Why Regionalism May Increase the Demand for Trade Protection

Why Regionalism May Increase the Demand for Trade Protection

This paper examines the influence of regional integration on the demand for trade protection. Previous studies have suggested the a customs union reduces the pressures for trade restrictions, as national interest groups have less weight to influence a central trade authority than their own government. On the contrary, this paper argues that protectionist preferences may not be diluted at the regional level. The reasons for this lie in the ability of protection interests to organize themselves at the regional level and the advantage they have over anti-protectionist forces in doing so (principally due to their superiority in controlling the potential free rider problem). In consequence, specific groups seeking external protection are likely to experience a relative (if not absolute) reinforcement of their preferences in a trade bloc. (JEL Classification: D72, F13)