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 9, 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 allows such trading blocs when their preferential treatment applies to substantially all trade among the partners. Most arrangements are regional, among neighboring countries, although exceptions such as the Israel-US Free Trade Agreement exist. The European Union (EU) is the most ambitious of these trade blocs with regard to the extent of economic integration it has fostered
learning objectives
among its members. 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 EU market.
