Regional Integration Agreements and the World Trading System
 

Organization

A the request of the participants, this course emphasizes the economics (rather than politics and technical implementation issues) associated with RIAs.  A CD-ROM  containing all readings for the course are distributed to each participant before the course (names of files corresponding to the reading in brackets in capital letters). Though some recent working papers are presented for further reading, the bulk of the course materials and most readings are from the following three publications:

• Jaime de Melo and Arvind Panagariya [MP], eds. 1993, New Dimensions in Regional Integration, Cambridge University Press
• Maurice Schiff and Alan Winters [SW], 2003, Regional Integration and Development, World Bank and Oxford University Press
• World Bank [WB], 2001, Trade Blocs

Course Outline

Day 1

Session 1: 9:30-10:30
Regional Integration Agreements (RIAs) :  Introduction and overview

Overview of Sessions
Definitions, terminology and abbreviations
Stated Objectives of RIAs
RIAs in history
Some recent examples
Annex: Selected WTO Provisions on RIAs

Notes:
 “Regionalism: Introduction and Overview”  [PTA1_OVER]
Reading materials:
1. De Melo, “Regionalism and developing countries: A Primer” (demelo_RP.pdf)
2. WB, “Regional Integration Agreements” [WB_ch1]  (Trade_Blocs_Chap01.pdf)
3. De Melo and Panagariya “Introduction” [DM_ch1]  (dm_ch1.pdf)
5. Schiff and Winters “Regional Integration Agreements: An Overview” [SW_ch1] (sw_ch1.pdf)
6. Irwin, “Multilateral and Bilateral Trade Policies in the World Trading System: an Historical Perspective [DM_ch4]  (dm_ch4.pdf)

Coffee break: 10:30-11:00
 

Session 2: 11:00-12:30
The Economics of Preferential Trading Arrangements: I (Traditional effects) (PTAs)

Trade Creation and Trade Diversion
What do we know about the effects welfare effects of PTAs
Evidence on Trade Creation and Trade diversion
Evidence on spillovers to third countries
Annex: Tools for trade policy analysis

Notes:
 “The Economics of Preferential Trading Arrangements: I”  [PTA2_ECON1]
Reading materials:
1. WB  “Economic Benefits and Costs” [WB_ch3]    (Trade_Blocs_Chap03.pdf)
2. Schiff and Winters, “How Trade Blocs Increase Competition and Welfare” [SW_ch3] (sw_ch3.pdf)
3. De Melo, Panagariya and Rodrik, “The New Regionalism: A Country Perspective” [DM_ch6] (dm_ch6.pdf)
4. C. Carrère, “Revisiting the Effects of RTAs on Trade with Proper Specification of the Gravity Equation” (Carrere_text.pdf)

Lunch: 12:30-14:00
 
 

Session 3: 14:00-15:30
The Economics of Preferential Trading Arrangements: II (Non-Traditional effects)

“Non-Traditional Effects” of PTAs
Location and agglomeration effects
Deep Integration
Regionalism and Services
N-N. vs- N-S RIAs
Annex: Welfare effects of trade policy under imperfect competition

Notes:
“The Economics of Preferential Trading Arrangements: II”  [PTA3_ECON2]
Reading materials:
1. Schiff and Winters, “Stimulating Investment” [SW_ch4]  (sw_ch4.pdf)
2. Schiff and Winters, “Growth and Location” [SW_ch5] (sw_ch5.pdf)
3. Fink and Mattoo (2002)  “Regional Agreements and Trade in Services: Policy Issues”, World Bank Policy Research Working Paper   (Fink_Mattoo_02.pdf)

Coffee break: 15:30-16:00
 
 

Session 4: 16:00-17:00
The Political Economy of Regionalism and implementation issues

The Political Economy of Trade policy
Regional Integration as Politics
The CET in Mercosur
Implementation: Rules of origin

Notes:
“Politics and Trading Blocs” [PTA4_POL]
Reading materials:
1. WB  “Politics and Policymaking” [WB_ch2]   (Trade_Blocs_Chap02.pdf)
2. Schiff and Winters, “Regional Integration as Politics” [SW_ch7] (sw_ch7.pdf)
3. Olarreaga,  Soloaga and Winters, 1999,  “What’s behind Mercosur’s Common External Tariff?” (Mercosur_Olarreaga.pdf)
4. Estevadeordal and  Suominen, “Rules of Origin: A World Map and Trade Effects” (Estevadeordal_Soumin2003.pdf)
 
 
 
 

Day 2

Session 5: 9:00-10:00
Regionalism and the Multilateral trading system

Trade Blocs and the Rest-of-the-world
Static and dynamic issues
Regional Integration and FDI
What about Open Regionalism

Notes:
 “Regionalism and Multilateralism”  [PTA5_REGION]
Reading materials:
1. Finger “GATT’s Influence on regional arrangements” [DM_ch5] (dm_ch5.pdf)
2. WB  “Trade Blocs and the World Trading System”  [WB_ch5]   (Trade_Blocs_Chap05.pdf)
3. Bhagwati “Regionalism and Multilateralism: an overview” [DM_ch2] (dm_ch2.pdf)
4. Krugman “Regionalism vs. Multilateralism: Analytical Notes” [DM_ch3] (dm_ch3.pdf)
5. Schiff and Winters, “Trade Blocs and the Rest of the World” [SW_ch8]  (sw_ch8.pdf)
6. Winters (1996) “Regionalism vs. Multilateralism” (Winters96.pdf)

Coffee break: 10:00-10:30
 

Session 6: 10:30-11:30
Summing it all up

A checklist to keep in mind
Rules of Thumb for Regionalism
Where are we heading?

Notes:
 “Summing Up”  [PTA6_SUM]
Reading Materials:
1. WB “Conclusion: Tell Me the Truth about Trade Blocs”   [WB_ch6] (Trade_Blocs_Chap06.pdf)
2. WB “Policy Choices” [WB_ch4]    (Trade_Blocs_Chap04.pdf)
 
 
 

Topics for further investigation