Preferential Trade Agreement And Wto...


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While the global trading system can theoretically work with a multilateral PTA-based baseline, this paper suggests that restrictions on financial and human resources in all trade policy communities involve following one practical path at the expense of another. The proliferation of trade policy forums and the weakness of institutionalization undermine in several respects the regulatory character of the overall architecture of trade governance. The ability of the global trading system to provide transparent, enforceable and simple global trade rules, and the overall quality of international trade cooperation, all suffer, as the global architecture of trade governance is redefined in favour of stronger governance patterns in the PTA era. While thin institutionalization has implications for all trade policy actors, it can be assumed that it disproportionately affects small traders for whom WTO governance functions are a global public good that will not be replaced by the PTA network. Multilateral negotiations help to eliminate the power imbalance in international trade negotiations through their inclusiveness and the institutional support offered by the WTO. Most respondents focused on the transparency, applicability and simplicity of the WTO`s unique framework for the fragmentation of the PTA network. However, interviewees speculated that the WTO`s powerful DSM could be an element that made it more difficult to conclude multilateral negotiations. This section argues that THE PTAs could remain for some time the preferred trading channel of powerful traders, because the thin institutionality favors those who have the resources and the economic and political influence to pursue their interests in a system based on watered down rules. The WTO`s political bodies and secretariat constitute the institutional infrastructure for the settlement of international trade disputes, including administrative and legal support. This section suggests that institutional support is essential for access to remedies, continuity of legal argument and fairness.

In the absence of institutional structures, the decision on international trade disputes may be more diplomatic and non-judicial in the context of PTA`s litigation. Small trade nations, in particular, face resource shortages and systemic exclusion and should be less likely to participate in the settlement of EPZ disputes than in the WTO. Why is deep integration gaining momentum? First, open trade increases the interdependence of policy (spillover), making unilateral decision-making ineffective in relation to collective decisions. A second reason is that deep integration agreements may be needed to promote trade in certain sectors and broader economic integration. This second explanation applies to international production networks that require a governance structure beyond low tariffs. One of the fundamental principles of trade liberalization is the non-discrimination provided for in Articles I of the GATT, II of the GATS and IV of the TRIPS agreement. This principle, Most Favoured-Nation (MFN), means that WTO members must not discriminate against their trading partners. Therefore, if a member pays a favour to one member, he must grant the same favour to others. However, as an exception to this principle, paragraphs 4 to 10 of GATT Article XXIV have been introduced. It allows for the creation of an agreement between members, whereby one member can grant more favourable trade terms to other parties to the agreement, not to other WTO members.

The enabling clause, which aims to increase the participation of developing countries, was also introduced as an exception to the MFN in favour of developing countries. It allows the establishment of PTAs for preferential trade agreements between these countries.