural, or Super-Natural?," NBER Working Papers 4588, National Bureau of Economic Research, Inc.
  17. Cadot, Olivier & de Melo, Jaime & Olarreaga, Marcelo, 1996. "Regional Integration and Lobbying for Tariffs Against Non-members," CEPR Discussion Papers 1448, C.E.P.R. Discussion Papers.
  18. Sinclair, P. & Vines, D., 1995. "Bigger Trade Blocs Need Not Entail More Protection," Discussion Papers 95-32, Department of Economics, University of Birmingham.
  19. John Kennan & Raymond Riezman, 2013. "Optimal Tariff Equilibria with Customs Unions," World Scientific Book Chapters, in: International Trade Agreements and Political Economy, chapter 5, pages 53-66 World Scientific Publishing Co. Pte. Ltd..
  20. Rodney D. Ludema, 1998. "On the Value of Preferential Trade Agreements in Multilateral Negotiations," International Trade 9802003, EconWPA.
  21. Bond, E. & Syropoulos, C., 1993. "Trading Blocs and the Sustainability of Inter-Regional Cooperation," Discussion Papers 93-17, Department of Economics, University of Birmingham.
  22. Antonio Spilimbergo & Ernesto Stein, 1998. "The Welfare Implications of Trading Blocs among Countries with Different Endowments," NBER Chapters, in: The Regionalization of the World Economy, pages 121-152 National Bureau of Economic Research, Inc.
  23. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 87(4), pages 506-519, September.
  24. Lawrence H. Summers, 1991. "Regionalism and the world trading system," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 295-301.
  25. Kyle Bagwell & Robert W. Staiger, 1993. "Multilateral Tariff Cooperation During the Formation of Free Trade Areas," Discussion Papers 1048, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  26. Paul R. Krugman, 1991. "The move toward free trade zones," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 7-58.
  27. Kowalczyk, Carsten & Sjostrom, Tomas, 1994. "Bringing GATT into the Core," Economica, London School of Economics and Political Science, vol. 61(243), pages 301-317, August.
  28. Alexis Jacquemin & André Sapir, 1988. "European integration or world integration?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 124(1), pages 127-139, March.
  29. Winters, L. Alan, 1994. "The EC and protection: The political economy," European Economic Review, Elsevier, vol. 38(3-4), pages 596-603, April.
  30. Ethier, Wilfred, 1996. "Regionalism in a multilateral world," Discussion Papers, Series II 314, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
  31. repec:idb:wpaper:323 is not listed on IDEAS
  32. Junichi Goto & Koichi Hamada, 1995. "EU, NAFTA, and Asian Responses: A Perspective from the Calculus of Participation," NBER Working Papers 5325, National Bureau of Economic Research, Inc.
  33. Nitsch, Volker, 1996. "Do Three Trade Blocs Minimize World Welfare?," Review of International Economics, Wiley Blackwell, vol. 4(3), pages 355-363, October.
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  35. Collie, David R, 1997. "Bilateralism Is Good: Trade Blocs and Strategic Export Subsidies," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 504-520, October.
  36. Desruelle, Dominique & Richardson, Martin, 1997. "Fortress Europe: Jericho or Chateau d'If?," Review of International Economics, Wiley Blackwell, vol. 5(1), pages 32-46, February.
  37. Widgren, Mika, 1995. " Probabilistic Voting Power in the EU Council: The Cases of Trade Policy and Social Regulation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(2), pages 345-356, June.
  38. repec:fth:michin:298 is not listed on IDEAS
  39. Jackson, J.H., 1991. "The European Community and World Trade: The Commercial Policy Dimension," Working Papers 298, Research Seminar in International Economics, University of Michigan.
  40. André Sapir & Alexis Jacquemin, 1988. "European integration or world integration?," ULB Institutional Repository 2013/8242, ULB -- Universite Libre de Bruxelles.
  41. repec:fth:geneec:96.07 is not listed on IDEAS
  42. Richardson, Martin, 1995. "Tariff revenue competition in a free trade area," European Economic Review, Elsevier, vol. 39(7), pages 1429-1437, August.
  43. Campa, Jose Manuel & Sorenson, Timothy L, 1996. " Are Trade Blocs Conducive to Free Trade?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 263-273, June.
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