A call for integration.

Author:Lester, Simon

Economic integration can be an important source of economic growth through increased trade and specialization As national economic are integrated, greater efficiency is achieved, and growth and development are (lie result.

For most of the history of trade negotiations and trade agreements, the focus of integration efforts been on pulling constraints on tariffs. quotas, and protectionist laws and regulations. Great progress has been made over the years, as tariffs have gone down from over 40 percent on average to less than 4 percent, and the GATT/WTO dispute settlement system has overseen many successful challenges to discriminatory taxes and regulatory measures The problem of protectionism has not been completely solved, but the existing system of disciplines keeps it in check. This has contributed to a long era of growing economics and prosperity.

Anti-protectionism can be thought of as the first generation of economic integration. However, there are limits to how much Integra lion can be accomplished in this way Markets can remain segmented for a variety of other reasons. Thus, deeper integration must go be yond the simple removal of protectionist measures. In some places, such as Western Europe, a customs union, a common market, and an economic union have been achieved, in progression; however, this is only a realistic possibility among very close partners

Recently, some governments have embarked on the next generation of economic integration (without attempting deep integration), one that is much more challenging: How to address the various non-protection domestic measures that interfere with trade? As the regulatory state has grown, die incidence of such measures has increased significantly. Health and safely regulations, environmental protection measures, and professional licensing requirements, among others, all impede the ability of individuals and companies to trade freely across borders. To take some real world examples. California might require that eggs sold in its market cook from liens which are housed in large-sized cages. Because this is not required and is not the norm in most other states, producers from outside California will find ii difficult in access (hat market. Or. on a smaller scale, a crane operator with a certificate to work in Quebec may be denied the ability lo do so in Ontario.

These arc not necessarily measures with a protectionist purpose, but they do have an impact on trade. What is needed is a process for...

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