Stepping stones or stumbling blocks? The EU's approach towards the problem of multilateralism vs regionalism in trade policy

Half the world's economists seem determined to prove that policy-makers should choose between being a multilateralist and a regionalist, and tell us that we can't be both at the same time. The problem is that life is messier and more complicated than economic theory. This short paper will argue: (i) that multilateralism and regionalism are not mutually exclusive, but are complementary instruments to manage the complexities of an interdependent world; (ii) that traditional Free Trade Areas are unlikely to be of great benefit, particularly for developing countries; (iii) that regionalism, if it is to support multilateralism effectively, needs to be deployed in the right way. In particular, the EU favours the model of 'deep integration' whereby market access liberalisation is underpinned by new and better rules; (iv) that the WTO's rules governing regionalism need to be updated in the current round of trade negotiations, the Doha Development Agenda; and (v) in conclusion, that while we have a policy of 'multilateralism first', the EU will continue to be an active player in regional trade policy.