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6 J. World Trade L. 269 (1972)
International Sectoral Integration: An Alternative Approach to Freer Trade

handle is hein.kluwer/jwt0006 and id is 285 raw text is: International Sectoral Integration An Alternative Approach to Freer Trade JACK N. BEHRMAN THE IDEAL STATE of international economic integration, in the usual economic model, is that arising from free trade. But it is unlikely that we can reach that utopian state, for free trade is not wholly acceptable to any nation, including the United States; the results are considered inequitable from the standpoint of national interests. Free trade promises to maximize output of all participants, taken together, but national governments have become increasingly concerned over the distribution of benefits of the resulting industrial production. Still, the efficiencies of specialization under freer trade are highly desirable, and all countries want the greater exports that would result from freer trade, to help meet and to reduce the costs of domestic industrial production. The most useful approach to the further freeing of trade and to more efficient production seems to be that proposed by Eric Wyndam White in the last months of his tenure as Secretary-General of the GATT. He argued that the next stage of negotiations over trade barriers should take each industrial sector separately-in whatever bite-sizes would permit agreement among nations. Only by focusing on the special situations arising in the sectors of, say, pulp and paper, aluminium, iron and steel, electronics, autos, and chemicals, would the problems become tractable. During the past 15 years, he argued, trade had increasingly become a result of foreign investment and of the shifts in the international location of production. A sectoral approach would now have to encompass the patterns of investment as well as trade if we were to achieve the desired levels of both efficiency and equity. The rise of the phenomenon of international production-production in one country controlled from another-and the increasing influence of the multinational enterprise have shifted the relationship between trade and investment. Trade is increasingly dependent on investment patterns and on decisions as to the location of production. These decisions, if taken Jack N. Behrman is Professor of International Business at the School of Business Administration, Univer- sity of North Carolina. 269 Copyright © 2007 by Kluwer Law International. All rights reserved. No claim asserted to original government works.

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