TRADING BLOCS: Pro or Con for Agriculture?

Abstract

Over the past year, the United States and Canada, who have already formed a free trade agreement (the CFT A), have begun negotiations with Mexico to create a North America Free Trade Area (NAFTA). The European Community (EC) is pushing ahead with plans to harmonize its internal market by January 1, 1993, and joined with the 7 countries of the European Free Trade Association in October 1991 to create the European Economic Area. Australia and New Zealand have further integrated the ties between their economies under the Closer Economic Relations (CER) agreement. Many Latin American countries are aggressively pursuing regional economic integration, with an eye on eventually forming free trade areas with the United States. In January of this year, the 6-member Association of Southeast Asian Nations (ASEAN), until now a primarily political grouping, announced their intention to form a free trade area. At the same time, the Uruguay Round being conducted under the auspices of the General Agreement on Tariffs and Trade (GATT) has experienced great difficulties and delays. It nearly collapsed in December 1990 largely over the question of agriculture and was stalled most of 1991 and into 1992. Such developments lead to this question, "Do regional trading arrangements have a positive effect on liberalizing the trading environment for agricultural products?" Some experts and observers respond yes; others say no. Here Goodloe will summarize the pro arguments and Raney will counter with the con, leaving you to reach your own conclusion.