Introduction

Regional trade agreements (RTAs) have proliferated since the 1990s, particularly after the completion of the Uruguay Round. Nearly every country in the world now is either participating in or discussing participation in one or more regional agreements. Such agreements have been concluded among high-income countries, low-income countries and more recently starting with the North American Free Trade Agreement (NAFTA) between high-income and developing countries. The structure of regional agreements varies, but all have one thing in common: the objective of reducing barriers to trade between member countries. At their simplest they merely remove tariffs on intrabloc trade in goods, but many go beyond that to cover non-tariff barriers and to extend liberalization to trade and investment. On the whole, the newer agreements tend to have deeper coverage, extending into areas of domestic disciplines beyond the exchange of tariff concessions. A number of agreements now also cover the services sector.

With virtually all World Trade Organization (WTO) members being partners in at least one RTA, these agreements have become by far the most important exception to the mostfavored nation (MFN) principle. Moreover, as the number of RTAs multiplies, networks of overlapping agreements may generate intricate webs of discriminatory treatment thereby leading to complex regulatory structures for the conduct of a growing share of world trade. The issue of regionalism vs. multilateralism has generated a vast debate on whether the immediate consequences of regionalism for the economic welfare of the integrating partners encourage or discourage evolution towards globally freer trade. However, most analysts, including the WTO Secretariat, have concluded that on the whole, regional agreements have made a positive contribution to the liberalization of world trade. Keeping in view the other large number of important issues regarding transparency of WTO rules on RTAs, the Doha Development Agenda (DDA) has included the issue of RTA as an area for negotiation in para 29 of the Ministerial Declaration. WTO members agreed to negotiations aimed at clarifying and improving disciplines and procedures under the existing WTO provisions applicable to RTAs. They also agreed that the “negotiations shall take into account the developmental aspects of RTAs.” The economic logic for this is that particularly for the developing countries, the ability to adjust to greater competition in the domestic markets or to take full advantage of additional market access opportunities can be constrained by their individual level of development. This points to the need to examine the flexibilities available during the transitional or implementation period of RTAs, taking into account the needs of developing countries in a properly focused and appropriate manner so as to support their greater integration into the multilateral trading system.

The basic objective of the present paper is to analyze the issues under the Doha Development Agenda with regard to RTAs. Keeping in view this basic objective some of the issues that come to the fore are highlighted in order to produce possible suggestions for India’s interest. The remainder of the paper is organized as follows. Section 2 summarizes the General Agreement on Tariffs and Trade (GATT)/WTO provisions on RTAs. Section 3 briefly discusses the global trend of RTAs and Section 4 focuses on the effect of the emerging new regionalism on world trade. Section 5 identifies the RTA-related issues that are of particular interest to India. Section 6 concludes the paper with trade policy recommendations for developing countries.

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1. Dr. Jayanta K. Nanda
   (posted 04 July 2007 / 08:44:57 AM)
   
   Not only for India, but for global trade in the near future.
   
   -www.jknanda.com