This study examines the various issues that have been brought up in the debate on the question of whether the new regionalism is a stumbling block or a building block toward establishing worldwide economic multilateralism. It reviewed the value of Most Favored Nation (MFN) status as well as some existing assessments of the trade and welfare effects of the new regionalism. It also presented some empirical examples of Regional Trading Arrangements (RTAs) that seem consistent with multilateral trade liberalization. The paper concluded that protectionism and trade diversion are threats that RTAs should constantly look out for but the trade created and investment induced by the new regionalism far outweigh them. Hence, RTAs are regarded as building blocks for multilateralism.
