Integration Without Institutions: The NAFTA Mutation of the EC Model and the Future of the GATT Regime

Abstract

Integration may be viewed as an evolutionary outgrowth of heightened social and economic interdependence brought about by advances in technology. As persons, goods, capital, services and ideas cross artificial national frontiers at increased rates of speed, the wisdom of imposing disparate governmental regulatory measures is not only called into question because of a variety of factors relating to efficiencies and economies of scale, but the authority of competing national power structures to regulate these flows is called upon for examination.

The NAFTA itself is, like the EC, an experiment. It will provide a model for other nations which are interested in reducing trade barriers, but not in creating significant central institutions or in harmonizing laws and regulations. The EC model is a comparative success. In addressing problems confronted by the new NAFTA,solutions may be found by examining the EC experience. Of course, the EC model itself is imperfect and is continually being refined. Perhaps the NAFTA will benefit by observation of the EC as it works its way through the obstacles on the path to completed integration.

Though the ambition of the NAFTA regarding the creation of regional institutions is rather modest, and the arrangement is lacking in mechanisms for the harmonization of law, the planting of the acorn of regional institutions in the NAFTA may prove to be a worthwhile task, in the hope of its long term growth into a solid oak of institutions capable of creating a complete and effective NAFTA regional arrangement.

Keywords: NAFTA, European Union, GATT, regional institutions

JEL Classification: F15, K33, O51