Developing Countries in the World Trading System
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Developing Countries in the World Trading System

The Uruguay Round and Beyond

Edited by Ramesh Adhikari and Prema-chandra Athukorala

The book examines the achievements of the Uruguay Round of trade negotiations in reforming the world trading system and the challenges to future reforms. It begins with an overview of the genesis of the world trading system and moves on to examine the key issues as they relate to developing countries. These include further liberalization of agricultural trade; abolition of the Multifibre Arrangement; environmental and labour standards; competition policy; regional integration in South East Asia; and the implications for developing Asian countries of the liberalization of the Chinese economy and its WTO membership. Furthermore, the book discusses the links between trade liberalization and poverty reduction – drawing on the experience of Asian countries – and puts forward arguments on how trade liberalization could effect a greater reduction in poverty.
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Chapter 9: The enlargement of ASEAN and its impact on regional integration

Jayant Menon


Chapter 9 11/2/02 1:17 pm Page 1 9. The enlargement of ASEAN and its impact on regional integration Jayant Menon Regional trading arrangements (RTAs) are currently popular, and have been proliferating. From 34 RTAs in 1992, the number now stands at more than 200. The demand to form or join RTAs on political grounds is strong. As Bhagwati (1997, p. 282) put it: ‘No politician is happy unless he has put his signature on at least one of them.’ Apparently there is also a strong compulsion to avoid being an outsider on economic grounds. As far back as 1964, Mundell demonstrated how trading partners who do not join a preferential trading arrangement might be made worse off through terms of trade effects even when global welfare is enhanced. (This occurs when the preferential arrangement is large enough to affect world prices, and outsiders as a whole are harmed because their terms of trade deteriorate as a result of trade diversion.) Even without terms of trade effects, that is, even if the RTA is small, the fact that an outsider’s competitors may have negotiated preferential access to its major markets suggests that the costs of not joining could be high. Thus the threat of trade and investment diversion is viewed as a compelling reason to seek membership in RTAs. On the supply side, RTA members are usually quite receptive to expanding their membership for both political and economic reasons. Size matters in politics. Political clout in international negotiations is often...

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