The Rush to Regionalism

The document analyzes the 'second wave' of regionalism in trade, characterized by a shift toward bilateral agreements and 'deeper integration' involving investment and intellectual property rights. It surveys various agreements (including NAFTA, ASEAN, and EU partnerships) to evaluate how they handle environmental exceptions, capacity building, and investor-state dispute settlement. The paper argues that while regionalism can pioneer new policy approaches, it risks creating a 'spaghetti bowl' of conflicting rules and may undermine the multilateral system by eroding the most-favoured-nation principle and restricting the policy space of developing nations.

• Since the early 1990s, there has been a steep rise in regional trade agreements, with the number of agreements notified to the WTO increasing from 120 pre-dating 1995 to nearly 300 expected by the end of 2005.
• Modern US free trade agreements (FTAs) frequently include 'WTO-plus' obligations that exceed multilateral commitments, particularly regarding intellectual property rights (IPRs) and investment. For example, the US-Singapore FTA protects pharmaceutical safety testing data for five years, restricting generic competition beyond TRIPS standards.
• Many regional agreements adopt investor-state dispute settlement (ISDS) mechanisms that allow firms to directly compel states into arbitration, a trend pioneered by NAFTA. However, some newer agreements, such as the US-Chile and US-Morocco FTAs, include provisions to consider establishing appellate bodies to review these awards.
• Environmental governance in FTAs varies widely. NAFTA's side agreement (NAAEC) created a Commission and a citizen submission process to 'name and shame' governments for failing to enforce environmental laws, but this model has seen little replication in subsequent agreements, which often rely on weaker annual councils or state-to-state dispute mechanisms.
• The 'rush to regionalism' may undermine the multilateral trading system by violating the most-favoured-nation (MFN) principle and creating 'stumbling blocks' where regional rules freeze in problematic regulatory approaches, such as the 'no more burdensome than necessary' test for services regulation.
• North-South agreements often reflect the priorities of the developed partner, with developing countries acceding to demands for environmental impact assessments or stringent IPR protections in exchange for market access.
• South-South agreements tend to be 'shallower,' focusing more on market access and tariffs than on deeper integration, and often prioritize shared regional environmental concerns, such as ASEAN's cooperation on haze pollution or Mercosur's regional ecolabelling system.

APA

Cosbey, A., Tay, S., Lim, H., & Walls, M. (2004). The Rush to Regionalism. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/trade_rush_region.pdf

Chicago

Cosbey, Aaron, Simon Tay, Hank Lim, and Matthew Walls. The Rush to Regionalism. International Institute for Sustainable Development, 2004. https://www.iisd.org/system/files/publications/trade_rush_region.pdf.

Wikipedia

{{cite report |last1=Cosbey |first1=Aaron |last2=Tay |first2=Simon |last3=Lim |first3=Hank |last4=Walls |first4=Matthew |title=The Rush to Regionalism |publisher=International Institute for Sustainable Development |date=November 2004 |url=https://www.iisd.org/system/files/publications/trade_rush_region.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cosbey2004rush, author = {Cosbey, Aaron and Tay, Simon and Lim, Hank and Walls, Matthew}, title = {{The Rush to Regionalism}}, institution = {International Institute for Sustainable Development}, year = {2004}, month = nov, url = {https://www.iisd.org/system/files/publications/trade_rush_region.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }