Regionalism and the Multilateral Trading System: The Role of Regional Trade Agreements

Regionalism and the Multilateral Trading System: The Role of Regional Trade Agreements

James P. Murphy, Carolan McLarney
Copyright: © 2018 |Pages: 18
DOI: 10.4018/978-1-5225-2673-5.ch001
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Abstract

Regionalism and the Multilateral Trading System: The Role of Regional Trade Agreements is a discussion about the new reality and the evolution of the reduction of international barriers to freer trade under the World Trade Organization (WTO) formerly the General Agreement on Trade and Tariffs (GATT). The chapter devotes time to the two largest regional trade agreements (RTAs), the European Union (EU) with 28 countries and North American Trading Agreement (NAFTA) with three countries account for half of all world trade (WTO, 2017a). The US set a course post World War II as the proponent of globalization and freer trade. RTAs at that time were failing or inconsequential. In response to the EU trading block, the US committed to a (Free Trade Area) FTA with Canada and subsequently the NAFTA with Canada and Mexico the rest of the world began to become concerned about being shut out of a preferential trade deal. The main theme of the chapter is that trade liberalization is moving forward because of Regional Trading agreements, not the WTO which is stalled and may never restart in its current form.
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Background

Systems of International Trade

World trade in 2014, from all the WTO countries, in goods represented $19.0 trillion dollars up from $2.3 trillion in 2010. It was no doubt spurred on by the worldwide growth in trade after WWII and the backward protectionist “beggar thy neighbour policies” of the 1930s (WTO, 2017b). Here one country attempts to make corrections in its economy and in doing so they trigger negative economic consequences to its “neighbour”. To encourage trade and take advantage of the benefits of increased trade, governments worked together to create organizations to spur on trade. The predominant one is GATT/WTO, a multilateral trade agreement to reduce the tariff barriers between countries levied against imported goods.

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