CHAPTER 15 REGIONAL INTEGRATION
1. OVERVIEW OF RULES
| Regional Integration
In addition to the global economic regime based on the GATT and IMF systems, which has sustained the world economy since World War II, regionalism, through which neighbouring countries seek to strengthen their economies by entering into some form of "regional integration" has become a major trend. This trend was triggered by the EU market integration. In both developed and developing countries, customs unions and free trade areas (FTAs) continue to increase and expand. Today, they account for a considerable amount of world trade. The WTO calls agreements that establish customs unions and FTAs "regional trade agreements (RTAs)." In this chapter, we use the term "regional integration" to signify both RTAs and other forms of regional cooperation. Some 90 percent of the WTO Members are parties to such RTAs. Japan and Hong Kong are among the few exceptions. Article XXIV of the GATT allows RTAs to be exempted from the most-favoured nation principle under certain conditions; RTAs must not raise barriers to trade with countries outside of the region. This is because while RTAs promote trade liberalization within the respective regions, if they raise barriers to trade with countries outside the regions, they would impede trade liberalization as a whole. Such RTAs should not be overlooked so that the WTO framework does not become a dead letter.
Moves towards "Regional Integration"
In recent years, moves towards regional integration have been more and more active, with countries seeking to strengthen their ties with other countries. In Europe, when the Treaty on the European Union (the Maastricht Treaty) took effect in November 1993, the European Union (EU) was created, which enlarged and built upon the European Community (EC). The enlargement of the EU took place on 1 January 1995 by accession of new three countries, Austria, Sweden and Finland, which were former members of the European Free Trade Association (EFTA). Meanwhile, the September 1993 signing of the side agreements to the North American Free Trade Agreement (NAFTA) launched the free trade arrangement in North America in January 1994. Also in the Americas, certain countries in Latin America initiated the Southern Common Market Treaty (MERCOSUR) in January 1995. On the other side of the Pacific, the ASEAN Free Trade Area (AFTA) began lowering tariffs among its members in January 1993, and while expanding the range of items covered, has agreed to begin negotiations on access to service areas. The AFTA members have also agreed to make efforts toward the acceleration of the integration process with a view to full implementation of AFTA by the year 2000. One of the trends that have recently been observed is to create mechanisms for broader regional cooperation. This includes: 1) enlargement of existing regional integration, including the FTAs between the EU and the Central and Eastern European countries (CEECs), the FTA to be set up between the EU and the Mediterranean countries, and the creation of a Free Trade Area of the Americas (FTAA); 2) linkage between regional integration organizations, such as economic cooperation, including the creation of a future FTA between the EU and MERCOSUR; and 3) continent-based regional cooperation that may not necessarily be seeking to create a FTA or customs union, such as Asia-Pacific Economic Cooperation (APEC) and the Asia-Europe Meeting (ASEM). The APEC is some form of regional cooperation that does not immediately seek to establish customs unions or FTAs. The APEC is founded on an open regionalism that seeks not only to reduce the barriers to trade among its member economies but to make the result of these efforts available to other non-region economies as well. In November 1994, an unofficial summit of the leaders of the APEC economies was held, and a joint declaration was issued "setting a goal of free and more open trade and...
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