The World Trade Organization and regional trade agreements : an analysis of the relevant rules of the WTO
- Publication Type:
- Thesis
- Issue Date:
- 2001
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The proliferation of regional trade agreements in recent years raises the question
as to whether they are building blocks or stumbling blocks for the multilateral trading
system. Studies carried out by academics, the WTO and other reputable bodies have
mostly indicated that they have in the past contributed to the efforts of the WTO in
liberalising world trade by eliminating barriers to trade among the parties to the
agreement and also by reducing barriers to the trade of third countries resulting in an
increase not only of intra-trade between the parties, but also trade between the
established regional trading bloc and the outside world. The WTO recognises the
important contribution that could be made by regional trading arrangements to the
multilateral trading system and has consistently stated that the two approaches are not
mutually exclusive and could be complementary if regional trade agreements operate in
full openness and comply with WTO rules.
Under the rules of the WTO, Members wishing to form free trade areas and
customs unions have to comply with a number of requirements including liberalising
substantially all their trade and ensuring that the general incidence of tariffs and
regulations of commerce is not higher after the formation of the regional trading
arrangement. The rules have been designed in such a way as to protect the interests of
third countries. In fact, as stated in Article XXIV:4, "the purpose of a customs union or
a free-trade area should be to facilitate trade between the constituent territories and not
to raise barriers to the trade of other. .. [Members] with such territories."
To ensure that regional trade arrangements comply with the relevant disciplines
of the WTO, Members of the WTO are obliged to notify any trade agreement that they
enter into for examination by the WTO. To date, over 100 agreements have been
examined, but it is only in one case that there was a unanimous verdict. In the rest of
the cases, opinions were sharply divided with parties to the examined agreements
insisting on conformity, while third countries expressed a contrary opinion. The
paralysis in the decision-making process could be attributed to the lack of clarity in the
WTO rules and the consensus principle which enables the parties to the agreement to
frustrate the examination process. If the WTO should be able to monitor effectively
existing regional trade arrangements and the proposed ones which are very ambitious in
terms of the subject areas covered and the diverse membership. it is imperative for the
rules of the WTO to be clarified and strengthened and also the decision-making process
of the Committee on Regional Trade Agreements fundamentally reformed to enable it to
make decisions.
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