Multilaterism can be defined as a policy of expanding international trade between many countries, rather than restricting it to bilateral deals between just two countries.[1]
Regionalism is formation of political groupings or blocks of countries for the purpose of promoting intra-regional trade[2]
If WTO general policy is promoting globalization and opened markets (multilaterism), why regionalism is permitted? Which is its role in the current global market? It is an obstacle or a help to free trade?
All WTO members, except Mongolia, have regional agreements.[3] As a way of illustration: US-Canada free trade agreement, European Single Market or the Asian initiative ASEAN.These initiatives, diversely successful one another, allow countries to avoid damages as well as to gain new commercial opportunities.[4]Some authors consider that regionalism is not a hindrance for multilateralism because Free Trade Regions (FTR) promote and create commerce:
-Negotiations are less complex. Smaller groups of countries with common interests can reach agreement more easily and after that, negotiations among, for example, three large trading blocks will be likely more productive than among individual countries.
- FTRs can go beyond trade reform to promote competition, trade dispute settlement procedures, cooperation in research, and a host of other worthy efforts unachievable through global negotiations. [5]
- FTRs can be also beneficial to non member countries because if the economy of member countries improves, number of importations from other countries will arise due to growth of wealth.[6]
However, some criticisms can be pointed in the context of the free market, which is promoted by WTO:
-FRTs may, to induce internal cohesion, raise internal prices and protection from trade with outsiders. FRTs countries sometimes favor commercial barriers against third countries, which is absolutely contrary to WTO principles.[7]
- It has been demonstrated that developing countries FRTs have not been successful[8] and even more, the European and the North American FRTs are the only ones considered as important nowadays.[9]
-Producers receive fewer benefits under regionalism than under multilateralism.[10]
Figures show that FRTs are joined to globalization because nearly 60% of global trade is arranged between commercial regional blocks. Furthermore they can not be considered as opposite to multilateral trade because their aims, most of the cases, seek increasing inversions, reducing legal uncertainty and harmonizing national legislations. These initiatives reinforce WTO system because successful actions in those contexts can be subsequently elevated to a multilateral level.[11]
On the other hand, differences between Northern and Southern World countries still remain. As demonstrated, regionalism is not helping developing countries and completed multilateralism is not possible.
Benefits of FRTs and WTO policies are easy to recognise in the developed World. Then, what are these agreements looking for? Facilitating trade or their member’s interest?
[2]L Tweeten, 'Trade Regionalism: Promise and Problems' [1993]75 (3)American Journal of Agricultural Economics 810
[3] F Steinberg,' El futuro del comercio mundial: ¿Doha o regionalismo y bilateralismo?'(2007) 95 Real Instituto el Cano 6
[4] R Baldwin, 'A Domino Theory of Regionalism' (1993) Graduate Institute of International Studies, University of Geneva.
[5]n2
[6]FKohon y H Arcej,'Regionalismo y multilateralismo: ¿Caminos complementarios o alternativos hacia el libre comercio? '[2007]59 Boletín Informativo de la Comisión Nacional de Comercio Exterior 1
[7]n6
[8]n2
[9] n4(page5)
[10] n2
[11] n3
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