RTA rules

This paper seeks to understand the relationship between World Trade Organization (WTO) rules and Regional Trade Agreements (RTA's).

In essence, it is purported that by allowing the formalisation of RTA’s, the WTO recognises the value they bring in trade liberalisation and economic integration. This is likely linked to the belief that trade liberalisation is more quickly achieved through regional trading blocs, and that these RTA’s serve as stepping stones for trade liberalisation at the multilateral level and global scale.

The paper concludes that WTO Members use RTA's to address issues such as (i) internal political and strategic objectives; (ii) allow for faster movement in the direction of economic integration; (iii) use them as insurance policies to secure better market access while avoiding protectionism and exclusion; (iv) send a message to foreign direct investment in the hopes of attracting it; (v) using them as mechanisms for counteracting domestic interest; and, (vi) using them to address other trade policy related measures.

Ultimately, recent evidence seems to suggest that WTO Members use RTA’s as a complex policy instrument, beyond seeking to simply secure tariff preferences given that the aforementioned issues are aspects less profoundly addressed by the multilateral agreements that make up the WTO.

This chapter explores how the former (GATT) and current (WTO) multilateral trading system have been handling the rules on RTAs over time and with the change of the multilateral liberalization agendas, and how the monitoring and evaluation set by those rules have been working. The chapter is structured as follows. Section A reviews the ideas of reciprocity and non-discrimination as the two fundamental principles of MTS. Section B explores the rules on RTAs that were originally set and that evolved in the pre-WTO period. The implementation of those rules is also reviewed through available data. Section C covers the period of the Doha Development Agenda as well as the intended and achieved negotiations on rules on RTAs based on Doha declaration. The new Transparency Mechanism on RTAs, one of the rare tangible outputs of the Round so far, is analysed in detail in terms of its characteristics and experience with its application is summarized ahead of the formal review due in the WTO in O...