While scholars and governments alike view the liberalization of international trade as a positive development, they disagree on the medium that will accomplish this objective with the highest economic returns. Some experts believe that multilateralism through the 150+ member World Trade Organization (WTO) is the only way to achieve truly open and efficient trade. Others view multilateralism as but an aspiration and find that regionalism offers the only viable prospect for the meaningful further opening of markets.
In light of what we label the "new regionalism," our paper explores in detail the positive and negative effects of regional trade arrangements (RTAs). In so doing, we necessarily pass judgment on the counterfactual of using global trading rules to increase disciplines on government restrictions on the further liberalization of trade. In Part I, we describe the "new regionalism" and explain how it affects assessment of the benefits and disadvantages of RTAs. In Part II, we trace the historical and legal background of RTAs beginning with the 1947 General Agreement on Tariffs and Trade (GATT).
The closely-related Parts III and IV examine in detail the positive and negative benefits of regional economic arrangements, primarily from an economic perspective. Our conclusions seek to answer the question of whether the WTO and other global institutions continue to serve a useful function from an economic standpoint. We offer to policy officials dealing with regional trade treaties specific prescriptions for addressing the changing roles of global and regional instruments.