The Move Toward Free Trade Zones

From World War I1 until about 1980, regional free trade agreements and global trade negotiations under the General Agreement on Tariffs and Trade (GATT) could reasonably be seen as complements rather than substitutes-as two aspects of a broad march toward increasingly open international markets. Since then, however, the two have moved in opposite directions. The 1980s were marked by stunning and unexpected success for regional trading blocs. In Europe, the European Community (EC) not only enlarged itself to include the new democracies of Southern Europe, but made a lunge for an even higher degree of economic unity with the cluster of market-integrating measures referred to as "1992." In North America, Canada ended a century of ambivalence about regional integration by signing a free trade agreement (which is also to an important extent an investment agreement) with the United States; even more startlingly, the reformist Salinas government in Mexico has sought, and appears likely to get, the same thing. And in East Asia, 'while formal moves toward regional free trade are absent, there was after 1985 a noticeable increase in Japanese investment in and imports from the region's new manufacturing exporters.