Nowadays, it is paradoxical to see the development, in a global world, of several types of regions. This process began after the Second World War, with the development of the international trade flows between economies. The creation in 1957 of the European Economic Community, by the Treaty of Rome, has launched this phenomenon. In response to this trend, other countries in the world, seeing the creation of this bloc, have created free trade areas, customs unions or common markets. Thus, we have seen the creation of the American Common market in 1960, the African Common Market in 1962 and other forms of regional protectionist unions. This phenomenon can be assimilated as the ‘Old Regionalism', which had a tendency to create regional integration agreements and further the form of defensive protectionism.
[...] Thanks to Articles 24 and 25 of the GATT, countries are allowed to create free trade areas or regional integration agreements if they do not encourage discrimination with non-members. To go a bit further, we can observe that the creation of a RIAs stimulate the trading flows and the general trading system by eliminating the tariff barriers and liberalizing the trading system between members. This stimulation can lead to a ‘trade creation', which is “when high-cost domestic producers are replaced by low-cost external suppliers within the free trade area”. [...]
[...] Going a little further on this point, we can say that regionalism creates a sharp division in the world by creating big trading blocs, which are creating more and more intra-zone trading flows and isolating themselves from others. The world trading system becomes more about a bloc opposition rather than a global trading co-operation. Thus, European Community (1958), which has grown from six to a dozen participating countries, has gone beyond reducing barriers to trade among member states. It also coordinates and harmonizes each country's tax, industrial, and agricultural policies. [...]
[...] Countries are included in a global environment, meaning that all the political, social and economic policies are integrated and influenced by the globalization process, which is in turn regulated by the supranational World Trade Organization. In this environment, the power of nation-states is more and more limited; it implies that nation-states are losing sovereignty and autonomy in front of the globalization trend. To respond to this dynamic, nation-states have to create blocks and gather together to create a counter power against this trend. [...]
[...] They act independently beside their membership obligations imposed by the WTO and move from a global relationship view to a bilateral or multilateral view. For example, the US and Canada created the US-Central America Free Trade Agreement in May 2004. This agreement a wide ranging agreement regulating many issues: agriculture, telecommunications, investment, trade in services (from water distribution to gambling), intellectual property, the environment, etc. It essentially serves US business interests by giving them a concrete and high-level set of rights to operate in Central America”. [...]
[...] Regionalism goes in pair with the globalization process In a world dominated by the Triad members of Europe, the United States of America and Japan, the discriminations in trading relations are huge. Regionalization is a way to liberalize trade for the countries or regions discriminated against. Indeed, globalization tends to increase the inequalities and discrimination of countries, which are not present in the Triad. An example of these types of discriminations and inequalities can be found in many African countries. [...]
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