In the century following the Second World War, non-discrimination and multilateralism were the pillars of the rules-based international trading system. However, from the early 1990s on, the number of regional and bilateral trade agreements in force increased more than tenfold, from less than 20 years to 279 in 2017. Moreover, the qualitative nature of these agreements has changed, starting with the fact that the United States has renounced its strong support for multilateralism and has rallied to the trend. Subsequently, the information and communication technology (ICT) revolution has led to increasing fragmentation of trade and the continued globalization of supply chains, which has posed many new problems that trade negotiators are struggling to address. Another form of competitive liberalization can occur when outsiders try to compensate for trade discrimination by joining an RTA from which they were initially excluded. It has been suggested that this process could, at least in theory, lead to global free trade, as new countries are gradually trying to join. “Open regionalism,” which allows third parties to join ATRs relatively easily, has also been proposed as a way to promote this form of competitive liberalization and to transform the “spaghetti shell” into a “lasagna plate”. However, some economic models show that this process falls well short of global free trade and instead ends with a handful of competing blocs that together reduce global well-being. 28 In practice, memberships of existing ATRs or non-EU membership unions were relatively rare. However, at the end of the second decade of the 21st century, the two pillars of trade negotiation appear fragile.

The Doha Round is dead, but not buried, blocking a new round of more recent negotiations. The TPP is moving forward, but without the United States, and the TTIP has disappeared for now. Unlike the Great Depression, the trading system was largely maintained during and after the Great Recession of 2007/2009, but not without charges that continue to undermine political support for trade in key countries. The relevant question may not be whether regionalism or multilateralism offers the best way forward, but whether conflict will replace cooperation as a dominant force in international trade relations. For several decades, the greatest exception to trade multilateralism has been the unity that began as an ERC. This six-member customs union has expanded its geographical and functional scope to become the 28-member single market, now known as the European Union (EU). Over the years, the EU has also negotiated with neighbours such as Switzerland, Norway and Iceland to the north and Turkey to the south. It has also negotiated with former colonies and members of the British Commonwealth, including Africa, the Middle East and, more recently, Canada. The EU is in the process of starting a series of other negotiations on the RTA. Baldwin and Thornton. 5. For more information on the rules governing global supply chain trade in the 21st century, see Richard Baldwin (2011) `21st Century Regionalism: Filling the Gap between 21st Century Trade and 20th Century Trade Rules`, WTO Staff Working Paper, No.

ERSD-2011-08, Geneva: WTO. Another impetus for ATRs has been the desire to modernize trade agreements and develop disciplines in new areas that would help global supply chains work more effectively. Dramaticly lower ICT costs have allowed companies to extend their supply chains, procure components and assemble them into finished products wherever they are at least expensive. However, this fragmentation also relies on reducing trade costs beyond tariffs, as it often involves cross-border investment and access to financial and other services, as well as the need to transfer physical inputs around the world. Richard Baldwin argues that this 21st century regionalism is fundamentally different from that of the 1990s and has a very different impact on the global trading system.