Relationship between wto and rtas

WTO | Regional Trade Agreements - scope of rtas

relationship between wto and rtas

Regional trade agreements (RTAs) seem to compete with the WTO, but often they defined in the WTO as reciprocal preferential trade agreements between two. the different levels of development among the. Members, others (RTAs) were provided since the inception of the GATT to allow like minded. Members willing to . Regional trade agreements (RTAs) have risen in number and reach over the years . between 11 parties;; Asia between Association of Southeast Asian Nations.

The Caribbean is a perfect example of this as can be seen by the creation of CARICOM and other representative regional processes and institutions of a geographically distinct union with both political and economic pillars.

relationship between wto and rtas

An increasing number of trade agreements seek to deepen economic relations, either because of political strategic interests or economic potential, or a combination of both. A customs union may seek an arrangement with other similar entities, or with individual countries. Some RTAs aim primarily to lower tariffs, some seek to maintain historical and traditional political and trade linkages, while others aim to incorporate non-WTO issues, and yet others are created as a conduit to garner greater market access into a non-party or to place pressure on a non-party.

The different possibilities and computations are endless. Hence issues such as investment, trade facilitation, government procurement, environmental and labour standards, intellectual property rights and competition policy often feature in modern arrangements with provisions which can be termed WTO-plus. This may occur either because the multilateral system has not agreed to negotiate or to conclude one or more of these issues, or as a result of partner A requiring such benefits from partner B rather than from the entire membership of the multilateral system.

The simple answer is that it depends on the genesis, composition and impact of the agreement in question. Conversely, particularly with regard to geographically concentrated countries, an enhanced regional economic structure can allow for principles of comparative advantage to kick in. This may create more realistic market structures and production patterns that may help the participants to enhance their integration into the global production and trade system.

relationship between wto and rtas

Contribution to the Multilateral Negotiating Process Although the WTO-plus component of some RTAs may have an impact on the future areas for negotiation at the multilateral level, it can also be an important contribution as it allows some Members, especially developing countries, to gain experience from negotiating and participating in regional or extra-regional processes, which could in turn improve their level of understanding and engagement at the WTO.

And then there is the question of negotiating legitimacy.

relationship between wto and rtas

If, for example, a developing country has taken a strong stance in the WTO negotiations against a Member or against an issue championed by it and then undertakes an RTA with that same Member, it can severely undermine the integrity and legitimacy of the developing country on that particular issue at the multilateral level.

The key for the institution is to ensure that an architecture is put in place to measure coherence with multilateral rules, and that there are mechanisms to seek appropriate redress if an RTA is blatantly out of conformity with the expectations under the WTO agreements.


The African, Pacific and Caribbean APC Group, for instance, has requested that the development dimension and flexibilities be incorporated into the rules, but positions have not really coalesced on this issue. In contrast, Australia and others have sought to tighten the disciplines.

relationship between wto and rtas

Some other important trade actors do not necessarily appear to want any major changes to the current GATT Article 24, and the danger of the ACP trying to push for such changes is that it may induce the more liberalisation-oriented WTO Members to push in the opposite direction. Over the years RTAs have not only increased in number but also in depth and complexity. WTO members and the Secretariat work to gather information and foster discussions on RTAs to enhance transparency and to increase understanding of their impact on the wider multilateral trading system.

RTAs in the WTO are taken to mean any reciprocal trade agreement between two or more partners, not necessarily belonging to the same region.

Preferential trade arrangements PTAsmeanwhile, refer to unilateral trade privileges such as General System of Preferences GSP schemes and non-reciprocal preferential programmes some WTO members implement for products from developing and least-developed countries.

Members have committed, in general, not to favour one trading partner over another. An exception to this rule is RTAs. These deals, by their very nature, are discriminatory as only their signatories enjoy more favourable market-access conditions.

WTO | Understanding the WTO - Regionalism: friends or rivals?

WTO members are permitted to enter into RTAs under specific conditions which are spelled out in three sets of rules. These rules cover the formation and operation of customs unions and free-trade areas covering trade in goods Article XXIV of the General Agreement on Tariffs and Traderegional or global arrangements for trade in goods between developing country members Enabling Clauseas well as agreements covering trade in services Article V of the General Agreement on Trade in Services.

Generally speaking, RTAs must cover substantially all trade - unless they are under the Enabling Clause - and help trade flow more freely among the countries in the RTA without raising barriers to trade with the outside world.

relationship between wto and rtas

A note of caution WTO members have also declared that RTAs must remain complementary to, not a substitute for, the multilateral trading system. Furthermore, a multilateral system ensures the participation of the smallest and most vulnerable countries and helps support the integration of developing countries into the world economy.

There are mixed views on RTA's effects on global trade liberalization.