The Growth of Regional Trading Blocs—often Known

as regional integration agreements (RIAs)—is one of the major international relations developments of recent years. Most industrial and developing countries in the world are members of a regional integration agreement, and many belong to more than one: more than one-third of world trade takes place within such agreements. 1 The structure of regional agreements varies hugely, but all have one thing in common—the objective of reducing barriers to trade between member countries. At their simplest they merely remove tariffs on intrabloc trade in goods, but many go beyond that to cover nontariff barriers and to extend liberalization to trade and investment. At their deepest they have the objective of economic union, and they involve the construction of shared executive, judicial, and legislative institutions. During the last decade the move to regionalism has become a headlong rush. Figure 1.1 gives the number of regional agreements notified to the General Agreement on Trade and Tariffs and the World Trade Organization (GATT/WTO) 2 each year, and makes apparent the dramatic increase that occurred in the 1990s. Of the 194 agreements notified at the beginning of 1999, 87 were notified since 1990. Description of some of the major agreements made in recent years is given in box 1.1, and table 1.1 lists selected trading blocs, their memberships—and their acronyms. The last 10 years have witnessed qualitative, as well as quantitative , changes in regional integration schemes. There have been three major developments. The first is the recognition that effective integration requires more than reducing tariffs and quotas. Many other barriers have the effect of segmenting markets and impeding the free flow of goods, services, investments, and 2 ideas, and wide ranging policy measures—going well beyond traditional trade policies—are needed to remove these barriers. This so-called deep integration was first actively pursed in the Single Market Program of the Euro-pean Union (EU), and elements of this program are now finding their way into the debate in other regional agreements. The second is the move from " closed regionalism " to a more open model. Many of the trading blocs that were formed between developing countries in the 1960s and 1970s were based on a model of import-substituting development, and regional agreements—with high external trade barriers—were used as a way of implementing this model. 3 The new wave of regional agreements—including resurrection of some old agreements—have generally been more outward-looking, and more committed to boosting, rather …