Abstract
While multilateralism is the most salient force in the postwar world economy, economic regionalism has consistently existed since the early 1950s. As a matter of fact, provided certain strict criteria are met and a procedure of notification is followed, regional trade agreements (RTAs) in the form of customs unions and free trade areas are openly sanctioned by GATT and its successor the WTO through three sets of rules, which include Article XXIV of GATT,1 the Enabling Clause,2 and Article V of the General Agreement on Trade in Service (GATS).3 According to these rules of GATT and the WTO, if a free trade area or customs union is formed, duties and other trade barriers should be reduced or removed in substantially all sectors of trade in the group. Non-members should not find trade with the group any more restrictive than before the group is set up. The major rationale for the permission of regional preferential trade arrangements is that the regional integration would bring trade creation effects for the world economy as a whole. More significantly, RTAs, according to this rationale, could serve as a supplemental, practical route to the universal free trade that GATT and the WTO advocate as the ultimate goal, as complete removal of trade barriers on a worldwide basis would not likely be achieved in anytime soon largely due to huge political obstacles.
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Notes
L. H. Summers, “Regionalism and the World Trading System,” in Policy Implications of Trade and Currency Zones, a symposium sponsored by the Federal Reserve Bank of Kansas City (Kansas City, MO: The Federal Reserve Bank of Kansas City, 1991), pp.295–301.
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WTO, Understanding the WTO: Cross-Cutting and New Issues: Regionalism: friends or rivals? http://www.wto.org/english/thewto_e/whatis_e/tif_e/bey1_e.htm, accessed on 28 March 2009. For a case study of the effects of economic regionalism on the multilateral trade system, see G. P. Sampson and S. Woolcock (eds), Regionalism, Multilateralism, and Economic Integration: The Recent Experience (Tokyo and New York: The United Nations University, 2003).
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Also M. Trachtenberg, A Constructed Peace: The Making of the European Settlement, 1945–63 (Princeton, NJ: Princeton University Press, 1999).
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According to Peter Leslie, economic union can be conceptualized in terms of a trade and investment union (the most basic type), a labor market union, a foreign economic policy union, a monetary union and a structural/development union. P. M. Leslie, “Abuses of Asymmetry: Privilege and Exclusion,” in K. Neunreither and A. Wiener (eds), European Integration Amsterdam: Institutional Dynamics and Prospects for Democracy (Oxford: Oxford University Press, 2000), pp.192–217.
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This is a strategic trade view. See A. Gamble, “Regional Blocs, World Order and the New Medievalism,” in M. Telo (ed.), European Union and New Regionalism: Regional Actors and Global Governance in a Post-Hegemonic Era, 2nd edition (Aldershot, England and Burlington, VT: Ashgate Publishing, 2007), p.27.
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According to Susan Strange, the world becomes more like the European middle ages with multi-level systems of authority than the Westphalian system of nation-states with territorial sovereignty. Strange’s observation has been further developed by Robert Cox. Strange, States and Markets, and The Retreat of the State. R. W. Cox, Approaches to World Order (Cambridge and New York: Cambridge University Press, 1996).
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© 2010 Kevin G. Cai
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Cai, K.G. (2010). Regionalism in the World Economy since the 1950s. In: The Politics of Economic Regionalism. International Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1057/9780230277267_4
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DOI: https://doi.org/10.1057/9780230277267_4
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