Regional Trade Agreements Under The Umbrella Of Wto

Regional trade agreements (ATRs) have multiplied over the years and have achieved, including a significant increase in major multilateral agreements being negotiated. Non-discrimination between trading partners is one of the fundamental principles of the WTO; However, reciprocal preferential agreements between two or more partners are one of the exceptions and are allowed by the WTO subject to a number of provisions. Information on WTO-notified ATRs is available in the RTA database. But there have been exceptions from the beginning. While the United States was a strong proponent of non-discrimination, the United Kingdom wanted to maintain preferential trade agreements with the Commonwealth. The British negotiators finally agreed to include non-discrimination in the GATT as a fundamental principle, but they also insisted on an exception for imperial preferences. John Maynard Keynes, a prominent economist and member of the British delegation negotiating the Bretton Woods agreements for the post-war global economy, argued before the House of Lords: [The proposed strategies] are primarily aimed at restoring multilateral trade … The basis of the policy before you is against bilateral trade and any discriminatory practice. Separate blocks and all the friction and loss of friendship they must bring are commodities that can be pushed into a hostile world where trade over vast territories has ceased to be cooperative and peaceful, and where healthy rules of mutual benefit and equal treatment are forgotten.

But I`m sure it`s crazy to prefer that. 3 Anticipating post-war efforts to promote integration in Europe, the GATT also included a broader exception, enshrined in Article XXIV, which allows the negotiation of free trade unions and agreements under certain conditions. 4 The exception was initially limited to customs unions, which are relatively more difficult to negotiate than free trade agreements, because the parties must set a common external tariff and eliminate tariffs on trade between them. U.S. negotiators agreed to extend Article XXIV to allow free trade agreements, purportedly because they were involved in free trade negotiations with Canada, which would not have happened for four decades. 5 In 2010, only a quarter of the regional agreements notified to the WTO were customs union unions. 6 It should be noted, however, that these agreements are very different in terms of breadth and depth, as well as in their impact on trade and their potential effects on the multilateral trading system. Because they are inherently discriminatory, even if they are fully compliant with Article XXIV, THE ATRs could also encourage third countries to push for multilateral trade openings to reduce the level of discrimination they face.