Abstract: In this chapter, the authors examine the nature of the exception for regional trade agreements (RTAs) under Article XXIV: 5 of GATT 1994. This exception, which aims to maximize the internal trade-liberalizing effects of an RTA while minimizing its external .
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Regional Trade Agreements (RTA) are entered into by countries to provide more favourable trading terms amongst member countries. Certain countries in a particular region may decide to go into such agreements so that they can allow for more favourable trading terms other than the trade terms enjoyed under World Trade Organization (WTO). These RTAs emerged from the WTO as immediate aftermath of the Cancun failure, which led major players in the WTO system to suggested that in order to make progress, they would turn to the negotiation of regional trade agreements in lieu of pursuing talks in the WTO multilateral system. The WTO seeks to ensure that the RTAs are successful by putting in place some structures in the form of procedural systems to follow in order to adopt and implement the RTAs. Notable among these systems is the notification of the RTA by member countries to the WTO. Whether these systems are working towards the achievement of the RTAs’ objectives is a questions of fact w.
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Netherlands International Law Review
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The North American Journal of Economics and Finance
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Some economists worry about the ‘spaghetti bowl phenomenon’ expected from proliferating regional trade agreements (RTAs). In particular, the complicated web of hub-and-spoke type of overlapping free trade agreements (FTAs) can result in high costs for verifying rules of origin (RoO) and trade diversion or suppression effects. This explains why almost half of the RTAs notified to the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) are currently inactive. This research attempts to provide best practices for RTAs to enhance global free trade by mitigating these negative effects. More specifically, we quantitatively estimate the trade creation and diversion effects of harmonized and cumulated RoO (bilateral, diagonal, and full cumulation) for RTAs established under GATT Article XXIV and under the Enabling Clause by adopting a Gravity regression analysis. We find that (i) RTAs in general create trade among members and divert trade from nonmembers; (ii) RTAs s.
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Contained in the GATT, are provisions whose applications contradict each other. Article XXIV, which empowers WTO members to form regional trade agreements (RTAs), otherwise referred to as competitive liberalization, is contrary to the idea of the Most-Favored-Nation (MFN) principle set out article I. Indeed article XXIV is an exception to article I, however the conflict caused by these provisions, has led to a situation where the two will not co-exist for long, and one will eventually phase-out the other. While under article I, countries are prevented from discriminating between their trading partners, and any benefit granted to one member of the WTO must be extended to all WTO members; article XXIV gives countries the option of circumventing article I, to offer preferential trade benefits to only the select few with which they choose to trade through the formation of RTAs. Thus, conclusion of RTAs is a practice that is contrary to the interest of the World Trade Organization. Rules of origin present in most RTAs have a negative impact on competitive liberalization, a key goal of the WTO in combatting protectionism, as RTAs grant special treatment to members regardless of their inability to produce commodities more competitively than non-members due to the reciprocal benefits of RTAs. This seeks to frustrate the aims of the WTO in attempting to effectively regulate international trade, because while RTAs facilitate trade amongst its members; it hinders trade for non-member with which it has no trade desires. Regrettably, however, the WTO has faced increasing difficulty in the regulation of RTAs, in their manifold shapes and sizes.
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