Regional trade agreements as a tool of neo-protectionism: the problem of dominance in international trade
Keywords:
regional trade agreements, free trade area, customs union, protectionism, economic security, free-rider effect, demonstration effect, preferential (discriminatory) trade, trade liberalizationAbstract
The nature of RTA is discussed, which are not new for the international economic order. They have been subject to regulation within the General Agreement on Trade and Tariffs (GATT) and the General Agreement on Trade in Services (GATC) since the multilateral trade system was established in 1947. Yet, spread of RTS in the latest two decades has raised important problems related with evolution from non-discriminatory liberalization of trade towards bilateral and regional preferential (discriminatory) trade in frames of economic integration at free trade zone or customs union level. In the latest 15 years, regional trade agreements have become an instrument for neo-protectionism in the context of international trade liberalization. Potential effects of RTA as an instrument going contrary to the multilateral approach declared by the World Trade Organization (WTO) are analyzed. The occurring effects of “stowaway”, demonstration and economy of scale help in evaluating RTA advantages and weaknesses from the perspective of economic security of a country. The increasing use of RTA, especially by the U.S. and the EU, may appear as an articulated neo-colonialist agenda, intended to impose and expand the spheres of their influence worldwide. However, it is argued that given the nature of RTA, they should be seen as a flexible tool for negotiations, combining various schemes under the disguise of trade liberalization, rather than a neo-colonialist instrument of influence. It is argued that RTA have been a tool for more privileged choice of trade policy by the U.S., the EU and many other countries, not only for taking prevalence over smaller partners, but also because they allow for more flexible control compared with the multilateral trade system of WTO. The problem of how correlation between the pace of competitive growth and the pace of liberalization could be secured triggers theoretical controversy between the advantages of trade on multilateral, regional and bilateral basis. The article puts emphasis on a kind of rivalry between multilateral and regional/bilateral patterns. It is argued that analysis of RTA signed by the U.S. and the EU may be a tacit evidence of their intention to alleviate other countries’ influences on the area of their economic interests. Moreover, control of public purchases and regulation of intellectual property rights, which is a foremost concern for the U.S. and the EU, can be easily regulated at bilateral or regional level than at multilateral basis. Also, considering that RTA, by their legal origin, are exclusive preferential trade agreements between countries that sign them, an obvious point is striving for leadership when signing agreements at new markets, supposed to guarantee the primacy of leader’s interests over others’. Such interpretation of RTA allows for assuming its singular role in seeking for economic security of a country.References
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