A birth and a birthday

meta-cre­ation_­date: 31/12/2003 10:00:00 Two events on 1 Jan­u­ary point to a decade of tur­bu­lent changes in the glob­al trad­ing sys­tem. First, a birth: Hong Kong and Chi­na form a free-trade area, bring­ing the wealthy ter­ri­to­ry into an eco­mom­ic union with Chi­na more than a cen­tu­ry and half after­it was claimed by Britain dur­ing the colo­nial wars of the 19th Cen­tu­ry. Accord­ing to the “Finan­cial Times”:http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1071251831502&p=10450509464 bq. The Clos­er Eco­nom­ic Part­ner­ship Arrange­ment was devised by Chi­na to bol­ster Hong Kong’s bat­tered econ­o­my after a pro­longed down­turn, exac­er­bat­ed ear­li­er this year by the out­break of severe acute res­pi­ra­to­ry syn­drome. Sec­ond: an anniver­sary. The North Amer­i­can Free Trade Agree­ment (NAFTA) is ten-years old. As “Tyler Cowen”:http://www.marginalrevolution.com/marginalrevolution/2003/12/10th_anniversar.html points out bq. NAFTA was far from a per­fect treaty, but let us offer three cheers in its favor. It may well go down as the most last­ing lega­cy from the Clin­ton admin­is­tra­tion. Of the 151 “region­al trade agree­ments” in force, accord­ing to WTO, at the end of 2002, 123 or more than 80 per­cent of them, were cre­at­ed in the decade of the 1990s.

Graph from WTO showing growth of RTAs since 1960s

Why this rapid growth? It’s true of RTAs as of unhap­py fam­i­lies that each has a dis­tinct his­to­ry. There does not appear to be a sin­gle expla­na­tion for their rapid growth. But thw wide­spread dis­sat­is­fac­tion with progress in break­ing down bar­ri­ers throught the mul­ti­lat­er­al sys­tem in the sec­ond half of the 1980s—and a very sim­i­lar dis­sat­is­fa­tion today—seems to explain some of the demand for dis­crim­i­na­to­ry, ‘fast-track’ lib­er­al­iza­tion agreeements.

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