Regional Trade Agreements and the WTO: General Observations and NAFTA Lessons for Asia
24 Pages Posted: 5 Dec 2005
Date Written: November 30, 2005
Abstract
This paper first outlines briefly the history and treatment of regional trade agreements (RTAs) in the WTO/GATT. In that regard, it examines the evolution of RTAs in the GATT/WTO system and the difficulties that the system has had in trying to apply the rules applicable to free trade areas (FTAs) and customs unions so as to control the spread of questionable RTAs. It considers the recent developments in WTO dispute settlement in this regard and the current negotiations in the Doha Round. The paper then considers briefly how economists evaluate the effects of RTAs. The paper concludes by considering how the NAFTA experience may be relevant for Asia. The paper concludes that (i) the economic benefits of negotiating RTAs are likely to be limited; (ii) that complex rules of origin should be avoided; (iii) that while limited agreements with a limited number of partners are easier to negotiate, the problems of complex networks of RTAs and their interrelationships are such that a single broad-based agreement with broad coverage would be preferable; and (iv) that attention should be paid to creating a robust dispute settlement system as without one, the limited benefits of an RTA are even less likely to materialize.
Suggested Citation: Suggested Citation