October 16, 1997
|Contact:||C. Fred Bergsten||(202) 328-9000|
Washington, DCWith the Clinton Administration urging Congress to approve fast-track authority to negotiate both regional and multilateral trade agreements, the relationship between regionalism and multilateralism has again become a major policy issue. Some observers worry that regional groupings such as the European Union, the North American Free Trade Agreement, Asia Pacific Economic Cooperation (APEC) forum and Free Trade Area of the Americas (FTAA) are detracting from global trade liberalization.
Regional Trading Blocs in the World Economic System is a comprehensive review and analysis of this issue. It includes historical, econometric, theoretical and political economy approaches. The analytic framework departs from much prior research by emphasizing the importance of geography, without which regionalism means little. It adjusts bilateral trade flows for such influences as distances between pairs of countries, their sizes, and whether they share common borders or common languages, in order to isolate the impact of regional arrangements on actual trade patterns. The book was written by Jeffrey Frankel, currently a Member of the Council of Economic Advisers, while he was a Senior Fellow at the Institute for International Economics (with collaboration from Ernesto Stein of the Inter-American Development Bank and Shang-Jin Wei of Harvard University).
The main conclusions of Frankel's analysis are that:
The book makes a number of policy recommendations aimed at further enhancing the compatibility of regional arrangements with global liberalization, including proposals to:
Frankel concludes by urging the United States to reject the notion that there is geopolitical competition among an "American bloc", a yen bloc and an EU bloc. He recommends that the United States, as the key member of the APEC and FTAA groupings, in fact "do anything possible to make sure that [these regional arrangements] evolve in a manner consistent with global liberalization."