Regional Trade Regional Trade Agreements and Agreements and

the WTOthe WTOJo-Ann Crawford, RTA Section,

TPRDEmail: jo-ann.crawford@wto.org

What is an RTA in the What is an RTA in the WTO?WTO?

ConcessionConcessionss

MembersMembers ExamplesExamples RTARTA??

ReciprocalReciprocal SelectiveSelective EU, NAFTA, EU, NAFTA, MercosurMercosur

UnilateralUnilateral SelectiveSelective Cotonou, Cotonou, AGOAAGOA

UnilateralUnilateral GeneralizGeneralizeded

GSPGSP

Types of preferential trade liberalization:Types of preferential trade liberalization:

Types of RTAsTypes of RTAs

Free Trade AreaFree Trade Area

PartialPartialScopeScope

a group of two or more customs territories a group of two or more customs territories that have eliminated all or most tariff and that have eliminated all or most tariff and non-tariff measures affecting trade among non-tariff measures affecting trade among themselves. Participating countries continue themselves. Participating countries continue to apply their existing tariffs on external to apply their existing tariffs on external goods. goods.

Formation of a FTAFormation of a FTA

Country A & B sign a Country A & B sign a FTAFTA

Tariffs are eliminated on Tariffs are eliminated on most goodsmost goods

Each party maintains its Each party maintains its tariff structuretariff structure

A Roo regime is put in A Roo regime is put in placeplace

Other common featuresOther common features Reciprocal concessions Reciprocal concessions

(possible asymmetrical (possible asymmetrical implementation)implementation)

Negative list approachNegative list approach Beyond tariff Beyond tariff

concessionsconcessions

BB

Country ACountry AUniform MFN tariff Uniform MFN tariff

of 6%of 6%

Country BCountry BVariable MFN tariff Variable MFN tariff

0–30 %0–30 %

AA

0% duties0% duties

Types of RTAsTypes of RTAs

Customs UnionCustoms Union

Free Trade AreaFree Trade Area

PartialPartialScopeScope

a group of two or more customs territories that a group of two or more customs territories that have eliminated all or most tariff and non-tariff have eliminated all or most tariff and non-tariff measures affecting trade among themselves. measures affecting trade among themselves. Participating countries Participating countries replace their individual replace their individual MFN tariffs with a single tariff applied to third MFN tariffs with a single tariff applied to third countries.countries.

Formation of a CUFormation of a CU

BB

Country ACountry AUniform MFN tariff Uniform MFN tariff

of 6%of 6%

Country BCountry BVariable MFN tariff Variable MFN tariff

0–30 %0–30 %

AA

0%0%dutiesduties

Country A & B sign a Country A & B sign a CUCU

Tariffs are eliminated on Tariffs are eliminated on most goodsmost goods

A common external tariff A common external tariff is adoptedis adopted

A mechanism to share A mechanism to share customs revenues is customs revenues is deviseddevised

A temporary Roo regime A temporary Roo regime may be put in placemay be put in place

Compensation is paid to Compensation is paid to third countries if bound third countries if bound MFN rates are raisedMFN rates are raised

CE

T 5

– 10

CE

T 5

– 10

%%

Types of RTAsTypes of RTAs

Economic UnionEconomic Union

Common MarketCommon Market

Customs UnionCustoms Union

Free Trade AreaFree Trade Area

PartialPartialScopeScope

Lesser coverage of

economic activity

Mor

e ec

onom

ic

and

polit

ical

inte

grat

ion

RTA trends & RTA trends & characteristicscharacteristics

As of 1 April 2010, 463 RTAs have been notified to the As of 1 April 2010, 463 RTAs have been notified to the GATT/WTO of which 272 are currently in forceGATT/WTO of which 272 are currently in force

Approximately 100 RTAs in the pipeline (signed, not yet in Approximately 100 RTAs in the pipeline (signed, not yet in force/under negotiation) – Unaccounted number of RTAs in force/under negotiation) – Unaccounted number of RTAs in force but not yet notifiedforce but not yet notified

05

101520253035404550556065707580859095

100105110

1948

1950

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

No

. o

f R

TA

s

0

50

100

150

200

250

300

350

400

450

500

Notified RTAs (goods, services & accessions) Inactive RTAs

Cumulative RTA notifications Cumulative active RTAs

RTA trends & RTA trends & characteristicscharacteristics

187 RTAs cover trade in goods; 73 trade in services; and 187 RTAs cover trade in goods; 73 trade in services; and 12 are accessions to existing RTAs12 are accessions to existing RTAs

EIAs represent 28% of total number of RTA notifications – EIAs represent 28% of total number of RTA notifications – approximately 70% of RTAs being negotiated contain approximately 70% of RTAs being negotiated contain provisions on trade in servicesprovisions on trade in services

RTA coverage is expandingRTA coverage is expanding

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

No

. o

f R

TA

s

0

50

100

150

200

250

300

Goods Services Accessions Cumulative

Quantifying the Quantifying the proliferation of RTAsproliferation of RTAs

Out of the total, 123 RTAs were notified during the GATT Out of the total, 123 RTAs were notified during the GATT years and 340 RTAs during the WTO yearsyears and 340 RTAs during the WTO years

Of the RTAs notified during the GATT years only 29 remain Of the RTAs notified during the GATT years only 29 remain in force todayin force today

020406080

100120140160180200220240260

No

. o

f n

oti

fied

RT

As

In force Inactive In force Inactive

Article XXIV Article V Enabling Clause

1947 - 1995 1995 - 2010

WTO

Typology of RTAsTypology of RTAs

FTAs account for the great majority of RTAs FTAs account for the great majority of RTAs notified and in forcenotified and in force

Notified RTAs in force as of 1 Notified RTAs in force as of 1 April 2010April 2010

82%

10%8%

Free Trade Agreement Customs Union Preferential Trade Agreement

Configuration of RTAsConfiguration of RTAsNotified RTAs in goods by type of partner as of 1 Notified RTAs in goods by type of partner as of 1 April 2010April 2010

26%

37%

37%

Developed only Developed-Developing Developing only

Configuration of RTAsConfiguration of RTAsNotified RTAs in services by type of partner as of 1 Notified RTAs in services by type of partner as of 1 April 2010April 2010

13%

49%

38%

Developed only Developed-Developing Developing only

Network of Plurilateral Network of Plurilateral Groupings in Europe and Groupings in Europe and

Central AsiaCentral Asia

European Union

Iceland

Norway

Liechtenstein

Switzerland

EFTA

EEA

EuroMed Partners

Morocco Algeria Tunisia Egypt

Pal. Auth. Israel Jordan Lebanon Syria

CEFTA Albania

Bosnia & Herz.

CroatiaFYROM

SerbiaUNMIK

SACU

CARICOMOCTs

Belarus

Kazakhstan

Rus. Fed.

UkraineCIS

Turkey

CEZ

EAEC

Kyrgyz Rep.

Tajikistan

AzerbaijanArmenia

Georgia Turkmenistan

Moldova

Uzbekistan

Afghanistan

Iran

Pakistan

ECO

Montenegro

EurAsEc

EU EFTA

European Union

Iceland

Norway

Liechtenstein

Switzerland

EFTA

EEA

EuroMed Partners

Morocco Algeria Tunisia Egypt

Pal. Auth. Israel Jordan Lebanon Syria

CEFTA Albania

Bosnia & Herz.

CroatiaFYROM

SerbiaUNMIK

SACU

CARICOMOCTs

Belarus

Kazakhstan

Rus. Fed.

UkraineCIS

Turkey

CEZ

EAEC

Kyrgyz Rep.

Tajikistan

AzerbaijanArmenia

Georgia Turkmenistan

Moldova

Uzbekistan

Afghanistan

Iran

Pakistan

ECO

Montenegro

EurAsEc

EU EFTA

European Union

Iceland

Norway

Liechtenstein

Switzerland

EFTA

EEA

EuroMed Partners

Morocco Algeria Tunisia Egypt

Pal. Auth. Israel Jordan Lebanon Syria

CEFTA Albania

Bosnia & Herz.

CroatiaFYROM

SerbiaUNMIK

SACU

CARICOMOCTs

Belarus

Kazakhstan

Rus. Fed.

UkraineCIS

Turkey

CEZ

EAEC

Kyrgyz Rep.

Tajikistan

AzerbaijanArmenia

Georgia Turkmenistan

Moldova

Uzbekistan

Afghanistan

Iran

Pakistan

ECO

Montenegro

EurAsEc

EU EFTA

Participation in Goods RTAs (notified and in force) as of 1 April 2010

Global & regional developments

1 to 4 5 to 9 10 to 19 20 to 30 No data1 to 4 5 to 9 10 to 19 20 to 30 No data

Global and regional developmentsParticipation in Services RTAs (notified and in force) as of 1 April

2010

1 to 2 3 to 4 5 to 9 10 to 15 No data1 to 2 3 to 4 5 to 9 10 to 15 No data

When seeking an exception to WTO rules, a WTO Member has always the possibility of seeking a waiver...

BUT, over time, the System itself has developed a series of conditional exceptions which Members can invoke when departing from their MFN commitment:

Since 1947→→GATT Article XXIV

Since 1979→→“Enabling Clause”

Since 1994→→Understanding on GATT Art. XXIV

Since 1994→→GATS Article V

Overview of Rules on RTAsOverview of Rules on RTAs

Common Principles*Common Principles*

The purpose of an RTA is to facilitate The purpose of an RTA is to facilitate trade among the partiestrade among the parties

The formation of the RTA must not The formation of the RTA must not entail placing entail placing barriersbarriers towards third towards third parties parties higherhigher than those existing than those existing before its formationbefore its formation

The RTA must provide for The RTA must provide for mutual/reciprocalmutual/reciprocal trade concessions trade concessions

*GATT Art. XXIV:4; “Enabling Clause” para. 3(a); GATS Art. V:4

Which legal cover should be sought?Which legal cover should be sought?

When entering an RTA, a WTO Member should When entering an RTA, a WTO Member should invoke one of the following provisions, and invoke one of the following provisions, and comply with the relevant conditions:comply with the relevant conditions:

RTA partiesRTA parties

Developed Developed onlyonly Developing onlyDeveloping only Developing & Developing &

developeddeveloped

Trade in Trade in goodsgoods GATT XXIVGATT XXIV

GATT XXIVGATT XXIV

Enabling ClauseEnabling ClauseGATT XXIVGATT XXIV

Trade in Trade in servicesservices GATS VGATS V GATS VGATS V GATS VGATS V

RTA databaseRTA database

Available at:Available at:

http://http://rtais.wto.org/UI/PublicMaintainRTAHome.artais.wto.org/UI/PublicMaintainRTAHome.aspxspx