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Does the rise of regional trading blocs threaten free trade progress made by the World...

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Mizdee | Student, Undergraduate | (Level 1) Valedictorian

Posted February 3, 2013 at 4:52 AM via web

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Does the rise of regional trading blocs threaten free trade progress made by the World Trade Organization?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted February 3, 2013 at 5:07 AM (Answer #1)

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It is certainly possible to argue that the creation of regional free trade blocs threatens free trade in the world as a whole.  It is not inevitable that this will happen, but it is definitely possible.  The reason for this is that regional trading blocs can easily adopt protectionist attitudes with respect to countries that are not part of the bloc.

The World Trade Organization (WTO) is aimed at creating free trade in the world as a whole.  The idea is that worldwide free trade would be beneficial to all countries involved.  They would all be able to benefit from access to markets all around the world.

The creation of regional trading blocs will not necessarily help to bring about free trade around the world.  The danger is that the regional trading blocs will not continue to liberalize rules on trade.  Instead, they will simply erect trade barriers to keep other countries and other regional trading blocs out.  We can imagine, for example, a situation in which the NAFTA countries have free trade with one another but erect trade barriers against the European Union.

Thus, it is at least possible that the rise of such regional trading blocs will erode the gains made by the WTO.

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