Regionalism in the world economy

In this paper, the relationship between multilateralism and international regionalism is examined from empirical and theoretical perspectives. An analysis of commodity flows suggests that the European Union, the North American Free Trade Area and a slowly emerging trading bloc centred upon Japan occupy an increasingly prominent role in an ongoing process of geo-economic adjustment centred upon regionalism. This resurgence of regionalism is often interpreted as a direct threat to multilateralism and the international regulatory framework embodied in the World Trade Organisation (WTO). The central contention of this paper is that multilateralism and regionalism are associated with different modes of regulation and a transformation is currently underway from Fordism and multilateralism supported by the WTO to a more flexible system of production based on regionalism. Regionalism in the world economy should therefore be interpreted as a powerful force fundamentally transforming the relationship between the world's principal economic players.