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German Working Papers in Law and Economics
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Volume 2009

DR. J S. Bhandari

World Migration and Trading Regimes: NAFTA and the EU in Interdisciplinary Perspective

DR. J S. Bhandari (2009) "World Migration and Trading Regimes: NAFTA and the EU in Interdisciplinary Perspective", German Working Papers in Law and Economics: Vol. 2009: Article 6.

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This paper examines the nature of the migration and trading regimes in the Western industrialized world (i.e. North America and the European Union) through the lens of various disciplines including law. A dominant theme of the paper is the two way relationship between the trading order and migrations regime. While both regimes are characterized by legal rules, the legal aspects of both international trade and migration are firmly rooted and reactive to other disciplines such as economics, political science, sociology, public choice and anthropology to name a few areas. While mobility of goods and services has been extensively studied in several disciplines, there has been virtually no attempt to comprehensively present or embed the insights from various disciplines in a single framework. This gap in “talking across disciplines” is unsatisfactory in that policy makers and analysts alike can profit from cross pollination across disciplines. North America and Europe have proceeded quite differently in their approaches to sequencing trade and migration policies. The North American trade bloc (NAFTA) was never endowed with competence over labor mobility (aside from certain minor side agreements), whereas, the “four freedoms” (which included free movement of goods and persons) were enshrined ab initio in the treaties establishing the European Union. Received economic doctrine of the simple vintage variety unequivocally predicts that under fairly restrictive conditions, free trade between nations is a substitute for international migration. Trade liberalization leads to convergence in factor prices (returns to labor, capital and land) which in turn diminishes the incentive for labor for economic migration. Hence, free trade or increased trade will diminish the incentives for unwanted migration. Political science and public choice scholars typically have not approached trade and migration policies in a single or comprehensive framework. Much of the political science literature deals with enfranchisement of the once foreign citizens and their participation in domestic political processes. I also discuss the relative deprivation hypothesis which suggests that migration occurs more in response to perceived deprivation within one’s reference group rather than because of actual aggregate differences in international per capita GDP levels. The relative deprivation hypothesis in political theory is a distant relative of the self selection hypothesis for migration popularized by labor economists. In fact, the self selection and relative deprivation hypotheses are important bridges to interest group analysis. The paper also discusses to some extent, approaches to migration and trade in disciplines such as sociology, anthropology, international relations, and urban studies among others. Sociologists and anthropologists have had little to say about trade and have focused in the main on migration. Marginalization (at least perceived marginalization) and exclusion from society on the basis of race or ancestry is domain of related disciplines of ethnic studies or urban analysis which seek to analyze urban concentrations along ethnic lines. These agglomeration effects are reminiscent of core periphery models of trade theory. International relations theory or international political economy offer perspectives on migration and trade that are distinct from those in economics, public choice or sociology. Creation of interest groups or coalitions is also an ingredient of international relations analysis as it is in public choice. With the creation of social or political groups emerge transnational communities that render the boundaries of the Weberian nation state increasingly irrelevant. This paper will appear in shortened form at 3 Alb. Gov't L. Rev. 1 (forthcoming Winter 2010).

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