Open regionalism

“Open regionalism” represents an effort to resolve one of the central problems of contemporary trade policy: how to achieve compatibility between the explosion of regional trading arrangements around the world and the global trading system as embodied in the World Trade Organization. The concept seeks to assure that regional agreements will in practice be building blocks for further global liberalization rather than stumbling blocks that deter such progress. “Open regionalism” has been adopted as a fundamental principle of the Asia Pacific Economic Cooperation (APEC) organization from its creation in 1989. The 18 nations of APEC account for about one half of world output and world trade. The institution includes the three largest economies in the world -- the United States, Japan and China. APEC decided at its Bogor (Indonesia) summit in November 1994 to achieve “free and open trade and investment in the region” by 2010 for its industrialized members, which account for about 90 per cent of its trade, and by 2020 for the rest; in light of APEC’s size, this is potentially the most far-reaching trade agreement in history (Bergsten, 1995). APEC is thus a major factor in the world trading system and its embrace of “open regionalism” has propelled the concept into global prominence. Yet neither APEC nor any other official body has defined “open regionalism.” There has been no explicit application of the principle to date. Indeed, there are several competing notions of what it means and how it should be implemented. There is thus considerable confusion about the implications, and even the relevance, of the basic idea This article addresses this set of questions. After sketching the contours of the basic debate over “globalism vs. regionalism,” it will trace the origins and evolution of the effort to reconcile potential conflicts between them via “open regionalism.” It will then present five alternative definitions of the concept and the arguments for and against each, concluding with my own recommendations for how to proceed. I will draw throughout on the extensive and unanimous treatment of the issue by APEC’s Eminent Persons Group, especially in its second report in August 1994 entitled Achieving the APEC Vision: Free and Open Trade in the Asia Pacific. “Open regionalism,” however, could--and, in my view, should--be adopted as well by other evolving regional arrangements, such as the proposed Free Trade Area of the Americas (FTAA)3 and any new North Atlantic Economic Community [Author's abstract]