ABSTRACT
Since the early 1990s, countries around the globe have concluded a large number of bilateral and regional trade agreements.1 These agreements, whether they come in the form of free trade agreements or of customs unions, eliminate tariffs and possibly also other barriers to trade between the member countries, but leave in place the trade barriers with excluded countries. In two respects this development has relevance for the debate about the globalization of the world economy, which analyses the causes and consequences of an increasing worldwide division of labour and of booming world trade. On the one hand, regionalism may at least partly be a response to globalization. In this vein, Stefan Schirm (2002) argues that the process of globalization imposes reform pressure on nation states. Countries respond to this pressure with regional agreements, which enhance the economic efficiency and political acceptability of the reforms implemented. On the other hand, regionalism may have an impact on the process of globalization. A preferential trading area, independent of its type, produces trade discrimination, which runs counter to a further division of labour. In addition, regionalism possibly influences the process of multilateral trade negotiations, which has been one of the engines of globalization.
