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Regional Trade Agreements

Caroline Freund () and Emanuel Ornelas

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper reviews the theoretical and the empirical literature on regionalism. The formation of regional trade agreements has been, by far, the most popular form of reciprocal trade liberalization in the last fifteen 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 have 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.

Keywords: regionalism; trade creation; trade diversion; external tariffs; trade liberalization (search for similar items in EconPapers)
JEL-codes: F13 F15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2009-12
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Related works:
Journal Article: Regional Trade Agreements (2010) Downloads
Working Paper: Regional trade agreements (2010) Downloads
Working Paper: Regional trade agreements (2009) Downloads
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