Regional protectionism

Competitive regional economic blocs
Economic regionalism
Discriminatory formation of regional trade groupings
Discriminatory trade agreements

Nature

The world is increasing settling into the pattern of three big protectionist trading blocs: the North American, European and Japanese-Asian.

Background

Regional protectionism emerged as a significant global concern during the late 20th century, as economic blocs such as the European Union and NAFTA intensified internal trade preferences. Scholars and policymakers began to recognize its impact when trade barriers within regions led to the marginalization of external economies. The 1990s saw heightened debate at WTO forums, where the tension between regional agreements and multilateral trade liberalization underscored the complexity and persistence of this phenomenon.

Incidence

The difficulties faced by developing countries in exporting have been heightened with the formation of regional groupings among industrialized countries and the consequent removal of barriers to their intra-trade. Among the countries outside these groupings, the developing countries tend to be most vulnerable to the resultant differential tariff and non-tariff treatment, given their initial competitive disadvantages. As a result of the formation of such groupings and other preferential arrangements, almost two-fifths of the intra-trade in manufactured and semi-manufactured products among the developed market economy countries are already on a preferential basis. With the enlargement of the EEC/EU, the share of preferential intra-trade among developed market economy countries is even greater. In addition, trade in industrial products between EEC/EU member states and other European developed market economy countries is increasingly on a preferential basis.

Claim

Multilateral trade produces a higher standard of living than is possible under competitive regional blocs.

Counter-claim

Regional protectionism is vastly overstated as a problem. Local governments have every right to prioritize their own economies and citizens. Claims that protectionism stifles global growth are exaggerated; in reality, it fosters healthy competition and preserves cultural identity. The so-called “threat” of regional protectionism is a distraction from more pressing global issues. It is not an important problem and does not deserve the attention it receives in economic debates.