Parallel to the multilateral negotiations for trade liberalization there have been many attempts to form regional preferential trade agreements. One can therefore ask whether regionalism is a complement to or a substitute for multilateral ism. The pessimistic view is that there will be a movement towards trading blocs that will tum inward and erect barriers with non-members and thus obstruct further liberalization. The more optimistic view is that the initial creation of trading blocs speed up the progress towards global free trade as it is much easier to negotiate with only a few blocs, rather than with numerous countries. The answer to this question is not obvious and depends on the political philosophy of the leading nations' governments. During the first wave of regionalism in the 1960s the European common market was formed and regionalism also spread through Africa and Latin America. The U.S., however, remained a supporter of multilateralism. During the second wave of regionalism in the middle eighties, the u.s. has favoured a regional approach (NAFT A and overtures towards Latin America), while Europe widened and deepened its integration. The reason behind the U.S.' change in opinion was the slow progress at GATT (Krugman, 1993). The large number of members had made the negotiations too difficult and there had also been a change in the character of protection (for instance voluntary export restrictions, antidumping mechanisms and other forms of administered protection). The change of U.S. strategy and the further integration of Europe made others, such as East Asia and various developing countries, fear that regional blocs are the only way to access world markets and to be left out. Therefore, we witness at present a new wave of regionalism.