The trend toward free trade areas: economic consequences and policy implications for the United States
All, William H., IV
Looney, Robert E.
Stockton, Paul N.
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Because America's economy relies to a significant degree on export markets and external sources of raw materials, the health of the international trading system is critical to the national security of the United States. This thesis demonstrates that the organization on which America has relied for the management of the international trading system since the 1950s, the General Agreement on Tariffs and Trade (GATT), is failing to effectively fulfill its role of international trade regulation. It is argued that because of that failure, an alternative global trading structure based on a triad of large regional free trade areas (FTAs) is developing. It is proven, using the generally accepted tenets of customs union theory, that the impact on the Unite States of such a triad could be generally positive in the absence of a functioning GATT. Based on this economic analysis broad American trade policy guidelines are proposed to maximize American advantage in the evolving system.
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