Regionalism and the World Trading System

Increasing economic integration has been one of the major forces driving the world economy's impressive growth over the last fortyfive years. Today, however, more than at any time since World War 11, the future of the world trading system is in doubt. Ironically, just as the Soviet Union, Eastern ~ u r o ~ e , and many developing countries rush to join the General Agreement on Tariffs and Trade (GATT), many in the developed world have become disillusioned with the GATT process. The nearing completion of Europe's 1991 process, the North American Free Trade Agreement (NAFTA) apparently on the way, and even the dissolution of Comecon has forced the question of regional trading blocs increasingly to the fore. It is useful at the outset to consider how the world trading system is now faring. World trade grew 3 percent a year faster than GNP in the 1960s, 2 percent a year faster in the 1970s, and 1 percent a year faster in the 1980s. The good news is that integration has continued; the bad news is that it has increased ever more slowly.