Working Paper: CEPR ID: DP748
Authors: Bernard M. Hoekman; Michael P. Leidy
Abstract: It often appears self-evident that regional integration arrangements (RIAs) result in more far-reaching liberalization of intra-bloc trade than is possible if countries restrict themselves to a multilateral approach. This paper considers whether such arrangements do in fact imply, or facilitate, greater liberalization of trade flows among member countries than that achieved (or sought) in the multilateral (GATT) context. The underlying hypothesis is that the political-economy forces that block far-reaching liberalization in the multilateral context also remain robust and largely decisive in sculpting RIAs. The holes and loopholes - exceptions, sectoral exclusions, market-sharing arrangements and escape clauses of various kinds - embodied in major RIAs are examined to assess the degree to which existing RIAs have achieved liberalization beyond the prevailing multilateral trade policy regime. A number of lessons regarding the likely prevalence of, and scope for, holes and loopholes in alternative types of RIAs are drawn from the historical overview.
Keywords: regional trade agreements; multilateral liberalization
JEL Codes: F13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| political economy forces (P19) | RIAs (G24) |
| political economy forces (P19) | liberalization of intrabloc trade (F13) |
| RIAs (G24) | liberalization of intrabloc trade (F13) |
| RIAs (G24) | limitations of multilateral trade frameworks (F13) |
| GATT commitments (F13) | liberalization of intrabloc trade (F13) |