UnitWTO——Eighteen.doc

Unit Eight Regional Trade Agreements (RTAs) and the WTO A Troublesome Relationship RTAs and the WTO share the common objective of trade liberalization; the former is discriminatory the latter is not. The pursuance of similar objectives but according to different approaches creates inevitably some tension in this relationship. The GATT and now the WTO have seen over the years a gradual erosion of the MFN principle due to the emergence of several layers of preferential trade regimes. Some of them (e.g. GSP) were introduced to account for 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 liberalize trade faster and deeper not to be held back by slow progress at the multilateral level. Considering that MFN liberalization is proving increasingly hard to attain and that certain trade policy areas that have become of crucial importance to several Members are excluded from the multilateral agenda,58 the appeal for RTAs becomes inescapable; these allow Members to single out trade liberalization with specific markets; they involve less burdensome negotiations than those at the WTO, especially if among like-minded parties; and they allow the parties to such agreements to trade according to custom-built regulatory aspects and trade policy disciplines. The growing appeal for RTAs has implications for the MTS. First, the benefits that RTAs could bring to multilateral trade liberalization are based on the assumption that preferential concessions will at some point be extended at the MFN level; unfortunately this concept of open regionalism is not applied in practice since it is rare, if not unheard of, for countries to extend on a MFN basis their RTA preferences unless as part of a multilateral round of trade negotiations. Concerns over the preservation of preferential margins carries systemic risks for the multilateral trading system since they may create resistance to furt