Regional Trade Policy
I wrote my PhD thesis on customs unions in the mid 1950s and later published it as The Theory of Customs Unions: A General Equiobirum Analysis (Weidenfeld and Nicolson, 1970). Since that time, I have been interested in regional trade policy. In have discussed my part in the debate leading up to the Canada-US Free Trade Agreement and then the NAFTA in my Intellectual Autobiography.
After the FTA was signed, Murray Smith and I wrote "Canada-U.S. Free Trade Agreement: Special Case or Wave of the Future" in Free Trade Areas and U.S. Trade Policy, J. Schott, ed, 1989, in which we defended the regional approach against those such as Anne Krueger and Jagdish Bhagwati, who argued that such regional agreements inhibited the more desirable multilateral negotiations that were then taking place through the GATT and later through the WTO. Murray and I returned to that theme in our 2011 piece “Multilateral Versus Regional Trading Arrangements: Substitutes or Compliments?” in the International Handbook of the Economics of Integration, (Miroslav Jovonovic, ed.).
There we presented many reasons why we assessed the chance of success of the Doha round and others that might follow to be small and getting smaller. We argued that a good second best substitute was the regional agreements that were proliferating. Although they look messy to those who like tidy arrangements, we argued that they show the potential to produce something closer to globalized free trade through piecemeal evolution than any overall attempt to accomplish it by unanimous agreement among the over 150 members of the WTO. Time will tell if we have been right in championing regional agreements as a compliment to and, (only) if needed, as a substitute for multilateral agreements.