Regional Integration and Regional Trade Agreements

International trade has undergone liberalisation in the post-war period. This liberalisation has been undertaken globally, through the GATT and the WTO, but also at the regional level. In the last ten years the number of regional trade agreements has increased dramatically. It would appear that regional agreements will continue to play an ever more important role. The EU is an important actor in this regard, having a plethora of trade agreements with many different countries.

The report looks at the motives and the consequences of this regional emphasis. Regional trade agreements lead to larger and more integrated markets where economies of scale can be utilised. Furthermore, regional trade agreements might lead to a domino effect, since there are incentives for outsiders to deepen their co-operation with regions to exploit the economies of scale.

The report surveys the empirical literature on regional economic integration and concludes that regional trade agreements benefit the contracting parties, but that the effect on countries that are outsiders are negligible.

The report was presented at the seminar Conflict of Interests in the World Trading System - Global T and is a part of the research project Trade and Welfare Effects of the EU's Bilateral and Regional Trade Agreements.

icon 2004:1 Regional integration och regionala handelsavtal (717.86 kB)