“Large” and “small” regional trading blocs and trade regime bias: A comparison of the EC and CARICOM

Abstract

‘Large’ and ‘Small’ Regional Trading Blocs and Trade Regime Bias: A Comparison of the EC and CARICOM. — Liberalizing trade on a regional basis may, but does not necessarily, reduce trade (anti-export) bias; the outcome depends upon the characteristics of the regional grouping and the height of external tariffs. There are a priori grounds for expecting trading arrangements for ‘small’ blocs to induce greater trade regime bias than ‘large’ ones. This paper explores the reasons for this, and provides evidence of potential trade regime bias from CARICOM (Barbados) and the EC (UK). The paper also considers to what extent regional commitments may constrain the scope for lowering trade regime bias, and investigates some of the national and regional policy options for lowering the bias associated with ‘small’ regional trade arrangements.