The Compatibility of Regional Economic Blocs and the GATT

Regional economic blocs are compatible with the General Agreement on Tariffs and Trade (GATT) multilateral trading system through Article XXIV, which provides for customs unions and free trade agreements. However, both the European Community and the North American Free Trade Agreement (NAFTA) raise...

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Bibliographic Details
Published in:The Annals of the American Academy of Political and Social Science 1993-03, Vol.526 (1), p.164-171
Main Author: Preeg, Ernest H.
Format: Article
Language:English
Subjects:
Economic bloc
Economic Policy
FREE TRADE
GATT
GENERAL AGREEMENT ON TARIFFS AND TRADE
General Agreement on Tariffs and Trade (GATT)
International agreements
INTERNATIONAL TRADE
Multilateralism
Regional cooperation
Regionalism
REGIONALISM, REGIONAL COOPERATION
Tariffs
Terms of trade
Trade blocs
Trade policy
Trade regionalization
Western hemisphere
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Summary:Regional economic blocs are compatible with the General Agreement on Tariffs and Trade (GATT) multilateral trading system through Article XXIV, which provides for customs unions and free trade agreements. However, both the European Community and the North American Free Trade Agreement (NAFTA) raise questions about the GATT criterion that the level of import restrictions to nonmembers is not higher than before the bloc formation. The actual trade impact of regional economic blocs is likely to be strongly trade-creating, while trade flows within the overall trading system are approaching parity between preferential and nonpreferential trade. NAFTA and the Enterprise for the Americas Initiative have unleashed a dynamic toward further bloc formation, especially for the Asian-Pacific region, which will have to be resolved during the 1990s. Questions on whether regional free trade arrangements will ultimately converge toward multilateral free trade, and in what form, cannot yet be answered and will depend on future political as well as economic relationships.
ISSN:0002-7162
1552-3349
DOI:10.1177/0002716293526001013