Hub and spokes
Hub and spokes: a concept used in the analysis of free-trade areas. It postulates that a large country could be a member of several free-trade arrangements, but that smaller countries might only belong to one of these arrangements each. The large country would then be the hub, and the others would form the spokes in a series of discriminatory bilateral trade arrangements. Unlike in the case of a free-trade area, where all parties negotiate as equals, under a hub-and-spokes arrangement the larger country generally sets the terms and conditions for membership. Some, however, argue that hub-and-spoke arrangements may be stepping stones to larger free-trade areas. Others maintain that the country forming the hub would have no incentive to extend such arrangements and trade preferences to others. This argument remains unresolved. However, as the 1995 WTO study on Regionalism and the World Trading System notes, in the case of a hub-and-spoke system, the essence is always the same: goods and services (and perhaps capital and labour) flow more freely between the hub and each spoke than they do between the spokes. I
Source: http://ctrc.sice.oas.org/trc/WTO/Documents/Dictionary%20of%20trade%20%20policy%20terms.pdf
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Author of the text: W. Goode
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