New regionalism in the aftermath of Cancún: to the benefit or detriment of developing countries?

Abstract

In the light of the ups and downs in the multilateral trade talks that are explicitly aimed at being a Development Round, it is worth considering whether the subsequent renewed emphasis on bilateral and regional trade agreements is to the benefit or detriment of developing countries. This chapter seeks to shed light on this issue by reviewing the most recent theoretical and empirical literature that assesses the economic impact of preferential trade agreements (PTAs) on developing countries. First, a brief discussion of the theoretically expected impacts of PTAs is presented. This is then followed by an overview of the main results of a large number of empirical assessments of selected PTAs. The chapter concludes by drawing preliminary conclusions about the desirability of bilateral and regional approaches to trade liberalization seen from the perspective of developing countries. Based on these conclusions, the overall advice to be given to developing country policy-makers is that they should direct their negotiation resources toward achieving a truly comprehensive trade liberalization at the multilateral level through the World Trade Organization.