ABSTRACT
To this point we have assumed that restrictions on imports are nondiscriminatory; that is, all trading partners are treated equally in terms of market access. Such nondiscriminatory trade is a major goal of the GATT/WTO system, which we examine in Chapter 10, but it is far from universal. Most countries have different levels of protection, maintaining the lowest level for partners in trade blocs or friends, and less favorable circumstances for others. The GATT articles of agreement allow such trading blocs when their preferential treatment applies to substantially all trade among the partners. The WTO reports that in October 2007 there were 194 active agreements, and by 2010 it anticipates there will be 400.1
The European Union (E.U.) is the most ambitious trade bloc with regard to its size and the extent of economic integration it has fostered among its members, and we pay primary attention to it in this chapter. We also consider the North American Free Trade Agreement (NAFTA), a more recent and less comprehensive agreement which nevertheless creates an internal market nearly as large as the E.U. market.
