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Regional trade agreements

Author

Listed:
  • Freund, Caroline
  • Ornelas, Emanuel
Abstract
This paper reviews the theoretical and empirical literature on regionalism. The formation of regional trade agreements has been, by far, the most popular form of reciprocal trade liberalization in the past 15 years. The discriminatory character of these agreements has raised three main concerns: that trade diversion would be rampant, because special interest groups would induce governments to form the most distortionary agreements; that broader external trade liberalization would stall or reverse; and that multilateralism could be undermined. Theoretically, all of these concerns are legitimate, although there are also several theoretical arguments that oppose them. Empirically, neither widespread trade diversion nor stalled external liberalization has materialized, while the undermining of multilateralism has not been properly tested. There are also several aspects of regionalism that have received too little attention from researchers, but which are central to understanding its causes and consequences.

Suggested Citation

  • Freund, Caroline & Ornelas, Emanuel, 2010. "Regional trade agreements," Policy Research Working Paper Series 5314, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5314
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    References listed on IDEAS

    as
    1. Bohara, Alok K. & Gawande, Kishore & Sanguinetti, Pablo, 2004. "Trade diversion and declining tariffs: evidence from Mercosur," Journal of International Economics, Elsevier, vol. 64(1), pages 65-88, October.
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    More about this item

    Keywords

    Free Trade; Trade Law; Trade Policy; Trade and Regional Integration; Economic Theory&Research;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

    NEP fields

    This paper has been announced in the following NEP Reports:

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