ABSTRACT
This chapter examines two variants of regional integration at very different stages of evolution: the European Union (EU) and the North American Free Trade Agreement (NAFTA). Regional integration is best thought of as trade policy that is liberal on the inside and mercantilist on the outside. Regional integration is a strategy that attempts to maximize the benefits and minimize the costs of trade by carefully selecting partners in trade and in the institutions that must accompany it. As integration has deepened, the dilemmas of trade have become more visible. Regional integration is a strategy that attempts to maximize the benefits and minimize the costs of trade by carefully selecting partners in trade and in the institutions that must accompany it. The core of NAFTA consists of a phased elimination of tariff and most nontariff barriers over ten years, with a few sectors having a fifteen-year transition period.
