The conclusion of the Uruguay Round of multilateral trade negotiations in 1994，and the establishment of the WTO in 1995 to provide the institutional support to the multilateral trade agreements, constituted a significant milestone in the evolution of the multilateral trading system. The principle of “single undertaking，” bound all WTO members to all the results of the Uruguay Round negotiations (with the exception of plurilateral agreements), thereby reinforcing the fundamental principle of most-favored nation (MFN) treatment. With the conclusion of the Uruguay Round and the strengthened multilateral trading system (MTS), there was an expectation that exceptions to multilateralism, such as regional trade agreements, even though legally covered by the WTO under certain conditions, would either become less of an alterative policy option for countries or will need to be adapted and conducted in such a manner as to become outward-oriented; not inward-looking, and has constitute building blocks for the new multilateralism ushered in by the WTO.
This objective has been continually emphasized in WTO Ministerial Declarations that reaffirm commitment to the supremacy of multilateralism while recognizing the important role that regional trade agreements (RTAs) can play. This is apparent from paragraph 4 in the Doha Declaration where WTO Members stressed their “commitment to the WTO as the unique forum for global trade rule-making and liberalization, while also recognizing that regional trade agreements can play an important role in promoting the liberalization and expansion of trade and in fostering development”. In the work programme adopted at Doha. WTO Members also agree to negotiations aimed at clarifying and improving, existing WTO provisions applying to RTAs while taking into account their developmental aspects (paragraph 29). Such “developmental aspects are a concrete expression of the wider emphasis in the Doha Work Programmed (DWP) on development issues, including implementation-related issues and As recognized by these Declarations, the growth, expansion and deepening of regional trade agreements has been remarkable. Almost all countries in the world and virtually all WTO Members (the exception being Mongolia) today are party to, or are in the process of negotiating, at least one RTA. Thus, regionalism has become a policy option for most countries and is a permanent feature of the international trading environment for the foreseeable future.
A notable feature in the recent rise of regionalism is that countries that have traditionally favored the multilateral approach to trade liberalization, including Australia, New Zealand, Japan, Singapore, India and the Republic of Korea have joined the RTA bandwagon. The United States has also given more attention to concluding RTAs. A different composition of RTAs involving the widening of country coverage beyond the traditional regional zone has emerged. Significantly, RTAs have emerged between countries and entities in different regions/continents (e.g. EU-Mexico, EU-South Africa, US-Israel. Jordan, Morocco, Chile). In most cases, these agreements are bilateral in membership, concluded by two countries/entities, including the case of free trade agreements negotiated and concluded by the two distinct RTAs (e.g. EU-MERCOSUR under negotiation).
The expansion, widening and deepening of RTAs has resulted in, a situation whereby intra-RTA trade accounted for some 40 per cent of world trade (merchandise imports) in 2000 and will account for over 50 per cent in 2005. Furthermore, intra-RTA trade has been significant, or has become more important for RTA members. Thus, international trade flows are increasingly concentrated within regional groupings formed by large trading nations.
The qualitative dimension of RTAs in respect of coverage of policy areas has also evolved. Recent “new-generation” RTAs increasingly cover not only trade in goods, but also other “behind the border” regulatory areas, including trade in services, investment, competition policy, intellectual property rights, government procurement, labor, environment and development cooperation, thereby going beyond multilateral disciplines and liberalization commitments (“WTO-plus”). These are part and parcel of “deeper” integration efforts.
Developing countries are no exception to the process of expansion and reinvigoration of the
RTAs. They have actively participated in regional trade agreements among themselves (South-South) and with developed countries (North-South). In addition to these sub regional agreements, various bilateral preferential trade agreements (PTAs) have been launched among or involving developing countries, often on an interregional basis.
What is WTO’s stance toward regionalism? How is the development of regionalism in the world right now? (5 points)
Please briefly analyze the positive and negative effects of regionalism to developing countries. (10 points)
With the thriving of regionalism in the world, what do you think is the future of WTO’s multilateral trading system (MTS)? (10 points)
