The legal
foundations for more open trade have been laid by the multilateral trading system - global
in its coverage - with regional integration agreements serving to deepen relations with
neighbouring countries. Thus, “the regional and multilateral integration initiatives
are complements rather than alternatives in the pursuit of open trade”. These are among the
main conclusions of a study, Regionalism and the World Trading System, published
today, by the World Trade Organization Secretariat, in Geneva. However, commenting on the
WTO rules and procedures governing regional integration agreements, the study says,
“...it may be that governments will consider that reforms are necessary in order to
put the mutually supportive relationship between multilateralism and regionalism on a more
solid foundation”.
The share of
world merchandise trade which is intra-regional (ie. conducted within a geographic region)
has risen from 40.6 per cent in 1958 to 50.4 per cent in 1993. This increase is mainly
accounted for by the development of Western Europe, whose internal trade grew from 53 to
70 per cent of its overall trade during this period. While this is the only region to
exhibit a clear policy-induced increase in the relative importance of intra-regional
trade, the importance of Western Europe's trade with other regions in relation to its
output has largely been maintained.
Between 1947
and the end of 1994, a total of 108 regional agreements were notified to the GATT. In
looking at the complementarity between regional integration agreements and the
multilateral trading system - first the GATT and now the WTO - the study makes a number of
points:
- the scope
for achieving tariff advantages at the regional level is much reduced since, once the
Uruguay Round commitments are fully implemented, 43 per cent of developed countries'
imports of industrial products from partners receiving MFN (Most-Favoured Nation)
treatment will be duty-free, with an average of only 6.6 per cent on the remainder;
- with the
importance of tariffs reduced, attention has shifted to the issue of non-tariff trade
measures, which are seldom administered preferentially, and domestic policies (such as
production subsidies), which cannot be administered preferentially;
- few
regional agreements cover services, agriculture and the protection of intellectual
property rights whereas the World Trade Organization has provided an integrated system of
rights and obligations at the multilateral level in all these areas as well as merchandise
trade in general;
- at the same
time, it is recognized that steps taken in certain regional integration agreements helped
lay the foundations for progress in the Uruguay Round.
The report
concludes that the co-existence of regional integration agreements and the world trading
system has been “at least satisfactory, if not broadly positive”. However, the
Secretariat finds some reasons for concern in the manner in which the GATT rules and
procedures on customs unions and free-trade areas have operated. In particular, Article
XXIV of GATT - now subsumed within the WTO rules - requires that such agreements cover
“substantially all trade” between members and that the level of trade barriers
facing those outside be “not on the whole higher or more restrictive”. It is
noted that among the 69 working parties called on to examine the conformity of customs
unions and free-trade agreements with Article XXIV, only six have been able to reach a
consensus.
The report
examines various proposals that might arise in any attempt to improve the functioning of
the rules and procedures on regional integration agreements; among these are:
- allowing
the working parties to review regional agreements before signature and domestic approval
begins, in other words while there is still scope for changing them;
- clarifying
the criteria laid down in Article XXIV and perhaps introducing new provisions to increase
the protection of third country interests; and
- improving
transparency through an enhanced system of WTO surveillance of the performance and effects
of regional integration agreements. |
