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Addresses the issue of preferential trade arrangements, looking first at part of the General Agreement on Tariffs and Trade (GATT) which sanctions Customs Unions and Free Trade Areas. During the 1960s, regionalism (preferential trade agreements among a subset of nations) failed, but it was the subject of a revival in the 1980s. The author analyses the second regionalism, from the viewpoint of world welfare, and asks whether non-discriminatory multilateral free trade for all will result, or whether the world economy will become fragmented. Regionalism has political appeal and thus will expand; if it is contained and shaped then maximum benefits may be obtained whilst any damaging effects are minimalised.
Jagdish N. Bhagwati (Tue,) studied this question.