| Abstract: | Regional trading arrangements are proliferating. This overview considers some of their implications. Section I reviews the paradigm of traditional trade theory which emphasizes the "second best" nature of these arrangements. It also evaluates the conditions under which they are permitted by the GATT. Section II notes that these arrangements increasingly move beyond simply removing internal border barriers toward deeper forms of integration involving common behind-the-border policies and systems of governance. Taking account of these aspects of the arrangements requires a different analytic paradigm, which evaluates these arrangements as an alternative to national governance rather than simply as a means of liberalizing trade. Section III considers existing and emerging regional arrangements in Europe, North America, and Asia in light of these paradigms. J. Japan. Int. Econ., Dec. 1994, 8(4), pp. 365–387. John F. Kennedy School of Government, Harvard University, and National Bureau of Economic Research, Cambridge, Massachusetts; and Brookings Institution, Washington, DC. |
