What is an RTA in the WTO? Types of preferential trade liberalization: ConcessionsMembersExamplesRTA? ReciprocalSelectiveEU, NAFTA, Mercosur,EPAs UnilateralSelectiveCotonou,AGOA UnilateralGeneralizedGSP In the WTO, RTAs are thus seen as... Reciprocal and Discriminatory (non-MFN)

Economic Union Common Market Customs Union Free Trade Area Partial Scope Lesser coverage of economic activity More Economic and political integration Types of RTAs

GATT 1994 Article XXIV Understanding on the Interpretation of Article XXIV Enabling Clause General Agreement on Trade in Services Article V Exceptions on RTAs are embodied in the following WTO Agreements: Overview

The purpose of an RTA is to facilitate trade among the parties...though without making more difficult the parties’ trade with non-party Members RTA exceptions are all based on the same principles*: * GATT Art. XXIV:4; “Enabling Clause” para. 3(a); GATS Art. V:4) How are these principles translated into specific provisions in each of the existing rules? Overview

Article XXIV & Understanding Scope Customs Unions Free-trade areas Interim Agreements As defined in paragraph 8 Customs unions or free-trade areas implemented in stages, over a transition period

For both customs unions and free-trade areas: «Deep integration» criterion «Neutrality» criterion Article XXIV & Understanding Substantive Criteria Tariffs and other trade measures should be eliminated on substantially all (originating) trade among the parties on substantially all (originating) trade among the parties Its formation should not imply an increase in tariffs And other trade measures applied to other, non-party WTO Members.

For customs unions, in addition: For interim agreements: Article XXIV & Understanding Substantive Criteria  Tariffs and other trade measures should be substantially harmonized among the parties.  Any increase in MFN tariff bindings resulting from the establishment of a common external tariff should be negotiated with interested Members.  Lead to either a free-trade area or a customs union in a maximum of 10 years, unless exceptional circumstances are acknowledged.  Contain a plan and schedule to achieve that aim.

Dispute settlement provisions may be invoked Notification to the WTO Submission of requested information by the parties Biennial reporting Article XXIV & Understanding Other Requirements / Provisions Automatic review (examination) of the RTA by WTO Members

The Enabling Clause Paragraph 2(c) : Scope WTO developing country Members are authorized to depart from the MFN clause (Article I), to enter into reciprocal regional or global arrangements with other developing countries, establishing tariff and (subject to WTO approval, in principle) non-tariff preferences in their mutual goods trade.

Submission of requested information by the parties Other Requirements / Provisions The Enabling Clause Notification to the WTO Consultations with other Members, upon request

GATS Article V «Economic Integration Agreements» Including those implemented on the basis of a time-frame Paragraph 6 Scope Agreements liberalizing trade in services Definition of beneficiary service providers (rules of origin)

«Neutrality» criterion GATS Article V Substantive Criteria «Deep integration» criterion  Substantial sectoral coverage  No a priori exclusion of a mode of supply for the sectors covered  In the sectors covered, absence/elimination of substantially all discrimination  Should not raise overall trade barriers (to other Members) compared to prior levels.

Flexibility for developing countries in terms of: Renegotiation of commitments: Other requirements / provisions GATS Article V If, when entering the agreement, a Member’s WTO specific commitments are made more restrictive, negotiations should take place.  Substantial sectoral coverage  Elimination of discrimination in the sectors covered

GATS Article V Other Requirements / Provisions Notification to the WTO Submission of requested information by the parties Possible review (examination) of the RTA by WTO Members

Member notifies participation in RTA, seeking legal coverage under: GATT Article XXIV Enabling Clause GATS Article V RTA Processes in the WTO Examination automatically mandated Council for Trade in Goods Consultations, no examination (in principle) Committee on Trade and Development Examination may be mandated Council for Trade in Services Proceeds to mandated examination and reports back Committee on Regional Trade Agreements RTA Procedures in the WTO

Draft report prepared by the Secretariat.Draft report prepared by the Secretariat. Informal consultationsInformal consultations Report, once agreed, sent to the relevantReport, once agreed, sent to the relevant body, for adoptionbody, for adoption Notification by the partiesNotification by the parties Submission of text of agreement,Submission of text of agreement, annexes & protocols annexes & protocols Submission of preliminary information by the parties (Standard Format)Submission of preliminary information by the parties (Standard Format) RTA Examination Procedures Written exchanges of comments, and questions & replies Oral policy statementsOral policy statements Oral comments, questions & repliesOral comments, questions & replies Factual examination in the CRTA RTA Procedures in the WTO

Summing-up When entering an RTA, a WTO Member should invoke one of the following provisions, and comply with the relevant conditions:... Or else the Member should seek a waiver! RTA parties Developed only Developing only Developing & developed Trade in goods GATT XXIV Enabling Clause GATT XXIV Trade in services GATS V

Column 1 List of notified RTAs Column 2 RTAs for which an early announcement has been made  Armenia - Russian Federation Armenia - Russian Federation  Free Trade Agreement between members of the Commonwealth of Independent States (CIS) Free Trade Agreement between members of the Commonwealth of Independent States (CIS)  Common Economic Zone (CEZ) Common Economic Zone (CEZ)  Russian Federation - Montenegro Russian Federation - Montenegro  Commonwealth of Independent States (CIS) Commonwealth of Independent States (CIS)  Russian Federation - Serbia Russian Federation - Serbia  Eurasian Economic Community (EAEC) Eurasian Economic Community (EAEC)  EFTA - Russian Federation / Belarus / Kazakhstan EFTA - Russian Federation / Belarus / Kazakhstan  Georgia - Russian Federation Georgia - Russian Federation  Russian Federation - New Zealand Russian Federation - New Zealand  Kyrgyz Republic - Russian Federation Kyrgyz Republic - Russian Federation  Russian Federation - Azerbaijan Russian Federation - Azerbaijan  Russian Federation - Belarus Russian Federation - Belarus  Russian Federation - Kazakhstan Russian Federation - Kazakhstan  Russian Federation - Republic of Moldova Russian Federation - Republic of Moldova  Russian Federation - Tajikistan Russian Federation - Tajikistan  Ukraine - Russian Federation Ukraine - Russian Federation

20 NOTIF: Regional Trade Agreements Formation of a regional trade agreement –free-trade area –customs union –between developing countries Biennial report Modifications Trade in services Webpage on the Transparency Mechanism for RTAs WT/REG/16