lecture11.23 - Lecture11/23 12:01:00 o Ex:NAFTA WhatareRTAs...

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Lecture 11/23  23/11/2010 12:01:00 Regional Trade Agreements RTAs have become ubiquitous across the globe o Ex: NAFTA  Number of RTAs have grown in the past few decades What are RTAs? Agreements to eliminate trade restrictions on a limited number of states Five types: o PTAs: reductions in tariffs  Biggest in world is between GSP and USA We have agreed to import goods from poor countries like Haiti  for free (they still tax us) o FTAs: eliminations in tariffs  Free trade agreements  o Customs Union: common external tariff Less common  o Common market: coordination of macroeconomic policy/labor markets o Economic union: common market + common currency  RTAs “I’ve never heard of these! Do they do anything?” “No they don’t!”  o Don’t actually liberalize trade Then why do states sign them? o Lure foreign direct investment o Protect key markets o Copy Europe!  Historically, regionalism was considered a bad word
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o Inter-war period showed dangers of regionalism How consistent with the GATT/WTO  o Exceptions so long as they are notified What about the US?
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