Development and Regional Trade Agreements - Entrenching Structural Inequities

Abstract

Multilateralism has the power to engender positive economic benefits through international trade, both for the countries that participate in the system and for individuals that may benefit from lowered costs. Nevertheless, as any student of introductory trade theory knows, with economic gains from trade come economic losses, and how multilateral rulemaking institutions and individual countries address those losses will shape the outcomes for individual participants in the system.

Regionalism and the plurilateral trade agreements arising from the consequent fragmentation of international trade, by contrast, are unlikely to result in improvements in living standards on a global level. Particularly where developing country issues are at stake, regional trade agreements, at least as currently being negotiated, will stand to increase the divide between developed and developing countries — between the Global North and the Global South. This essay offers a critique of the trend towards regionalism and challenges the idea that continued trade liberalization is either necessary or desirable, at least at this juncture. Rather than negotiating regional trade agreements, the focus should be on shoring up multilateralism by refocusing the World Trade Organization (WTO) on the goals in its preamble, particularly those of sustainable development.

Keywords: WTO, International Trade, Capitalism, Regional Trade Agreements, TPP, CETA, RCEP, Global South, Development, Climate Change

JEL Classification: K33