Final Examination Review Notes
Is the creation of regional organizations like NAFTA a steppingstone to
globalization or a roadblock to it?
Regionalism and globalism.
The last question we are asking today is, what is the relationship
between regionalism and globalism?
Are the regional blocs steppingstones to world trade or alternative
As you can see by the Ravenhill reading, this question is the subject of sharp debate, and with
no resolution in sight.
According to Robert Zoellick, the former US Trade Representative, regional
trade openings are not contrary to global openings, but rather are helpful to it.
According to him, the
growth of regional blocs in North America and the Pacific persuaded the Europeans to complete the
Uruguay Round and create the WTO.
US policy is to pursue both roads at once—to go from NAFTA
to CAFTA and finally, possibly, to a Free Trade Area of the Americas, and at the same time to pursue
the Doha Round.
On the other hand, the thrust of the Gordon article is that regional blocs promote
more regional blocs—the growth of NAFTA and the deepening of the EU promotes the growth of
Asian blocs and vice versa, and that the US doesn’t really want to see the world divided into regional
The US trades in roughly equal shares with the Americas, Europe and East Asia, and we want to
have trade flowing freely with all those areas, not to have Europe and Asia building large walls
between themselves and the rest of the world.
So who is right?
There certainly is a steppingstone quality to the regional blocs.
Domestic producers are forced
to deal on a larger stage, to get used to dealing with foreign competition, to exporting to foreign
markets, and in general to stepping up to a bigger stage.
In addition to that, as I’ve been saying, the
chief problem with advancing free trade is not whether it makes economic sense theoretically but
whether the particular political interests in maintaining the status quo can overpower the general and
diffuse interest in increasing the world’s efficiency and so its productivity.
Regionalism seems to make
it harder for particular interests to be politically effective.
It’s one thing for a sugar plantation owner to
lobby its own senator for special favors, and another thing to lobby NAFTA or the EU.
This may be
why further free trade in the Americas is encountering such strong resistance.
On the other hand, the
historical trend shows regionalism and globalism are not friends.
As I’ve been discussing, the
stalemate at the WTO talks helps produce more regionalism, but the growth of regionalism itself seems
to make global trade talks more difficult, as the example of the EU at Doha shows.
regionalism has been advancing from a walk to a trot while globalism has been slowing from a walk to
Moreover, the growth of regional blocs may actually make it harder to reach agreement at the