coverage and depth of preferential treatment varies from one RTA to
another. Modern RTAs, and not exclusively those linking the most
developed economies, tend to go far beyond tariff-cutting exercises.
They provide for increasingly complex regulations governing
intra-trade (e.g. with respect to standards, safeguard provisions,
customs administration, etc.) and they often also provide for a
preferential regulatory framework for mutual services trade. The most
sophisticated RTAs go beyond traditional trade policy mechanisms, to
include regional rules on investment, competition, environment and
What all RTAs in the WTO have in common is that they are reciprocal trade agreements between two or more partners. They include free trade agreements and customs unions, notified under Article XXIV:7 of the GATT 1994, and paragraph 2 (c) of the Enabling Clause, and Economic Integration Agreements under Article V:7 of the GATS. Information on regional trade agreements notified to the WTO is available in the RTA Database.
Preferential Trade Arrangements (PTAs) in the WTO are unilateral trade preferences. They include GSP schemes, non-reciprocal preferential schemes for products from LDCs only, as well as other non-reciprocal preferential schemes that have been granted a waiver by the General Council (such as AGOA or CARIBCAN). Information on preferential trade arrangements notified to the WTO is available in the PTA Database.
A note of Caution:
can complement the multilateral trading system, help to build and
strengthen it. But by their very nature RTAs are discriminatory: they
are a departure from the MFN principle, a cornerstone of the
multilateral trading system. Their effects on global trade
liberalization and economic growth are not clear given that the
regional economic impact of RTAs is ex ante inherently ambiguous.
Though RTAs are designed to the advantage of signatory countries,
expected benefits may be undercut if distortions in resource
allocation, as well as trade and investment diversion, potentially
present in any RTA process, are not minimized, if not eliminated
altogether. An RTA's net economic impact will certainly depend on its
own architecture and the choice of its major internal parameters (in
particular, the depth of trade liberalization and sectoral coverage).
Concurrent MFN trade liberalization by RTA parties, either
unilaterally or in the context of multilateral trade negotiations, can
play an important role in defusing potential distortions, both at the
regional and at the global level.
increase in RTAs, coupled with the preference shown for concluding
bilateral free-trade agreements, has produced the phenomenon of
overlapping membership. Because each RTA will tend to develop its own
mini-trade regime, the coexistence in a single country of differing
trade rules applying to different RTA partners has become a frequent
feature. This can hamper trade flows merely by the costs involved for
traders in meeting multiple sets of trade rules.
The proliferation of RTAs, especially as their scope broadens to
include policy areas not regulated multilaterally, increases the risks
of inconsistencies in the rules and procedures among RTAs themselves,
and between RTAs and the multilateral framework. This is likely to
give rise to regulatory confusion, distortion of regional markets, and
severe implementation problems, especially where there are overlapping