Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade

48 Pages Posted: 22 Sep 2006

See all articles by Richard E. Baldwin

Richard E. Baldwin

University of Geneva - Graduate Institute of International Studies (HEI); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

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Date Written: August 2006

Abstract

This paper addresses the final steps to global free trade - what they might look like, what sort of political economy forces might drive them, and what the WTO might do to guide them. Two facts form the point of departure: 1) Regionalism is here to stay; world trade is regulated by a motley assortment of unilateral, bilateral and multilateral trade agreements; 2) this motley assortment is not the best way to organise world trade. Moving to global duty-free trade will require a multilateralisation of regionalism. The paper presents the political economy logic of trade liberalisation and uses it to structure a narrative of world trade liberalisation since 1947. The logic is then used to project the world tariff map in 2010, arguing that the pattern will be marked by fractals - fuzzy, leaky trade blocs made up of fuzzy, leaky sub-blocs (fuzzy since the proliferation of FTAs makes it impossible to draw sharp lines around the big-3 trade blocs, and leaky since some FTAs create free trade 'canals' linking the big-3 blocs). The paper then presents a novel political economy mechanism - spaghetti bowls as building blocs - whereby offshoring creates a force that encourages the multilateralisation of regionalism. Finally, the paper suggests three things the WTO could do to help.

Keywords: Domino effect, juggernaut effect, multilateralism, regionalism, RTB unilateralism, trade

JEL Classification: F10, F13, F15, F2

Suggested Citation

Baldwin, Richard E., Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade (August 2006). CEPR Discussion Paper No. 5775, Available at SSRN: https://ssrn.com/abstract=932115

Richard E. Baldwin (Contact Author)

University of Geneva - Graduate Institute of International Studies (HEI) ( email )

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