regional trade agreements and the wto
DESCRIPTION
Regional Trade Agreements and the WTO. What is an RTA in the WTO?. Types of preferential trade liberalization:. In the WTO, RTAs are thus seen as. Reciprocal and Discriminatory (non-MFN). Economic Union. Common Market. Customs Union. Free Trade Area. Partial Scope. Types of RTAs. - PowerPoint PPT PresentationTRANSCRIPT
What is an RTA in the WTO?
Types of preferential trade liberalization:Concessions Members Examples RTA?
• Reciprocal Selective EU, NAFTA, Mercosur,EPAs
• Unilateral Selective Cotonou,AGOA
• Unilateral Generalized GSP
In the WTO, RTAs are thus seen as...
Reciprocal and Discriminatory (non-MFN) Reciprocal and Discriminatory (non-MFN)
Economic Union
Common Market
Customs Union
Free Trade Area
PartialScope
Lesser coverage of
economic activity
Mor
e Ec
onom
ic
and
polit
ical
inte
grat
ion
Types of RTAs
GA
TT 1
994
GA
TT 1
994
Article XXIVArticle XXIV
Understanding on the Understanding on the Interpretation of Interpretation of
Article XXIVArticle XXIV
Enabling ClauseEnabling Clause
Gen
era
l A
gre
em
en
t on
Tra
de in
G
en
era
l A
gre
em
en
t on
Tra
de in
S
erv
ices
Serv
ices
Article VArticle V
Exceptions on RTAs are embodied in the following WTO Agreements:
Overview
The purpose of an RTA is to facilitate trade among
the parties
...though without making more difficult the
parties’ trade with non-party Members
RTA exceptions are all based on the same principles*:
*GATT Art. XXIV:4; “Enabling Clause” para. 3(a); GATS Art. V:4)
How are these principles translated into specific provisions in each of the existing rules?
Overview
Art
icle
XX
IV &
Un
ders
tan
din
g
Art
icle
XX
IV &
Un
ders
tan
din
g Scope
•Customs Unions•Free-trade areas
InterimAgreements
As defined in paragraph 8
Customs unions or free-tradeareas implemented in stages, over a transition period
For both customs unions and free-trade areas:
«Deep integration» criterion
«Neutrality» criterion
Art
icle
XX
IV &
Un
ders
tan
din
g
Art
icle
XX
IV &
Un
ders
tan
din
g Substantive Criteria
Tariffs and other trade measures should be eliminatedTariffs and other trade measures should be eliminated on substantially all (originating) trade among the partieson substantially all (originating) trade among the parties
Its formation should not imply an increase in tariffs Its formation should not imply an increase in tariffs And other trade measures applied to other, non-partyAnd other trade measures applied to other, non-partyWTO Members.WTO Members.
For customs unions, in addition:For customs unions, in addition:
For interim agreements:For interim agreements:
Art
icle
XX
IV &
Un
ders
tan
din
g
Art
icle
XX
IV &
Un
ders
tan
din
g Substantive Criteria
Tariffs and other trade measures should besubstantially harmonized among the parties.
Any increase in MFN tariff bindings resulting from the establishment of a common external tariff should be negotiated with interested Members.
Lead to either a free-trade area or a customs union in a maximum of 10 years, unless exceptional circumstances are acknowledged.
Contain a plan and schedule to achieve that aim.
Dispute settlement Dispute settlement provisions may be provisions may be
invokedinvoked
Notification to the Notification to the WTOWTO
Submission of Submission of requested informationrequested information
by the partiesby the parties
Biennial Biennial reportingreporting
Art
icle
XX
IV &
Un
ders
tan
din
g
Art
icle
XX
IV &
Un
ders
tan
din
g Other Requirements / Provisions
Automatic Automatic review review
(examination) (examination) of the RTA by of the RTA by WTO MembersWTO Members
Th
e E
nab
lin
g C
lau
se
Th
e E
nab
lin
g C
lau
se
Paragraph 2(c) :Paragraph 2(c) :
Scope
WTO developing country Members are authorized to depart from the MFN clause (Article I), to enter into reciprocal regional or global arrangements with other developing countries, establishing tariff and (subject to WTO approval, in principle) non-tariff preferences in their mutual goods trade.
Submission of Submission of requested requested
information by the information by the partiesparties
Other Requirements / ProvisionsTh
e E
nab
lin
g C
lau
se
Th
e E
nab
lin
g C
lau
se
Notification to the Notification to the WTOWTO
Consultations Consultations with other with other Members, Members,
upon requestupon request
GA
TS
Art
icle
VG
ATS
Art
icle
V
«Economic Integration Agreements»«Economic Integration Agreements»
Including those
implemented on the basis of a time-frame
Paragraph 6
Scope
Agreements liberalizing
tradein services
Definition of beneficiary Definition of beneficiary service providers (rules of service providers (rules of
origin)origin)
«Neutrality» criterionGA
TS
Art
icle
VG
ATS
Art
icle
VSubstantive Criteria
«Deep integration» criterion
Substantial sectoral coverage No a priori exclusion of a mode of supply for
the sectors covered In the sectors covered, absence/elimination
of substantially all discrimination
Should not raise overall trade barriers (to other Members) compared to prior levels.
Flexibility for developing countries in terms of:
Renegotiation of commitments:
Other requirements / provisionsG
ATS
Art
icle
VG
ATS
Art
icle
V If, when entering the agreement, a If, when entering the agreement, a Member’s WTO specific commitments are Member’s WTO specific commitments are made more restrictive, negotiations should made more restrictive, negotiations should take place.take place.
Substantial sectoral coverageSubstantial sectoral coverage Elimination of discrimination in the Elimination of discrimination in the
sectors coveredsectors covered
GA
TS
Art
icle
VG
ATS
Art
icle
VOther Requirements / Provisions
Notification to the Notification to the WTOWTO
Submission of Submission of requested requested
information by the information by the partiesparties
PossiblePossible review review
(examination) (examination) of the RTA by of the RTA by WTO MembersWTO Members
Member notifies participation in RTA,Member notifies participation in RTA,seeking legal coverage under:seeking legal coverage under:
GATT Article XXIVGATT Article XXIV Enabling ClauseEnabling Clause GATS Article VGATS Article V
RTA Processes in the RTA Processes in the WTOWTO
Examination automatically mandated
Council for Trade Council for Trade in Goodsin Goods
Council for Trade Council for Trade in Goodsin Goods
Consultations, no examination (in principle)
Committee on Trade Committee on Trade and Developmentand Development
Committee on Trade Committee on Trade and Developmentand Development
Examination may be mandated
Council for Trade Council for Trade in Servicesin Services
Council for Trade Council for Trade in Servicesin Services
Proceeds to mandated examination and reports Proceeds to mandated examination and reports backback
Committee on Regional Trade Committee on Regional Trade AgreementsAgreements
Committee on Regional Trade Committee on Regional Trade AgreementsAgreements
RTA
Pro
ced
ure
s in
th
e
RTA
Pro
ced
ure
s in
th
e
WTO
WTO
• Draft report prepared by the Secretariat. Draft report prepared by the Secretariat. • Informal consultationsInformal consultations• Report, once agreed, sent to the relevant Report, once agreed, sent to the relevant • body, for adoptionbody, for adoption
• Notification by the partiesNotification by the parties• Submission of text of agreement,Submission of text of agreement, annexes & protocolsannexes & protocols• Submission of preliminary information by Submission of preliminary information by
the parties (Standard Format)the parties (Standard Format)
RTA Examination RTA Examination ProceduresProcedures
Written exchanges Written exchanges of comments, and of comments, and questions & repliesquestions & replies
• Oral policy statementsOral policy statements• Oral comments, Oral comments,
questions & repliesquestions & replies
Factual examination in the CRTA
RTA
Pro
ced
ure
s in
th
e
RTA
Pro
ced
ure
s in
th
e
WTO
WTO
Summing-up
When entering an RTA, a WTO Member should When entering an RTA, a WTO Member should invoke one of the following provisions, and comply invoke one of the following provisions, and comply with the relevant conditions:with the relevant conditions:
... Or else the Member should seek a waiver!... Or else the Member should seek a waiver!
RTA parties
Developed only
Developing onlyDeveloping &
developed
Trade in goods
GATT XXIVGATT XXIV
Enabling ClauseGATT XXIV
Trade in services
GATS V GATS V GATS V
Column 1
List of notified RTAs
Column 2
RTAs for which an early announcement has been made
Armenia - Russian Federation Free Trade Agreement between members of the Commonwealth of Independent States (CIS)
Common Economic Zone (CEZ) Russian Federation - Montenegro
Commonwealth of Independent States (CIS) Russian Federation - Serbia
Eurasian Economic Community (EAEC) EFTA - Russian Federation / Belarus / Kazakhstan
Georgia - Russian Federation Russian Federation - New Zealand
Kyrgyz Republic - Russian Federation
Russian Federation - Azerbaijan
Russian Federation - Belarus
Russian Federation - Kazakhstan
Russian Federation - Republic of Moldova
Russian Federation - Tajikistan
Ukraine - Russian Federation
20
NOTIF: Regional Trade Agreements
• Formation of a regional trade agreement– free-trade area
– customs union
– between developing countries
• Biennial report
• Modifications
• Trade in services
Webpage on the Transparency Mechanism for RTAs
WT/REG/16