Regionalism Versus Multilateralism: The Response of the Third Country

摘要

The creation or the expansion of a Preferential Trade Arrangement (PTA), ingeneral, hurts the non-member countries because of trade diversion. This could increase the pressure for protection in the non-member countries and, ultimately, worsen the member countries market access in those outsiders. The insiders have an incentive to pre-empt this reaction by liberalizing their external trade. Regionalism can help multilateralism.