Regional Trade Agreements vs. Global Trade Liberalization
There is much debate concerning regional trade agreements and global trade liberalization. Pros and cons can be found for each trade policy. After looking at several arguments for and against regional trade agreements, it seems that overall regional trade agreements are more beneficial when compared to global trade liberalization.
A regional trade agreement is “where member nations agree to impose lower barriers to trade within the group than trade with nonmember nations,” (Carbaugh, p 529). Regional trade agreements don’t affect each nations domestic policies, it only creates increased trade and relations among certain nations. ...view middle of the document...
Regional trade agreements has proven to be beneficial for intra-regional trade within the Association of Southeast Asian Nations and six additional nations, Australia, New Zealand, China, India, Japan and Korea. Overall, preferential trade agreements among these nations increased trade and revenue for all involved (Sen, Srivastava, & Pacheco, 2013).
Stamoulis’s article, Trading away the future: an analysis of the trans pacific partnership, discusses the advantages and disadvantages of trade agreements in relation to the Trans Pacific Partnership. A major advantage of this partnership is small nations, such as Malaysia, experience greater and more open trade. On the other hand, some feel the partnership was created by the United States to push their domestic agendas.
Overall, regional trade agreements and global trade liberalization both have several advantages and disadvantages. Depending on the size of the nation and how well their trade is already set up, takes part on which side of the argument the nation will take. Regional trade agreements increase trade among select nations yet discriminate against other, non-participant nations.
Asafu-Adjaye, J., & Mahadevan, R. (2009). Regional trade agreements versus global trade liberalisation: implications for a small island developing state. World Economy, 32(3), 509-529. doi:10.1111/j.1467-9701.2008.01117.x
This study takes an in-depth look at both regional trade agreements and global trade liberalization’s impact on Fiji, a small island country. Through their research, it was founded that full trade liberalization created the best outcomes, in terms of real output. Furthermore, the results of the study showed that regional trade agreements take advantage of lower developed nations. On the other hand, regional trade agreements can increase the market size and increase buying power of a smaller nation.
Carbaugh, R.J. (2013). Regional Trading Arrangements. International economic (14th ed.). Mason, OH: South Western CENGAGE Learning.
In the textbook, International Economics, Carbaugh discusses in-depth, both global trade liberalization and trade agreements. He argues that liberalization opens up free trade among all nations and does not encourage the formation of groups. Trade agreements, on the flip side, encourage nations to ban together and offer special discounts to one another.
Colorado State University-Global Campus. (2014). Module 5: Regional Trade Arrangements, International Factor Movements, and MNCs [Blackboard Course]. In ECN 500 – Global economics (pg. 1). Greenwood Village, CO: Author.
The module content provided by Colorado State University-Global Campus discusses regional trading agreements. It states that the tendency to use negotiation and organization of free trade had been undermined by regional trading agreements since the 1980s. Furthermore, CSU-Global argues that regional trade groups strengthen trade and the benefits of the groups...