Political economy considerations on the supply of trade protection in regional integration agreements

The purpose of this article is to discuss the institutional aspects of regional integration and its implication for the determination of external trade policies by a trade bloc. In particular, this study raises the question, can institutional designs in a regional integration area increase the responsiveness of trade authorities to protectionist demands? Contrary to some previous research, the analysis shows that the answer is affirmative. As illustrated by the European Union (EU) experience, the supply of trade protection in the context of regional integration crucially depends on the design and evolution of institutions adopted by the trade bloc. Moreover, the dynamic process of regional integration entails a redefinition of rules which inevitably attracts lobbying activities (in particular from those with protectionist interests). In consequence, in the absence of a strong political commitment, the danger exists that the design of new institutions will be captured by protectionist forces.