Regionalism and Multilateral Tariff Co-operation

Abstract

In recent years, there has been a proliferation of regional trading agreements. What are the consequences of such agreements for multilateral tariff co-operation? Are regional agreements ‘building blocks’ or ’stumbling blocks’ for the multilateral liberalization process? In this chapter, we develop a formal model that identifies important effects that regional agreements may have on multilateral tariff co-operation; and we find that the consequences of such agreements for multilateral tariff co-operation need not be clear-cut: regional agreements can produce effects which complement multilateral liberalization efforts, and can also produce effects which undermine the multilateral liberalization process. While we do not provide a conclusive answer to the questions posed above, we outline a framework of effects which can enable a better understanding of the possible impact of regional agreements on multilateral tariff co-operation. We also describe circumstances in which the net impact of the various effects can be determined.

For helpful comments, we thank Martin Richardson, an anonymous referee, John Piggott and Alan Woodland, Nita Watts, and the conference participants. This chapter was completed while Staiger was a Fellow at the Center for Advanced Study in the Behavioral Sciences. Staiger is also grateful for financial support provided by the National Science Foundation Grant no. SBR-9022192.