WTO Seminar on Regional Trade Agreements and the WTO Geneva, 14 November 2003

Overview The drive towards the conclusion of RTAs continues unabated. 33 RTAs have been notified to the WTO since November If the current trend continues we estimate that 300 RTAs will be in force in RTAs can clearly help countries integrate into the MTS, but are a fundamental departure from the guiding principle of non-discrimination of the WTO. Are RTAs a building block or stumbling block? Need to look at the changing landscape of RTAs

Main Trends Identified Countries traditionally favouring MFN liberalization are increasingly being drawn into RTAs. Those which have been engaged in RTAs for some time are looking further afield for cross-regional partners. Mega-blocks such as the FTAA or Euro- Mediterranean FTA are under negotiation.

RTAs notified to the GATT/WTO ( ) in force and non-notified RTAs

RTAs in force, as of October 2003, by type of agreement

RTAs’ Configuration

Cross Regional RTAs are a growing phenomenon

Regional and cross-regional developments The greatest concentration of RTAs is in Europe, where over 100 RTAs are in force. The main focus of RTA activity has shifted away from Europe in the last two years towards Asia Pacific. APEC members, in particular, have been among the most active participants in RTAs.

Motivations: why do countries engage in RTAs? Economic Rationale search for larger markets deeper integration defensive necessity lock out competition lock in investment More secure access to developed markets than GSP programs Political Reasons increase bargaining power prevent backsliding on political/economic reforms ensure or reward political support

Effects of RTAs on the multilateral system are manifold: Positive economies of scale laboratories for change provide competition attract FDI allow countries to hone negotiating skills Negative strains negotiating capacity dampens enthusiasm for multilateral negotiations creates vested interests labyrinthine rules of origin trade and investment diversion weakest countries left out

RTAs in the WTO context Long-standing controversy about the interpretation of provisions relating to RTAs Impasse in the current examination of agreements. Negotiations launched at Doha have resulted in fruitful discussions on transparency, but no « early harvest » was achieved in time for Cancun. Informal discussions on the more controversial systemic issues began in June.