regionalism - 2618-CH05 10/15/02 10:27 AM Page 124 CHAPTER...

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Fundamental Issues 124 CHAPTER FIVE Regionalism and Multilateralism 1. What are the main types of regional trade agreements, and how do economists measure trade within regional trading groups? 2. How is a free trade area such as the North American Free Trade Agreement different from other types of preferential trade arrangements? 3. What distinguishes customs unions such as the European Economic Community of the 1970s and the current Andean Community from common markets such as the European Union and Mercosur? 4. How can regional trading arrangements lead to both trade creation and trade diversion? 5. What is trade deflection, and how do rules of origin help to limit the extent to which trade deflection occurs? 6. How do multilateral trade agreements contrast with regional trade arrangements? To its proponents, the time was right to seriously consider a proposal whose time they believed had come. To its opponents, the time had finally arrived to reject an especially zany idea. At the request of the Senate Finance Commit- tee, the U.S. International Trade Commission, a federal agency that makes trade recommendations to both the president and Congress, held special hearings in 2000 to consider the proposal to allow another nation to join the United States, Canada, and Mexico within the North American Free Trade Agreement (NAFTA). This island nation once fought two wars against the United States. Nevertheless, it has for some time had a particularly close po- litical and economic relationship with Canada, and its relationship with the United States is also very close. The nation is the United Kingdom. 2618-CH05 10/15/02 10:27 AM Page 124
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The United Kingdom was not the first country from outside North America to be considered for membership in NAFTA. Just a few years ear- lier, there had been serious discussion of admitting Chile into the free-trade area. That idea has never completely been ruled out, but it failed to attract sufficient interest to advance beyond the “consideration” stage. Propo- nents of NAFTA membership for the United Kingdom were hopeful that they could push their idea much further. Even as the International Trade Commission’s hearings commenced, of- ficials within the U.S. and U.K. governments were casting cold water on the idea, and so far, the idea has not progressed to the stage of a formal proposal. Nevertheless, a few important leaders in the U.S. Congress and the U.K. Parliament have continued to push for formal consideration of U.K membership in NAFTA. To British enthusiasts, NAFTA membership would make it easier for the United Kingdom to avoid becoming politically entan- gled in the European Union (EU) while reaping benefits of broadened trade with both continental Europe and North America. U.S. proponents also have broad strategies in mind: They believe that bringing the United King- dom under the NAFTA umbrella would help to restrain alleged protectionist leanings of the EU. British entry into NAFTA, they argue, would force the EU
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This note was uploaded on 10/02/2010 for the course INTB 3353 taught by Professor Prodan during the Spring '10 term at University of Houston-Victoria.

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regionalism - 2618-CH05 10/15/02 10:27 AM Page 124 CHAPTER...

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