1. Regional Trade Agreements and the WTO
Roberto Fiorentino World Trade Organization

2. Regional Trade Agreements and the WTO
Outline:
Some facts and figures
RTAs and the WTO
DDA negotiations

3. 1. What is a Regional Trade Agreement?
A problem of definitions:
Preferential Trade Arrangements (PTA)
these are trade arrangements under which a party agrees, either unilaterally or as a result of negotiations, to accord one or more other parties preferential treatment in trade in goods or services.
Free-Trade Agreement (FTA)
a contractual arrangement between two or more countries under which they give each other preferential market access
Regional Trade Arrangement (RTA)
a free-trade agreement, customs union or common market consisting of two or more countries

4. 2. How many RTAs are there?
As of November 2008, 418 RTAs have been notified to the GATT/WTO of which 227 are currently in force
161 RTAs cover trade in goods; 54 trade in services; and 12 are accessions to existing RTAs

5. Typology of RTAs
Notified RTAs in force as of November 2008
FTAs account for the great majority of RTAs notified and in force
RTAs signed and under negotiations
...and of the projected RTAs

6. Participation in RTAs (goods) as of January 2009*
The global landscape of RTAs
Participation in RTAs (goods) as of January 2009*
1 to 4
1 to 4
5 to 9
10 to 19
20 to 26
No data
* Notified and in force.

7. Configuration of RTAs
RTA configuration as of November 2008
Bilateral RTAs account for the majority of RTAs notified and in force and of future RTAs
Cross-regional RTAs as of November 2008
Cross-regional RTAs account for a large share of future RTAs

8. Global & regional developments
The spaghetti bowl effect...
United
States EC
EFTA
Mexico
Chile
S. Africa
Singapore
MERCOSUR
GCC
Australia
N. Zealand
ASEAN
Japan
Korea
Jordan
Israel
ECOWAS
CEMAC
SACU
ESA
Morocco
Chinese
Taipei
Panama
Bahrain
Thailand
India
Signed / In Force
Under Negotiation
Under Consideration
China
SADC
Egypt
PACIFIC
EPA
CARIFORUM
Canada
Cross-Regional RTAs (clicking instructions)
Introduction: the map that you will see here builds upon the previous chart by providing a visual and detailed overview of cross-regional RTAs as of March As in the previous chart it includes notified RTAs, those under negotiations and proposed. Once again the figures are conservative meaning that only those RTAs for which information is founded have been included.
Click – Notified RTAs: here we can see the leading players to date with respect to cross-regional RTAs (US, Chile, Mexico, the EC, EFTA and Singapore) – click again
Click – Under negotiations/signed: here we see that while the leading countries are reinforcing their network of cross-regional RTAs, other WTO Members are following suit (Canada, Japan, Korea, Australia, New Zealand, South Africa) – click again
Click – Proposed: here we see yet more countries joining in (Thailand, India, MERCOSUR)
Click: Comments
This map gives a sense of the growing number of RTAs which criss-cross the globe creating increasingly complicated networks with overlapping membership.
It also points to the development of North-South and South-South RTAs

9. 3. RTAs in the WTO What is the legal nature of an RTA in the WTO?
Derogations & exceptions
General Exceptions
Security Exceptions
Waivers
S&D (GSP, EBA, etc)
RTAs
Basic principles:
MFN
National Treatment
WTO
The MTS is best described as a multilayered trading system characterized by the interplay of different trading regimes.
The WTO is recognized as the global forum for rules making and trade liberalization and as such it is supposed to provide the basis on which to build the MTS.
As indicated in its preamble one of the objective the WTO is “... the elimination of discriminatory treatment in international relations” - The MFN (most-favoured-nation) commitment taken by WTO Members is a fundamental instrument for achieving that aim. The other major principle is “transparency”.
However, the system provides for exceptions and these are found in what we may call discriminatory regimes since they derogate from the fundamental principles of MFN.
These derogations may take different forms:
Unilateral – GSP and waivers
Reciprocal – RTAs
The problem today for global trade is the proliferation of such exceptions.
Non - Discrimination
RTAs are the major exception to MFN (Article 1)

10. RTAs & the WTO What type of an exception is an RTA?
RTAs are permitted albeit conditional exceptions to the MFN principle;
RTAs can be established in accordance with the following conditional legal provisions:
GATT Article XXIV
Enabling Clause
Goods
GATT Article XXIV was drafted during the Havana Conference in It covers trade in goods only. When we look back at the drafting history of Article XXIV we see that initial drafts of this Article allowed only for the establishment of customs unions. It was only at the last minute that provision was made for the inclusion of free trade areas. It is fair to see that the trading landscape of RTAs that we are confronted with today would look radically different if Article XXIV only allowed for customs unions, not FTAs.
During the Tokyo Round in 1979 GATT Contracting Parties negotiated the Enabling Clause. In addition to setting the foundation for the GSP system, the Enabling Clause allows for the conclusion of preferential trade agreements between developing countries but not subject to the same stringent conditions as Article XXIV.
The Uruguay Round produced two important developments in the field of RTAs. The first was the Understanding on the interpretation of GATT Article XXIV. While the understanding clarifies a number of areas, particularly in relation to customs unions – we’ll look at them in detail in a moment – it did not touch upon the most contentious issues that have plagued Article XXIV over the years.
Finally, GATS Article V provides for preferential trade agreements in the area of trade in services and applies to both developed and developing countries.
Understanding on GATT Art. XXIV
GATS Article V
Services
To invoke the exception the RTA has to be notified

11. Common Principles
The purpose of an RTA is to facilitate trade among the parties through the reduction or elimination of tariffs and other barriers to trade
The RTA must provide for mutual/reciprocal trade concessions
The attainment of the internal objective of trade liberalization must not entail placing barriers towards non-RTA parties higher than those existing before the formation of the RTA

12. 4. RTAs & WTO: problems? Lack of transparency: Systemic concerns:
Failure to comply with notification obligations
Where notified, inadequate information provided
Systemic concerns:
Proliferation of RTAs
Divergent interpretation of WTO provisions on RTAs
Institutional deadlock:
No effective WTO surveillance mechanism of RTAs
No consistency assessment of the RTAs in force

13. 5. DDA negotiations on RTAs: the mandate
The Doha Ministerial Declaration (14 Nov 2001) contains two references to RTAs:
§4 Recognize the WTO as unique forum for global trade rule-making and liberalization
... and RTAs’ role in trade liberalization and development
Preambular
language
§29 Calls for negotiations to clarify and improve WTO rules and procedures on RTAs
... taking into account RTAs’ developmental aspects
Negotiating
Mandate

14. Procedural Requirements
GATT Art. XXIV
GATS Art. V
Enabling Clause – Para. 2(c)
Transparency Mechanism for RTAs
General Council’s Decision
of 14 December 2006 (WT/L/671)

15. State of play and what remains to be done
RTA Transparency:
Review of the Mechanism - § 23 of WT/L/671
Permanent application (Single Undertaking)
Database on RTAs
Systemic Issues:
Last meeting dedicated to these questions was held in February 2007
Main problem facing the Group is the lack of text-based proposals to advance the process
Chair has been holding bilateral consultations with Members to hear their views on the way forward

16. Roberto.Fiorentino@wto.org RTA Section World Trade Orgainzation
Thank you
RTA Section
World Trade Orgainzation