10 July 2006

Lamy welcomes WTO agreement on regional trade agreements

Director-General Pascal Lamy, on 10 July 2006, welcomed the Negotiating Group on Rules' formal approval of a new WTO transparency mechanism for all regional trade agreements (RTAs).

“This decision will help break the current logjam in the WTO on regional trade agreements. This is an important step towards ensuring that regional trade agreements become building blocks, not stumbling blocks to world trade. It is important to note as well that this breakthrough comes at a critical juncture in our broader Doha round negotiations. Hopefully this decision is a good omen for much needed progress in other areas of the talks, such as agriculture and industrial goods trade, where agreement is urgently needed.”

The new transparency mechanism provides for early announcement of any RTA and notification to the WTO.

Members will consider the notified RTAs on the basis of a factual presentation by the WTO Secretariat.

The Committee on Regional Trade Agreements will conduct the review of RTAs falling under Article XXIV of General Agreement on Tariffs and Trade (GATT) and Article V of the General Agreement on Trade in Services (GATS).

The Committee on Trade and Development will conduct the review of RTAs falling under the Enabling Clause (trade arrangements between developing countries).

The transparency mechanism is to be implemented on a provisional basis. Members are to review, and if necessary modify, the decision, and replace it by a permanent mechanism adopted as part of the overall results of the Doha Round.

The Chairman of the Negotiating Group on Rules, Ambassador Guillermo Valles Galmés (Uruguay), said the decision is “an early contribution to the Doha Round”. He commended the “constructive engagement” of all delegations in the negotiations.

The Negotiating Group on Rules has forwarded the decision to the Trade Negotiations Committee.

RTAs, which includes bilateral free trade agreements between countries that are not in the same region, have become so widespread that all but one WTO member are now parties to one or more of them.

It is estimated that more than half of world trade is now conducted under RTAs. Some 197 such agreements in force have been notified to the GATT/WTO.

A Committee on RTAs in 1996 replaced separate working parties that have examined these agreements since the GATT.

Differences between members on how to interpret the criteria for assessing the consistency of RTAs with WTO rules have created a lengthening backlog of uncompleted reports in the Committee. In fact, consensus on WTO consistency has been reached in only one case so far: the customs union between the Czech Republic and the Slovak Republic after the break up of Czechoslovakia.