REGIONALISM VERSUS MULTILATERALISM

PROJECT SUBMITTED IN PARTIAL FULFILMENT

OF THE COURSE IN
ECONOMICS OF GLOBAL TRADE AND FINANCE
AT
M.COM PART- I
2015-16

APEKSHA PAWAR

GUIDING TEACHER
PROF. SHALU PARASHAR
UNIVERSITY OF MUMBAI
RAJASTHANI SAMMELANS
GHANSHYAMDAS SARAF COLLEGE
OF ARTS AND COMMERCE
S. V. ROAD, MALAD (W)
MUMBAI- 400064

RAJASTHANI SAMMELANS
GHANSHYAMDAS SARAF COLLEGE
OF ARTS AND COMMERCE
S. V. ROAD, MALAD (W)
MUMBAI- 400064

CERTIFICATE

This is to certify that Miss. APEKSHA PAWAR of MCom Part I

(2015-2016) has successfully completed the project on
REGIONALISM VERSUS MULTILATERALISM under the
guidance of Prof. SHALU PARASHAR

Course Co-ordinator

Project Guide/ Internal Examiner

External Examiner

Principal

DECLARATION

I APEKSHA PAWAR the student of Master in Commerce Part I

(2015 -2016) hereby declare that I have completed the project on
REGIONALISM VERSUS MULTILATERALISM
The information submitted is true and original to the best of my
Knowledge.

Signature
APEKSHA PAWAR

ACKNOWLEDGEMENT
Selection of this project topic and in depth study on it gave
momentum to our subdued and dormant brain and it was an opportunity to
learn more and expand our horizon.
During the course of our project work being carried out at
Ghanshyamdas Saraf College, we are receiving the valuable support and
kind co-operation of number of people. We are deeply indebted to our guide,
our subject teacher, and group members, for their continuous and priceless
suggestion without which we would not have been able to succeed in our
project work carried on until now.
We are also obliged to our Prof. Mrs. Shalu Parashar who extended
their sincere help in present study.
We are also thankful to our internal guide, for their valuable
suggestion and guidance we also support. We express our gratitude towards
our principal Dr. Sujata Karmarkar, for their continuous support

SIR

CONTENT

NO.

1.

Regionalism :
Introduction of regionalism
Advantages & Disadvantages of regionalism
Challenges

2.

Multilateralism :
Introduction of multilateralism
Advantages & disadvantages of multilateralism
Challenges

3.

Regionalism versus multilateralism:

Comparison between:
1. 20th century old regionalism vs. old multilateralism
2. 21st century new regionalism vs. new
multilateralism

4.

Conclusion

5.

Bibliography

1. INTRODUCTION

International trade is the exchange of capital, goods, and services across international
borders or territories, which could involve the activities of the government and individual.
[1] In most countries, such trade represents a significant share of gross domestic
product (GDP). While international trade has been present throughout much of history

(see Silk Road, Amber Road, salt road), its economic, social, and political importance
has been on the rise in recent centuries. It is the presupposition of international trade that a
sufficient level of geopolitical peace and stability are prevailing in order to allow for the
peaceful exchange of trade and commerce to take place between nations.
Trading globally gives consumers and countries the opportunity to be exposed to new
markets and products. Almost every kind of product can be found on the international market:
food, clothes, spare parts, oil, jewellery, wine, stocks, currencies and water. Services are also
traded: tourism, banking, consulting and transportation. A product that is sold to the global
market is an export, and a product that is bought from the global market is an import.
Imports and exports are accounted for in a country's current account in the balance of
payments.
Industrialization, advanced technology,

including transportation, globalization, multinational corporations,

and outsourcing are all having a major impact on the international trade system. Increasing
international trade is crucial to the continuance of globalization. Without international trade,
nations would be limited to the goods and services produced within their own borders.
International trade is, in principle, not different from domestic trade as the motivation and
the behavior of parties involved in a trade do not change fundamentally regardless of whether
trade is across a border or not. The main difference is that international trade is typically more
costly than domestic trade. The reason is that a border typically imposes additional costs such
as tariffs, time costs due to border delays and costs associated with country differences such
as language, the legal system or culture.
Another difference between domestic and international trade is that factors of
production such as capital and labor are typically more mobile within a country than across

countries. Thus international trade is mostly restricted to trade in goods and services, and
only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods
and services can serve as a substitute for trade in factors of production. Instead of importing a

factor of production, a country can import goods that make intensive use of that factor of
production and thus embody it. An example is the import of labour-intensive goods by the
United States from China. Instead of importing Chinese labour, the United States imports
goods that were produced with Chinese labour. One report in 2010 suggested that
international trade was increased when a country hosted a network of immigrants, but the
trade effect was weakened when the immigrants became assimilated into their new country.
International trade is also a branch of economics, which, together with international
finance, forms the larger branch called international economics. Trading is a value-added

function: it is the economic process by which a product finds its market, in which specific
risks are to be borne by the trader.

OBJECTIVE
To study the comparison between Regionalism and Multilateralism.

RESEARCH METHODOLOGY
This project is been made using secondary data i.e., through web and textbook.

2. REGIONALISM

1.1 Introduction
In international relations, regionalism is the expression of a common sense of identity and
purpose combined with the creation and implementation of institutions that express a
particular identity and shape collective action within a geographical region. Regionalism is
one of the three constituents of the international commercial system (along
with multilateralism and unilateralism).
The first coherent regional initiatives began in the 1950s and 1960, but they accomplished
little, except in Western Europe with the establishment of the European Community. Some
analysts call these initiatives "old regionalism". In the late 1980s, a new bout of regional (also
called "new regionalism") began and continues still. A new wave of political initiatives
prompting regional integration took place worldwide during the last two decades. Regional
and bilateral trade deals have also mushroomed after the failure of the Doha round .
The European Union can be classified as a result of regionalism. The idea that lies behind this
increased regional identity is that as a region becomes more economically integrated, it will
necessarily become politically integrated as well. The European example is especially valid in
this light, as the European Union as a political body grew out of more than 40 years

of economic integration within Europe. The precursor to the EU, the European Economic
Community (EEC) was entirely an economic entity.

Definition
Joseph Nye defined an international region "as a limited number of states linked by a
geographical relationship and by a degree of mutual interdependence", and (international)
regionalism as "the formation of interstate associations or groupings on the basis of
regions". This definition, however, was never unanimously accepted, and some analysts
noted, for example, that the plethora of regional organizations founded at the initiative of
developing countries had not fostered the rapid growth of regionalism in the Third World.
Other authors, such as Ernst B. Haas, stressed the need to distinguish the notions of regional
cooperation, regional system, regional organization and regional integration and regionalism

The concept of regionalism

By definition, parties to a regional trade agreement (RTA) offer each other more favourable
treatment in trade matters than to the rest of the world (including WTO Members). As you
know, this is contrary to the MFN principle. The number of RTAs involving WTO Members
has increased notably in the recent years. Free trade areas are more prevalent than customs
unions. The purpose of a customs union or a free trade area should be to facilitate trade
among the parties to the RTA and not to raise barriers to the trade with other WTO Members.
RTAs shall be in line with the objectives of the MTS, and not constitute obstacles to it. Other
requirements comprise provisions on interim agreements and transition periods and
transparency provisions. The Enabling Clause (paragraph 2c) allows developing Members to
conclude among themselves agreements on trade in goods (South-South agreements) subject
to more flexible requirements than those contained in Article XXIV of the GATT. It is worth
noting that the Transparency Mechanism for RTAs (transparency requirements) applies to all
RTAs, whether notified under the GATT, the GATS or the Enabling Clause.

History
Initiatives towards a closer regional integration date back to the 1880s. The first coherent
regionalism initiatives, however, took place during the 1950s and 1960s. During the late
1990s, however, a renewed interest in regionalism emerged and lead to the rapid emergence
of a global system of regions with political and economic parameters.

Origins
It is quite difficult to define when the history of regionalism begins, since there is no single
explanation that encompasses the origins and development of the regional idea. Criteria such
as the desire by states to "make the best of their regional environment" are regarded by
certain analysts as elusive; they prefer to consider the history of regionalism in terms of the
rise of modern institutions. If formal organization at the regional as opposed to the
international level is to be the yardstick for the onset of regionalism, it is difficult to place its
origins much before 1945.

Before 1945
Advocacy of international regionalism was rare in the period between World War I and World
War II when the doctrine of collective security was dominant. With the notable exception of
the Inter-American System very few regional groupings existed before World War II. What
did emerge before World War II were a growing number of international public and private
associations, such as the General Postal Union and the International Law Association, which
were holding regular meetings and had their own secretariats.

1945-1980
By the end of the Second World War, then, regionalism had not still entered the vocabulary of
international relations. By the 1940s however, an increasing number of influential people had
already advocated "escape from a theoretical and ineffective universalism into practical and
workable regionalism". The region as a unit of analysis became important not only in
the Cold War context, but also as a result of the self-consciousness of regions
themselves. Because of the subsequent demands by states that had already made heavy
political investments in regional arrangements such as the Inter-American System,
the Commonwealth and the Arab League, regionalism made its appearance even in the
finalized UN Charter.

European initiatives
European regionalism took a concrete form during the late 1940s. The treaty establishing
the Benelux Customs Union was signed in 1944 by the governments in exile of Belgium,
Netherlands and Luxembourg in London, and entered into force in 1947. In
1952, Denmark, Sweden, Iceland and Norway (Finland joined in 1955) established

the Nordic Council, an inter parliamentary organization with the goal to forge the
regional Nordic co-operation. The Nordic Council's statutes set out in the 1962 Helsinki
Agreement, according to which the parties undertake "to seek to preserve and further develop
co-operation between our nations in the legal, cultural and financial areas as well as in
matters relating to transport and protection of the environment".
In the 1951 Treaty of Paris, France, West Germany, Italy, Belgium, Luxembourg and
the Netherlands established the European Coal and Steel Community (ECSC) to pool the
steel and coal resources of its member-states. The same states established on March 25, 1957
by the signing of the Treaty of Rome the European Atomic Energy Community and
the European Economic Community, most important of two European Communities

1.2 ADVANTAGES OF REGIONALISM:

1. More practical and feasible:
Everybody would agree that multilateral agreements are the preferred instruments for
liberalizing international trade. Such agreements ensure a non- discriminatory approach,
which provides political and economic benefits for all. However, there are many important
and unresolved issues in the WTO negotiations and hence affect multilateral trade.
2. Promote freer trade:
Regional arrangements promote freer trade and multilateralism. According to them, on
account of regional integration trade creation has generally exceeded trade diversion. Further,
regionalism has contributed to both internal and international dynamics that enhance rather
than reduce the prospects of global liberalisation.
3. Contribute to multilateralism:
They seem to be contradictory, but often regional trade agreements can actually support the
WTOs multilateral trading system. Regional agreements have allowed groups of countries to
negotiate rules and commitments that go beyond what was possible at the time multilaterally.
In turn, some of these rules have paved the way for agreements in the WTO. Services,
intellectual property, environmental standards, investment and competition policies are all
issues that were raised in regional negotiations and later developed into agreements or topics

of discussion in the WTO. Thus, regional integration should complement the multilateral
trading system and not threaten it.
4. Demonstration Effects:
Regional initiative can accustom officials, governments and nations to the liberalization
process. Subsequently they can move on to similar multilateral actions. learning by doing
applies to trade liberalization as well as to economic development itself, and can often be
experienced both more easily and more extensively in the regional context with far fewer
negotiating partners.
5. Positive political effects:
Trade and broader economic integration has brought about peace between neighbouring
countries and thus has positive rather than negative political effects. Trade and broader
economic integration has created a European Union in which another war between Germany
and France is literally impossible. Thus, RTAs can help to reduce political conflicts.
6. Compatibility:
The supporters of regionalism note that article 24of the GATT, and now the WTOs explicitly
permits regional agreements and thus acknowledges their compatibility with the multilateral
trading system. To be WTO-legal, such agreements must meet three criteria: they must cover
substantially all trade of member countries. They must avoid raising new barriers to nonmembers, and they must achieve free trade among members by a date certain.

1.3 DISADVANTAGES OF REGIONALISM:

1. Trade Diversion:
The regional agreements divert trade by creating preferential treatment for member countries
vis--vis non-members. In addition to differential tariffs, members may benefits from
preferential rules of origin and regional content requirements.
2. Undermine the multilateral system:
Countries may lose interest in the multilateral system when they engage actively in regional
their discriminatory nature. The slow pace of multilateral system because of has given a

greater impetus to bilateral and regional trade negotiations. The very success of those
negotiations can make liberalisation on a multilateral scale more difficult as governments
devote greater time and time to RTAs which can be quickly negotiated.
3. Geopolitical Impact:
Extensive and intensive regional ties may lead to conflicts that range beyond economics to
broader spheres of international relations.
4. Prevents developing countries from active participating:
There are concerns that RTAs are active stretches negotiation capacities to their limit, and in
the case of developing countries, prevents them from with the United Nations and the World
Bank to build capacity in smaller countries and give aid money to support participation in
trade negotiations.
5. Hurt the interest of others:
Under some circumstances regional trading arrangements could hurt the trade interests of
other countries. Normally, setting up a customs union or free trade would violate the WTOs
principle of equal treatment for all trading partners, which is most-favoured-nation
agreement.

1.4 NEW CHALLENGES:

The growing success of European regionalism in particular led scholars in the late 1950s to
what Ernst called "the new challenge of regionalism, the potentialities of the field for insights
into the process of community formation at the international level". By the late 1950s, "the
organization of the world's ninety-odd states into various systems of competing and
overlapping regional associations [had been] a fact of international relations for over ten
years".
Regionalism had already given rise to a floodtide of literature critical of its development or
determined to justify it as a necessity for world security. Some critics were arguing that
economic unions and common markets distorted the logic of a universal division of labor, and
that regional military planning was made both impossible and obsolete. On the other hand,
the defenders of the pattern were invoking the necessities of the cold war. By the 1960s a

number of important changes in international politics the easing of the intensity of the Cold
War, the independence of new states that had been part of colonial empires, the successful
initiation of the European integration experience gave rise to a new range of questions
about regionalism. According to Nye the new international environment made "the collective
security and military defense focus of the writings in the early 1950s seem at best quaint and
at worst misleading".
After the 1980s:
Since the late 1980s globalization has changed the international economic environment for
regionalism. The renewed academic interest in regionalism, the emergence of new regional
formations and international trade agreements like the North American Free Trade Agreement
(NAFTA), and the development of a European Single Market demonstrate the upgraded
importance of a region-by-region basis political co-cooperation and economic
competitiveness.
The African Union was launched on July 9, 2002 and a proposal for a North American region
was made in 2005 by the Council on Foreign Relations' Independent Task Force on the
Future of North America.
In Latin America, however the proposal to extend NAFTA into a Free Trade Area of the
Americas that would stretch from Alaska to Argentina was ultimately rejected in particular by
nations such as Venezuela, Ecuador and Bolivia. It has been superseded by the Union of
South American Nations (UNASUR) which was constituted in 2008.

3. Multilateralism

2.1 Introduction
In international relations, multilateralism is multiple countries working in concert on a given
issue. Multilateralism was defined by Miles Kahler as international governance of the
many and its central principle was opposition [of] bilateral discriminatory arrangements
that were believed to enhance the leverage of the powerful over the weak and to increase
international conflict. In 1990, Robert Keohane defined multilateralism as the practice of
coordinating national policies in groups of three or more states.
Multilateralism, whether in the form of membership in an alliance or in international
institutions, is necessary to bind the great power, discourage unilateralism, and give the small
powers a voice and voting opportunities that they would not otherwise have. Especially, if
control is sought by a small power over a great power, then the Lilliputian strategy of small
countries achieving control by collectively binding the great power is likely to be most
effective. Similarly, if control is sought by a great power over another great power, then
multilateral controls may be most useful. The great power could seek control through

bilateral ties, but this would be costly; it also would require bargaining and compromise with
the other great power. Embedding the target state in a multilateral alliance reduces the costs
borne by the power seeking control, but it also offers the same binding benefits of the
Lilliputian strategy. Furthermore, if a small power seeks control over another small power,
multilateralism may be the only choice, because small powers rarely have the resources to
exert control on their own.
International organizations, such as the United Nations (UN) and the World Trade
Organization are multilateral in nature. The main proponents of multilateralism have
traditionally been the middle powers such as Canada, Australia, Switzerland,
the Benelux countries and the Nordic countries. Larger states often act unilaterally, while
smaller ones may have little direct power in international affairs aside from participation in
the United Nations (by consolidating their UN vote in a voting bloc with other nations, for
example). Multilateralism may involve several nations acting together as in the UN or may
involve regional or military alliances, pacts, or groupings such as NATO. As these
multilateral institutions were not imposed on states but were created and accepted by them in
order to increase their ability to seek their own interests through the coordination of their
policies, much of these international institutions lack tools of enforcement while instead work
as frameworks that constrain opportunistic behaviour and points for coordination by
facilitating exchange of information about the actual behaviour of states with reference to the
standards to which they have consented.
The term "regional multilateralism" has been proposed suggesting that "contemporary
problems can be better solved at the regional rather than the bilateral or global levels" and
that bringing together the concept of regional integration with that of multilateralism is
necessary in todays world.
The converse of multilateralism is unilateralism in terms of political philosophy.

The concept of multilateralism

Collectively, the agreements included in Annexes 1, 2 and 3 are referred to as the
"Multilateral Trade Agreements", since they comprise the substantive trade policy obligations
which ALL the Members of the WTO have accepted. They form part of the "single
undertaking" applied in the Uruguay Round. That is, all agreements form part of a single

package that was accepted by the Members as a Whole (or as negotiators like to say "noting
is agreed until everything is agreed"). (From WTO website)

History
One modern instance of multilateralism occurred in the nineteenth century in Europe after the
end of the Napoleonic Wars, where the great powers met to redraw the map of Europe at
the Congress of Vienna. The Concert of Europe, as it became known, was a group of great
and lesser powers that would meet to resolve issues peacefully. Conferences such as
the Conference of Berlin in 1884 helped reduce power conflicts during this period, and the
19th century was one of Europe's most peaceful.
Industrial and colonial competition, combined with shifts in the balance of power after the
creation - by diplomacy and conquest - of Germany by Prussia meant cracks were appearing
in this system by the turn of the 20th century. The concert system was utterly destroyed by
the First World War. After that conflict, world leaders created the League of Nations in an
attempt to prevent a similar conflict. A number of international arms limitation treaties were
also signed such as the Kellogg-Briand Pact. But the League proved insufficient to prevent
Japan's conquests in Eastern Asia in the 1930s, escalating German aggression and, ultimately,
the outbreak of the Second World War in 1939.
After the Second World War the victors, having drawn experience from the failure of the
League of Nations, created the United Nations in 1945 with a structure intended to address
the weaknesses of the previous body. Unlike the League, the UN had the active participation
of the United States and the Soviet Union, the world's two greatest contemporary powers.
Along with the political institutions of the UN the post-war years also saw the development
of other multilateral organizations such as the General Agreement on Tariffs and
Trade (GATT) (now the World Trade Organization), the World Bank (so-called 'Bretton
Woods' institutions) and the World Health Organization. The collective multilateral
framework played an important role in maintaining world peace in the Cold War.[citation
needed] Moreover, United Nations peacekeepers stationed around the world became one of
the most visible symbols of multilateralism in recent decades.
Today there are several multilateral institutions of varying scope and subject matter, ranging
from the International Telecommunications Union (ITU) to the World Intellectual Property

Organization (WIPO) and Organisation for the Prohibition of Chemical Weapons (OPCW).
Many of these institutions were founded or are supported by the UN (United Nations).
2.2 ADVANTAGES OF MULTILATERALISM:
1. Cannot be dominated by the major players:
In the multilateral process when priorities are set, they cannot be dominated by the major
players. For examples, take the issue of the transfer of environmentally friendly technologies
from rich countries to poor was one of the secondary issues at the Bonn meetings. It was
considered very important. But if the richest 10 or 20 economies in a room had discussed all
this alone, this issue would never come up.
2. Best for liberalizing an economy:
A free and fair multilateral trading system serves best the interests of any liberalizing
economy. Although there has been a huge proliferation of bilateral/regional free trade
agreements in recent years, no one questions the primacy of the multilateral trading system.
According to Jadish Bhagwati, the internationally renowned trade economist, preferential
trade agreements (PTA) have undermined the prospects for multilateral freeing of trade,
serving as stumbling blocks, instead of building blocks.
3. Contributed to Indias growth:
Indias engagement with the multilateral trading arrangement helped it to sustain the trade
liberalisation process which was started in 1991. The inclusion of agriculture in the WTO
agreement helped India bring about some policy changes even in the agricultural sector,
which had remained highly protected after the initial round of reforms. While the agricultural
sector is still reasonably protected with high tariffs, the phasing out of quantitative
restrictions has arguably been the single most successful area of trade liberalisation in this
sector and has happened mainly because of Indias WTO commitments. The reforms initiated
in the early 1990s and Indias WTO triggered policy changes have had a positive impact on
export and in turn resulted in higher economic growth.

4. Better economic performance:

The protagonists of trade liberalisation claim that open trade policies lead to better economic
performance. Virtually all growth miracles are associated with rapid expansion of trade rather
than wholesale substitution of imports by domestic production.
5. Other advantages:
Beyond the welfare gains achieved through the reduction of tariffs in manufacturing and
agriculture, additional gains tend to accrue with the introduction of scenarios that incorporate
trade liberalisation in the services sector, reduction of non-tariff barriers, trade facilitation,
effective utilisation of dispute settlement mechanism etc.
2.3 DISADVANTAGES OF MULTILATERALISM:
1. Slow down the process:
The biggest disadvantage to multilateralism is that in the process every country has the right
to have their opinions taken into account, they usually take advantage of it. It can slow down
things a lot.
2. Increased use of NTBs:
Another important problem in the WTO is the increasing use of Non-tariff barriers has not
been defined under the WTO but its usage and understanding broadly refers to any border
measure other than a tariff, which acts as a barrier to trade. This includes internal measures
that, despite in several instances being in line with WTO rules and serving legitimate policy
objectives may discriminate or unnecessarily restrict access to markets, translating in
additional costs for the exporters or importers.
2.4 CHALLENGES:
Compared to unilateralism and bilateralism where only the country itself decides on what to
do or make decisions between two nations, multilateralism is much more complex and
challenging. It involves a number of nations which makes reaching an agreement difficult. In
multilateralism, there may be no consensus; each nation have to dedicate to some degree, to
make the best outcome for all. The multilateral system has encountered mounting challenges
since the end of the Cold War. The United States has become increasingly dominant on the
world stage in terms of military and economic power, which has led certain countries (such as

Iran, China, and India) to question the United Nations' multilateral relevance. Concurrently, a
perception developed among some internationalists, such as former UN Secretary General
Kofi Annan, that the United States is more inclined to act unilaterally in situations with
international implications. This trend began when the U.S. Senate, in October 1999, refused
to ratify the Comprehensive Test Ban Treaty, which President Bill Clinton had signed in
September 1996. Under President George W. Bush the United States rejected such
multilateral agreements as the Kyoto Protocol, the International Criminal Court, the Ottawa
Treaty banning anti-personnel land mines and a draft protocol to ensure compliance by States
with the Biological Weapons Convention. Also under the Bush administration, the United
States withdrew from the Anti-Ballistic Missile Treaty, which the Nixon administration and
the Soviet Union had negotiated and jointly signed in 1972. In a direct challenge to the
actions of the Bush administration, French president Jacques Chirac directly challenged the
way of unilateralism: "In an open world, no one can live in isolation, no one can act alone in
the name of all, and no one can accept the anarchy of a society without rules." He then
proceeded to tout the advantages of multilateralism.
Global multilateralism is presently being challenged, particularly with respect to trade, by
emerging regional arrangements such as the European Union or NAFTA, not in themselves
incompatible with larger multilateral accords. More seriously, the original sponsor of postwar multilateralism in economic regimes, the United States, has turned to unilateral action
and bilateral confrontation in trade and other negotiations as a result of frustration with the
intricacies of consensus-building in a multilateral forum. As the most powerful member of the
international community, the United States has the least to lose from abandoning
multilateralism; the weakest nations have the most to lose, but the cost for all would be high.
Multilateralism is the key, for it ensures the participation of all in the management of world
affairs. It is a guarantee of legitimacy and democracy, especially in matters regarding the use
of force or laying down universal norms.
Multilateralism works: in Monterrey and Johannesburg it has allowed us to overcome the
clash of North and South and to set the scene for partnershipswith Africa notablybearing
promise for the future.
Multilateralism is a concept for our time: for it alone allows us to apprehend contemporary
problems globally and in all their complexity

3. REGIONALISM VERSUS
MULTILATERALISM
It is impossible to decisively resolve the regionalism vs. multilateralism dispute. Most
analyses of most FTAS, including most importantly by far the European Union, conclude that
trade creation has dominated trade diversion. Most of the analysts agree that regional and
global liberalization have proceeded together.
There are such differences explained below between 20th century old regionalism and old
multilateralism:

OLD REGIONALISM

versus
OLD MULTILATERALISM

*The old regionalism countries are the core *The old multilateralism countries
of the system is flexible.

are the core of the system is

*Exchange of market access

inflexible.

* tariff

*Inter-governmental organization

*formally

institutions of organizations

*vinerian tax economies

are dependent on the states will

*The principle of sovereignty in
decision making process

*WTO tariff cutter

*The policies are independent
* qualitative dimension
* the principle of sovereignty in
* internationalization of
the supply chain
*trade nexus

decision making process

* the policies are independent
*the involvement of the citizens is

* two-ways flows of goods, people and

limited to democratic representation at

ideas within factories

political level formal institutions or

*simple trade with simple rules

*North-South agreements

organizations
*the global order is divided into levels
of governance, from global to local

* unipolarity or bipolarity
*North-South agreements
*preferential tariffs
*unipolarity or bipolarity
* countries are winners or losers
*perfect synchronization
*North-North FDI flows
between regions and
* trade federalism
regional organizations
*universal norms
*principle of subsidiarity in
*GATT/WTO play a central role
decision making process
*the system is closed
*universal norms
*United Nations play a central role

From the above content and figure of 20th century, old regionalism and old multilateralism
shows how different they are from each other. The regionalism and multilateralism both has
their own prospect about their own passion of work in trade both are necessary. Some
function they have in common like North-South Agreements, Unipolarity or Bipolarity,
Universal norms and so on. And there is a difference in flexibility between both of them. Old
regionalism is flexible but multilateralism is inflexible in nature, central role played by the

regionalism is GATT/ WTO, whereas central role played be the multilateralism is by United
Nations.

21st century new regionalism and new multilateralism:

NEW REGIONALISM

NEW MULTILATERALISM

* the new regionalism

the new multilateralism

*RTAs are the core of the system

*other actors are the core of the

*the system is inflexible

system

* foreign factories for domestic

* the system is flexible

reform

* redistribution of global power,

*regulation

independent on the states will

* regulatory economics

* diversification of the multilateral

*WTO rule writer

*quantitative dimension

organizations
* the increased number of non-state
actors at regional level

*outsourcing of the supply chain

* trade-investment service nexus

* interconnected policies

*two-ways flows across

*the involvement of the

international borders

citizens in the decisional

* complex trade with complex

process, not only at the

rules

political level

* formal agreements
*South-South agreements
*unilateralism
* non-tariff measures
*corporations are winners or

* informal agreements
*there is no hierarchical
structure of governance
* multi-polarity
* asymmetric

losers
synchronization between
*South-South FDI flows
regions and regional organizations
* fiscal federalism
*principle of mutuality in decision
*regional norms
*informal organizations play a
central role
* GATT/WTO do not
play anymore a central
role

making process
*informal organizations play a
central role
*United Nations do not play
anymore a central role

Here the 21st century new regionalism and new multilateralism express that the old
regionalism is fully opposite from the new regionalism as per the same like regionalism old
multilateralism is different from new multilateralism.

4. CONCLUSION
Within the new global economic governance, certain elements are likely to give new impetus
to regionalism and multilateralism: the growing dissatisfaction on the activities within these
processes and the slow pace of reform, the emergence of new powers and their impact on
international economic system, global crisis and other issues of global concern. Each one of
these has a significant impact on the appearance of regionalism and multilateralism in the
near future and there is a stringent need to finding common answers and solutions. A
fundamental reorganization of the international system has not been fair approached until
now and everyone looks blown away if this change would be unnoticed or seen as cause of
geopolitical pressures. The qualitative analysis is done in a comparative way, trying to
highlight the most important elements of this transition. The main added value is the
comparative approach of the two concepts transition and their formal relationship with the
new paradigm of global economic governance. In terms of prior work, it has been previously
tried to emphasizing the concepts already by known researchers in the field. The approach is
a more theoretical one, with emphasis on results and future research.
After the completion of this project I have come to this conclusion that both regionalism and
multilateralism better in their own scenario

REFERENCES

For books:
P. A. Johnson / A.D. Mascarenhas (2013)
ECONOMICS OF GLOBAL TRADE & FINANCE by Manan Prakashan(publisher)
Web References:

https://en.wikipedia.org/wiki/Regionalism_(international_relations)

www.rangasai.com Economics of global trade and finance CVS Ranga Sai