international system (Lamy, 2001 and 2002).

Even Japan, Korea, and China are now

engaged in regionalism with their first agreements signed at the end of 2002.8

These trends have led to a number of questions and research challenges for trade

economists:

What are the empirical characteristics of these new RTAs that distinguish them

from earlier RTAs?

• Does the existing body of “old” trade theory, based largely on the theory of

comparative advantage, provide an adequate framework for analyzing new

regionalism?

• Does recent work on “new” trade theory provide a better framework for analyzing

new regionalism?

• What are the major knowledge gaps, both empirical and theoretical, that need to

be addressed for better analysis of new regionalism?

The objective of this paper is to review the major elements of the economics

debate on new regionalism. First, we provide a brief overview of the characteristics of old

and new regionalism. We then describe recent trends in the types of RTAs being formed,

focusing on delineating the elements of deep integration and the links between developed

and developing countries that represent the main distinctions between new and old

regionalism. We also discuss the practical challenges to regional integration, particularly

8
Japan signed an agreement with Singapore in November 2002, and is now negotiating agreements with
Mexico, South Korea, the Philippines and Thailand. China signed its first agreement with ASEAN
(Association of South East Asian Nations), while Korea’s first agreement was with Chile.