INR 3933r Lecture Notes - Mercosur, North American Free Trade Agreement

62 views7 pages
19 Mar 2014
School
Course
Professor
Regionalism v. Multilateralism 03/03/2014
Free Trade is the good for both of these processes, what both sides are working toward. But how do you get
there? Multilateral approach? Regional approach? Combination of the two? Does one get in the way of the
other? Or are they complimentary?
Liberal economics argues that multilateral approaches are the first-best strategy.
Regionalism: “theory of the second-best”
Negative is trade diversion
With Multilateralism, all you get is trade creation
GATT/WTO and RTAs
War-time negotiations:
During the 40s, U.S and U.K were greatest economic powers, specifically the U.K
U.K wanted to maintain “imperial preferences” that existed before the war, after the war
Special deals for its colonies
U.S (not having colonies) wanted to do away with all types of discrimination
GATT Article 1 called for unconditional MFN treatment (so U.S wins debate regarding regional
arrangements) no preferences
But…
GATT Article 24 permits countries to form RTAs under certain conditions if they:
Eliminate trade restrictions on “substantially all” trade among the members within a “reasonable” period
They do not “on the whole” raise barriers to nonmembers
B/c if raise barriers to nonmembers it would create trade diversion
Meant to limit the development of RTAs
Not successful b/c RTAs have grown very dramatically
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 7 pages and 3 million more documents.

Already have an account? Log in
Poorly enforced
States do not have to ask permission, just have to “notify” they WTO/GATT when they join
Waves of Regionalism
First Wave: late 1950s and 60s
European Community as the exemplar. ECSC EEC
EFTA
Talk of a “NA”FTA, but the US indifferent
Outbreak of RTAs in the LDCs
LAFTA and CACM (1960)
Attempts in Africa (based on colonial associations)
Very little long-term success, except in Europe
Why?
Southern RTAs could not reconcile regional liberalization with ISI
Hostility by the US to RTAs in LDCs
Not hostile to Europe b/c of USSR & so they supported it for political and security reasons rather than
economic
Second Wave: mid-1980s to 1990s
Growth in all regions
Participation of the hegemon:
1985: Israel-US FTA
1989: CUSFTA (1994: NAFTA)
New energy in Europe
Unlock document

This preview shows pages 1-2 of the document.
Unlock all 7 pages and 3 million more documents.

Already have an account? Log in

Get OneClass Notes+

Unlimited access to class notes and textbook notes.

YearlyBest Value
75% OFF
$8 USD/m
Monthly
$30 USD/m
You will be charged $96 USD upfront and auto renewed at the end of each cycle. You may cancel anytime under Payment Settings. For more information, see our Terms and Privacy.
Payments are encrypted using 256-bit SSL. Powered by Stripe.