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IS THE WTO QUIETLY FADING AWAY? THE NEW REGIONALISM AND GLOBAL TRADE RULES
Georgetown Journal of Law & Public Policy (2011)
  • Stephen Joseph Powell, University of Florida
  • Trisha Low, University of Florida
Abstract

While scholars and governments alike view the liberalization of international trade as a positive development, they disagree on the medium to 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 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. We begin by describing how New Regionalism affects assessment of the benefits and disadvantages of RTAs, then trace the historical and legal background of RTAs, and conclude by seeking to answer the question whether the WTO and other global institutions continue to serve a useful function.

We find that while RTAs can increase efficiency by parlaying the commonalities of neighboring countries into more cooperative trade relationships, RTAs also can undermine the benefits of multilateral consensus with provisions that, although not inconsistent, dilute that consensus through rigorous additional disciplines. We note that the marriage of developed and emerging market countries in RTAs often has positive effects on infrastructural development, but that RTAs can confuse and fragment trade through the “spaghetti bowl” effect of hundreds of different preferences that must at great cost be navigated, an especial burden for small firms. We learn that RTAs can speed trade liberalization by addressing issues such as migration, energy, and transit that the WTO has not brought to ground, but that they slow multilateral consensus on these subjects because WTO Members, especially emerging market countries, have insufficient resources to engage meaningfully on both regional and global levels.

In the end, we find surprising common cause between the WTO and its plethora of regional offspring. Proceeding from this premise, we offer to policy officials dealing with regional trade treaties specific prescriptions for addressing the changing roles of global and regional instruments, including the need and means to design development strategies at different levels and use of RTAs to activate the most efficient aspects of multilateralism.

Keywords
  • WTO,
  • regional trade agreements,
  • RTAs,
  • trade diversion,
  • trade creation,
  • new regionalism,
  • spaghetti bowl,
  • trade efficiency,
  • development
Disciplines
Publication Date
Summer July, 2011
Citation Information
Stephen Joseph Powell and Trisha Low. "IS THE WTO QUIETLY FADING AWAY? THE NEW REGIONALISM AND GLOBAL TRADE RULES" Georgetown Journal of Law & Public Policy Vol. 9 Iss. 2 (2011)
Available at: http://works.bepress.com/stephen_powell/8/