Ronald Cox's two groups of US business interests and support for RTAs

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Ronald Cox holds that the business interests in the United states that support Regional Trade Agreements (RTA’s) such as NAFTA and CBI (Caribbean Basin Initiative) can be broken into to two groups with distinct motives. Cox calls the first group “multilateralists” for their general support of free trade and final goal of the existence of successful multilateral trade regimes such as the WTO. This group is made up of the major industries in the sectors of banking, services, pharmaceuticals and agriculture. Their primary interest in this context is in exporting, as the global market makes up a large share of their profit. While they may support certain RTAs intermittently and temporarily, this support acts only as a stepping stone for their ultimate espousal of the multilateral trading system which will cater to their export and broader free trade interests.

The second group is labeled “regionalists” for their support of more regional trade regimes over multilateral ones. This group is made up primarily of foreign direct investors who have struggled to maintain an adequate hold of the “triad markets” of Western Europe, Japan and the US. Cox cites auto companies and electronics firms as the major players in this group who support non-tariff barriers against their competitors (Japan, Western Europe) and often pursue industrial reorganization such as outsourcing production to cheap-labor regions. Cox also notes the preferential treatment that regional agreements can accord to the proximate firms at the behest of foreign competitors.

Cox’s main argument is that regionalist firms are likely to continue their preference for RTA’s such as NAFTA over multilateral regimes such as the WTO because of the benefits of RTA’s such as preferential treatment that regional firms receive, and the possibilities to cut production costs. [1]

  1. Cox, Ronald W. “Explaining Business Support for Regional Trade Agreements.”