Gatt to Wto

Topics: International trade, World Trade Organization, Free trade Pages: 19 (7504 words) Published: February 7, 2013
Engagements of developing countries in WTO and regional trading arrangements are critical to get meaningful market access for efficient utilization of their resources. Many developing economies have succeeded in becoming part of global production chains, which typically take advantage of the strengths of different regional economies to produce components and assemble completed products. The rise in the use of these production chains has been associated with increased foreign direct investment flows into developing countries (Economic Analytical Unit, 2003b). Trade between developing countries stands to become increasingly important in the years ahead due to higher economic growth in these countries compared to developed countries. The World Bank projects a real GDP growth rate for developing countries over the period to 2015 of 4.6 per cent, compared with 2.6 per cent for industrial countries (World Bank, 2003a). As a spirit for deeper integration, a set of developed and developing countries formalized GATT into WTO and trade to be governed by WTO rule based regime. Various efforts have been made at WTO forum to get meaningful market access to developing countries in earlier and the present round of WTO negotiations known as Doha Development Round. However, WTO member countries could notfind common grounds due to strict positions of developed countries and more informed/articulated positions (compared to earlier round) of developing countries on tariffs, subsidies and NTBs. Hence, Doha Development Round has not achieved success at WTO so far. In present global policy framework, Regional Trade Agreements (RTAs) have become a critical trade policy instrument for both developed and developing countries as a result of slow progress in multilateralism at WTO. The number of RTAs as well as the world share of trade covered under them has been steadily increasing over the last decade and a half. The widespread of RTAs/FTAs has led to the debate whether they help or hinder the broader process of multilateral trade liberalization. Are they, in Bhagwati's (1993) phrase, "building blocks" or "stumbling blocks" on the road to global free trade? However, it is still unresolved theoretically and empirically whether RTAs facilitates or hinders multilateralism in trade. Researchers like Ethier (1998), Mansfield and Reinhardt (2003), Hudgins (1995) and Sampson & Woolcock (2003) state that regionalism isn't blocking multilateralism; instead it is assisting its development while Winters (1996), Bhagwati (1996) and Jayasinghe & Sarker (2004) say that regionalism can hinder the move to multilateralism. However, RTAs/FTAs cannot be interpreted in regional context as RTAs/FTAs are formalized across regions as well. From its inception, GATT/WTO has allowed member countries to conclude customs unions and free-trade areas, as an exception to the fundamental principle of non-discrimination set in the most-favoured-nation clause of Article I. Conditions for trade in goods were set in GATT Article XXIV, conditions for trade in services GATS Article V, and the Enabling Clause. GATT Article 24 allows regional trading arrangement to be set up as a special exception. Duties and other trade barriers should be reduced substantially in all sectors of trade in the group. Non-members should not find trade with the group any more restrictive than before the group was set up. Regional integration should complement the multilateral trading system and not threaten it. Article 5 of the General Agreement on Trade in Services (GATS) provides for economic integration agreement in services. Preferential trade arrangements on goods between developing-country members are regulated by an “Enabling clause” dating from 1979.The main principle is that the purpose of a RTA should be to facilitate trade between the constituent countries and not to raise trade barriers to other WTO members (non parties to the RTA). Despite debate, the surge in RTAs has continued unabated since...
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