Developing and Least-Developed Countries and Mega-Regional Trade and Investment Agreements

Abstract

Regional trade agreements (RTAs) have become a very prominent feature of the multilateral trading system. These arrangements have operated as legally permitted exceptions to the General Agreement on Tariffs and Trade (GATT) since it was established in 1947. The GATT rules, which have been subsumed under the WTO rules, recognise that tariffs and other barriers to trade can be reduced on a preferential basis by countries under regional arrangements. This is based on the cardinal principle of Article XXIV of GATT, which permits a departure from the Most Favoured Nations (MFN) obligation of non-discrimination within free trade areas, customs unions or interim arrangements that lead to the formation of free trade areas or customs unions. Mega-Regional trade and investment agreements merit attention because of their sheer size and their potential implication for trade and investments. These agreements are broad economic agreements among groups of countries that together have economic weight in negotiations and also at the world stage.