Global Trade: Multilateralizing Regionalism


The article looks into the parameters of global free trade and its probable outline in the near future. It also discusses the forces of the political economy that could be instrumental in shaping the future. Another chief aspect of the article is the intervention of the WTO and the influence of WTO in the context of free trade. It indicates that regionalism would be manifested in the parameters of trade even under the influence of multilateral or bilateral trade agreements. However, the article also states that this control would not necessarily be beneficial for free trade. In the process the article uncovers the development of trade liberalization uses the logic in the context of preparation of a free trade map for 2010. Thus, the mechanism of spaghetti bowl economy is discussed and the probable approaches of WTO in the near future. (Baldwin, 1-44)


Free trade is the principle of foreign economic policy, connected with the good’s free trade on the world market. The classical international agreements of the free trade assume the elimination of tariff and non-tariff barriers in mutual good’s trade, whereas each of the member countries preserves its own control system of trade with the third countries. The debates about what to prefer – free trade or protectionism – lasted for hundred years. The argument in favor of free trade was always that it ensures maximum competition, therefore, maximum production efficiency, reduction in the prices and finally benefit to user. The argument in favor of protectionism was always the fact that the free trade was fraught with completely negative consequences for the national economies, both in the short term and in the long-term perspective. It increases unemployment and leads to the crash of local producers in the short term perspective. But it forces the weaker countries to be occupied by the unprofitable economic activity in the long-term perspective. Although there are several advantage supporting free trade, it does not benefit third world nations because it is unfair trade and it makes poverty in those nations worse.

Global trade is likely to offer benefits to the partaking countries; mainly trade presumptions are anchored in the supposition of full employment. (Stiglitz, 154) On the other hand, in a world predominated with unemployment, all producers benefiting from global production and exchange may not always be true, as some economies may fail to find suitable markets for specific products. If at all they do, it possibly will be due to major price cuts in their product lines. It should be mentioned that the returns from outward-leaning manufacturing may cause a fallacy of composition.

Current example

An example of such development in the present world is China. It is logical for a country like China to particularly intensify their exports of manufactured products and reap benefits from that. Yet, due to surplus capacity and unemployment, other less proficient producers have little room in the markets. (Kaplinsky, 34) Entry of additional player will just bring about price reductions of products. It could be identified that the excess labor, the surplus of investment eligible resources and the mobility of international sponsors means that for numerous global economies, poverty and inequality are not residual, but relational to globalization. Given that poverty and inequality are relational concepts and not just residual notions, the “one-size-fits all” paradigm with respect to poverty and inequality is not competent enough to address the relevant issues. It could be stressed on the necessity of dynamic and integrated strategies to let countries the benefits of globalization. Because various countries have diverse understandings of globalization, it is needed that national and regional economies retort with suitably contextual strategies, accounting for their individual relative advantages, limitations, openings and trajectories.


To sum up what is talk above, should mark that free trade is advantageous for developed countries and less favorable for third world countries. But there must be use more protective measures for nation producers like different taxes and tariffs. Businesses could produce items that are less costly to produce locally rather than import, and export surpluses of those products or materials. Considering that the tariffs and taxes are good for local businesses but are hurtful for the pockets’ of consumers and absence of low tariffs and taxes are hurtful for production businesses and their employees. It could be considered that the passage to the free trade must stimulate the trade between the member countries and do not create additional barriers for the third countries. Free trade by goods must be mutual and cover major portion of the commodity turnover between the sides, including the basic sectors of the economic activity.

Works Cited

Baldwin, Richard. “Multilateralizing Regionalism: Spaghetti Bowls as Building Blocs on the Path to Global Free Trade.” Center for Economic Policy Research: CEPR Discussion Papers No. 5775, 2006.

Kaplinsky, Richard. Globalization, Poverty and Inequality: Between a Rock and a Hard Place. New York: Polity, 2005.

Stiglitz, James. Globalization and Its Discontents. Auckland: UBL, 2003.

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