Regional Trade Agreements in the Era of Globalization: A Legal Analysis

Regional Trade Agreements (RTAs) are agreements whereby members grant preferential treatment to one another in regard to trade barriers. When a member in the World Trade Organization (WTO) enters into an RTA through which it grants more favourable conditions to specific trade partners, this member departs from the guiding principles of non-discrimination in international trade law. Those principles are generally defined in Article I of the General Agreement on Tariffs and Trade (GATT), Article II of the General Agreement on Trade in Services (GATS), and elsewhere. However, WTO Members are still permitted to form RTAs under specific conditions which vary depending on the level of integration sought, mainly according to Article XXIV of the GATT and Article V of the GATS. The number of RTAs has grown dramatically over the last decade. Since 1995, more than 300 agreements have been notified to the WTO. The coverage of RTAs tends to expand and cover issues beyond the scope of the WTO such as investment, competition policy, government procurement, e-commerce, labor and environmental standards. This proliferation of RTAs, had never been expected, and is considered by many legal and economic scholars as parallel competing trade regime that could undermine the multilateral trade order. In 1996, the WTO created the Committee on Regional Trade Agreements (CRTA) to oversee all RTAs and to consider the implications of such agreements on the multilateral trading system. So far, the CRTA has achieved limited success. For many legal and technical reasons, the CRTA has been unable to carry out effectively its duties of examining the consistency of RTAs with the rules, and overseeing their implementation. Thus WTO Members agreed in July 2006 on a new mechanism on transparency that draws specific guidelines for reporting RTAs to the CRTA, and outlines clear timetables for that purpose. The effectiveness of this new transparency mechanism has not been tested yet. This article which was published in the North Carolina Journal of International Law & Commercial Regulation, attempts to analyze the legal and factual status quo of RTAs. Simply put, the purpose of my paper is three-fold: first, to review certain developments in the proliferation of RTAs around the world; second, to offer a comparative legal analysis of major concerns that RTAs pose; third, to highlight the need to recognize and critically examine the link between the various factors that contribute in the proliferation of RTAs.