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Stepping Stone or Building Block

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Submitted By abirn4
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There is uninformed judgment whether regional trade arrangements help or hinder multilateral liberalization. It depends on certain circumstances. Since regional trade liberalization is both discrimination and liberalization, its implications are profoundly ambiguous. Liberalizing on a regional basis means liberalizing on a discriminatory basis. Therein lays the two-sided nature of regionalism. The “liberalization” part in “discriminatory liberalization” is generally good since it removes artificial barriers between domestic and some foreign producers. The “discrimination” part, by contrast, is generally bad since it creates new barriers between various foreign producers. Plainly then, one cannot know whether regionalism helps or hinders multilateralism based on pure logic. This brings us to the state of the debate. The key risks of regionalism is that regional liberalization is a substitute for multilateral liberation and regionalism shifts power in worrying directions specifically it fosters greater dominance of small nations by hegemonic powers, and it increases the chances of inter-bloc trade war. The regionalism-is-a stumbling- bloc school focuses on the discrimination. The regionalism-is-a-building bloc school focuses on the liberalization. Reciprocal liberalization of most kinds tends to strengthen pro-trade political economy forces while at the same time weakening the anti-trade political economy forces, and this within each of the participating nations.

Fascism is organized around the primacy of the nation and when it comes to economic policy this means promoting national industry by, among other things, avoiding ‘destructive competition. High tariff barriers were an important part of this in the 1920s and 1930s. Of course, protectionism was embraced by all major states in those times, with an important difference. Most nations viewed protection as a

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