Regional trade agreements: Dangerous liaisons?

Abstract

There here has been considerable growth in the number and complexity of regional trade agreements (RTAs) in recent years, and further agreements are being negotiated. A number of these agreements are centred on the European Union and the United States, raising fears that such mega-blocs may undermine the basic most favoured nation and national treatment principles of the multilateral system. There is also concern that they may divert attention from the multilateral system at a time when a new Round of multilateral trade negotiations will require considerable concentration of effort by all players. This paper examines the basis of these concerns. It looks first at the yardstick by which we evaluate RTAs, noting that wider political and security reasons have also been a factor behind their development. It notes that deeper integration may be more beneficial than lesser degrees of integration and looks at different possible levels and forms of such, including FTAs and customs unions. It then briefly reviews the evidence on regionalism versus multilateralism, before going on to look at the growth of RTAs. This is followed by a discussion of the experience with RTAs in the WTO system. Finally, the paper considers some suggestions for resolving the current impasse in consideration of RTAs in the WTO system.