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The last decade has witnessed widespread and rapid formation of regional trading agreements simultaneously to the growing of the trade liberalisation and the establishment of the World trade organization. This rapid spread of RTAs is surely the most important recent development in the world trading system. This is now an important challenge to the world trading system, particularly when RTAs continue to proliferate as progress on the Doha round has slowed.
It is not clear why states constitute preferential economic blocs when they belong to a multilateral system in which the norm of nondiscrimination in trade is the cornerstone, while RTAs violate obviously this norm.
This paper will first outline briefly the history and the economic theory of RTAs and treatment of RTAs in the WTO/GATT. It will then discuss the question of compatibility between WTO rules and the exigencies of RTAs.
Key words: Economic blocks, international trade, most-favored-nation (MFN), multilateralism, regionalism, regional trade agreements (RTAs), world trade system.

I. Introduction
Since the Second World War, the world economy has known several interesting developments and reforms. A key objective of these reforms initiated from that time was how to prevent a return to protectionism - a trade policy that has proven to be ineffective. To achieve this goal, the process of trade liberalisation was long and hard, it needed eight successive rounds of negotiations under the general agreement on tariffs and trade (GATT) before the birth of the world trade organization (WTO) in 1995.
Regionalism has been also a recognizable feature of international trade relations in the post-war period, though its salience has increased and decreased. It has been an accelerating trend toward regional integration in every part in the world. More intensively and since the late 1980s, we are witnessing an explosion of various forms of regionalisms. The widening and deepening of the European Union (EU) is perhaps the most debated example of this trend. Other regionalization processes can be observed in other parts of the world, as well through the revitalization or expansion of regional projects such as the Southern common market (Mercosur), the Association of Southeast Asian nations (ASEAN), the North American free Trade Agreement (NAFTA), the Southern African development community (SADC), and so many examples.
It is important to notice that regional trade agreements (RTAs) have been proliferating in recent years. Notably, after the establishment of the WTO as of December 2002, some 250 RTAs have been notified to GATT/WTO, of which 130 were notified after January 1995. By the end of 2005, if RTAs reportedly planned or already under negotiation are concluded, the total number of RTAs in force might well approach 300 (data from the official web site of the WTO).
It seems to be clear that even after the launch of the WTO multilateral trading system; there is strong move of preference away from multilateralism to regionalism. It is an on-going debate among economists and policy makers whether the proliferation of RTAs encourages or discourages global free trade.
There are at least two important issues concerning this question: the first issue is whether RTAs raise trade and welfare among the trade bloc members without damaging the welfare of non-members; the second issue concerns the effect of the proliferation of RTAs on global trade over time. Economists are stile debating the issue of will proliferation of RTAs be a "building block" or a "stumbling block" to global free trade, as Bhagwati's famous phrase.
This increase in regionalism and the surge of RTAs raise again issues dealing with the relationship of RTAs and the multilateral trading system, a subject that has long been a difficult and controversial one. While RTAs are explicitly permitted subject to certain conditions under WTO/GATT rules, how can we view the role of the WTO, since that the role of the WTO is to uphold the liberalization process.
II. Main objectives:
- define a concept of regionalism and its forms, history and causes of regional trade agreements, and main features of current wave of regionalism;
- compare regionalism with multilateralism in the world trade system, and compatibility between WTO rules and the exigencies of RTAs;
- propose some steps of resolving the controversies in the interpretation of WTO rules and interrelationship between regionalism and multilateralism.
III. Results
Before to start talking about the dilemma of compatibility between RTAs and WTO rules, this section will discuss briefly about the meanings of regionalism and reasons of the spread of its various forms.
The resurrection and redefinition of regionalism are among the dominating trends in today's international studies. Regionalism has been brought back in to the academic as well as the policy debates. Regionalism can be broadly defined as tendency towards some of preferential trading arrangements between number of countries belonging possibly to a particular region. The word 'preferential' is the key word, implying that countries not belonging to a particular regional arrangement are discriminated against [1, p. 13].
There are different forms of regionalism that may differ in the configuration. Five forms can be distinguished:
1) preferential trade arrangements (PTAs) is a union between tow or more countries in which tariffs on some trade are reduced, the discrimination against non-members in general violates WTO regulations (GATT grants less developed countries exceptions);
2) free trade area (FTA) is PTAs in which countries eliminate mutual trade barriers but retain their own trade barriers against other countries;
3) customs union is FTA with harmonised external trade policy;
4) common market it is a customs union with free internal factor mobility;
5) economic union which go beyond the free movement of goods and factors to harmonize economic, legal, social and other policies [2, p. 12-16].
In this paper, the term 'regional trade agreements' (RTAs) will be used as a substitute to the different forms previously sited.
Two waves of regionalism can be distinguished. The first wave was in the late of 1950s and the early 1960s. Following the EC set up under the Treaty of Rome in 1957, many developing countries agreed RTAs while USA was a strong proponent of multilateralism. Although most of the developing countries proposals initiated at that time had collapsed, in addition, the growing momentum of multilateral liberalization in the 1970s and 1980s contributed to the decline in the importance attached to regionalism [3, p. 16].
A second wave of regionalism is often labelled 'the new regionalism', started during the second half of the 1980s. The origin of this wave has been attributed to the drawn out nature and slow progress of the GATT Uruguay Round negotiations, to the apparent success and fears aroused by the EU's initiative aimed at establishing a Single European Market, and to the conversion of the United States to regionalism with its negotiation of the NAFTA and its Enterprise for the Americas initiative. In Latin America, new life was breathed into some old integration arrangements, sometimes in the wake of political change (the Central American Common Market and the Andean Pact) and new arrangements, such as MERCOSUR, were created. In Asia, ASEAN embarked on plans for an ASEAN Free Trade Area (AFTA), the South Asian Association for Regional Cooperation agreed in 1997 to transform itself into the South Asian Free Trade Area, while the Asia Pacific economic cooperation (APEC) also committed to trade liberalization objectives on a non-preferential basis. In Africa, initiatives have included the revitalization of existing regional groupings and the formation of new groupings
There are three important features of the current wave of regionalism:
1) almost every country belongs to at least one trade bloc;
2) most trade blocs have been formed among neighbouring countries, and many are along continental lines;
3) regional arrangements are put forward or accelerated in various parts of the world simultaneously.
Much recent interest surrounds regionalism, first because of its scale, the percentage of world trade accounted for RTAs is expected to grow from 43% at present to 55% by 2005 if all expected RTAs are realized.
But the key reason for the sharpened focus on regionalism has to do with motivation. Traditionally RTAs have predominantly been between adjacent countries seeking to maximize the benefits of proximity, often with a strong underlying political or strategic rationale. More recently, the growth of RTAs has reflected an additional element: belief that regional or bilateral arrangements are both speedier to negotiate and more far-reaching than multilateral agreements through the WTO. This creates pressure for more RTAs, as countries seek to avoid being left out.
But "what are the problems of the GATT that lead countries to turn to their neighborhood instead?" [4, p. 73]. There are main four reasons why countries choose regionalism:
1) modern trade barriers are varied an more complex than the tariffs and quotas considered in the early GATT rounds this makes multilateral negotiations harder;
2) the large number of participants in multilateral trade negotiations makes it more difficult;
3) frustrations with the GATT mattered in North America and Europe;
4) the reduced economic dominance of the US makes the world trade system hard to run [5, p. 874].
If gains from multilateralism are uncontested, but regional economic blocs are associated with some negative effects, then why have so many countries sought regionalism? And why have countries not solely depended on multilateral liberalization? The answers to these questions differ for developed and developing countries. Countries, such as the United States of America, have a different set of reasons for turning to regionalism then developing countries.
Regionalism and multilateralism. Prior to Jacob Viner's work, the treatment of RTAs was devoid of an explicit economic framework. The consensus was that, because RTAs in the form of CUs constitute a partial movement toward free-trade world, their creation implied an improvement in economic welfare. Viner was the first to demonstrate the shortcoming of this reasoning [6, p. 6]. He distinguished two effects of RTAs: a favourable 'trade creation'; and an unfavourable 'trade diversion', so the RTAs represent a movement towards free trade only if trade creation exceeds trade diversion.
Since that time, there is much controversy over the economic effects of RTAs on the multilateral trading system. Whether regional agreements are 'building blocks or stumbling blocks', the terms used by Jagdish Bhagwati remains a central question. This is obviously an economic, not a legal, question, and economists have quite differing views on the issue. This diversity of viewpoints arises because of the difficulty of measuring the effects of RTAs.
Arguments can be mad on both sides. The proponents of regionalism note that Article XXIV of the GATT, and now the WTO, explicitly permits regional agreements and thus acknowledges their compatibility with the multilateral trading system.
Bergsten argue that regional arrangements promote global free trade in at least two senses: that trade creation has generally exceeded trade diversion, and that the regionalism contributes to both internal and international dynamics that enhance rather than reduce the prospects for global liberalization [7, p. 80]. The internal dynamic is particularly important for developing countries, regional commitments which can be negotiated much faster than global pacts, and lock in domestic reforms against the risk that successor governments will try to reverse them. Internationally, the regionalism often pioneer new liberalization ideas that can subsequently be generalized in the multilateral system.
For supporters the RTAs may accelerate larger multilateral liberalization, trade liberalization means trade liberalization it doesn't matter if it is achieved regionally or multilater-ally.
In other side, opponents to RTAs, particularly Bhagwati and Panagariya, show systematically that 'free trade areas' and 'free trade' are not synonyms. They note that empirical studies have shown that trade diversion is not necessarily a negligible phenomenon, and the fact that countries try to gain preferences given to third countries proves the existence of trade diversion [8, p. 485]. They also talked about the dynamic path of RTAS towards free trade do not necessarily maximises world welfare.
Bhagwati and Krueger express strong concerns about the negative effects of growing regionalism and they worry that RTAs divert attention from the multilateral trading system. Bhagwati, in particular, stresses the benefits of free trade and rejects arguments about the need for an alternative to the GATT for countries which wish to liberalize faster, and the use regionalism as a supplement to the GATT [9, p. 16].
But more recently the transition from old to new regionalism has been accompanied by developments in economic theory and empirical work. Wonnacott counters that RTAs may be better then previously thought. He argues that even trade diversion, welfare may increase for both the diverting country and the world due to economies of scale [10, p. 94].
Baldwin, Ethier and Lawrence tend to regard regionalism much more as a complement to multilateralism (building blocks rather than stumbling blocks). Baldwin argues that NAFTA triggered off pressures for such agreements as a kind of domino effect. He and Lawrence both argue that such liberalization strengthens the hand of exporters and pro-trade forces. Ethier emphasises that the new regionalism is in good part a direct result of the success of multilateral liberalization, as well as being the means by which new countries trying to enter the multilateral system.
Lawrence also makes an important point that the correct comparison is not between RTAs and complete multilateral liberalization, but between two second-best situations of multilateral liberalization that is only partial with preferential trade liberalization which could be much more complete [11, p. 8-9].
However, Winters argues that, on the basis of various models, it is not yet possible to determine whether regionalism encourages or discourages evolution towards globally freer trade. But still, there is no definite answer whether RTAs increase or decrease the welfare of the world, consequently countries form RTAs for their best interest.
Regional Trade Agreements in the GATT/WTO System. Despite the tow pillars of the multi-lateral trading system as embodied GATT and it's successor the WTO the principles of reciprocity and non-discrimination (most favoured nation, or MFN) there have been exceptions from the beginning, RTAs which are by their nature discriminatory was allowed. The principle of reciprocity is a GATT norm under which one country agrees to reduce its level of protection in return for a reciprocal concession from its trading partner. At the broadest level, this Principle refers to the "ideal" of mutual changes in trade policy that bring about equal changes in import volumes across trading partners.
The principle of non-discrimination is a separate norm, under which a member government agrees that any tariff applied to the exports of a given product from one trading partner will apply equally to the exports of that product from all other trading partners.
Founder's of the GATT has view regional arrangements as a complement and supporter to liberalization under the multilateral trading system, that's why a special provision GATT article XXIV was created to permit the formation of RTAs if they meet certain conditions. The hope was that article XXIV would permit RTAs as an exception until they could eventually transition into full multilateral liberalization.
GATT/WTO provisions for RTAs. Within the GATT and the WTO, the examination of RTAs has been plagued by disagreement about the interpretation of certain elements of the rules relating to RTAs as well as by certain procedural aspects.
Basic rules. RTAs have been accommodated in to GATT through article XXIV and GATS article V. These tow articles specify conditions that must be met for a RTA to qualify as an exception to the principal of MFN. In addition, for developing countries, there is the so-called Enabling Clause allows the formation of regional or global arrangements amongst developing WTO members.
Having regard to the provisions of Article XXIV of GATT 1994, WTO members recognize that the purpose of RTAs should be to facilitate trade between the constituent territories and not to raise barriers to the trade of other members with such territories; and that, in their formation or enlargement, the parties to them should avoid creating adverse effects on the trade of other members. They should also recognize that the expansion of world trade will be reached by eliminating restrictive regulations and diminished if any sector of trade is excluded.
While paragraph 4 of Article XXIV sets outs GATT's basic handling concerning RTAs. Paragraph 5 is essentially designed to limit the level of restrictions applied to non-members before and after the RTA is brought into effect. Paragraph 5(a) specifies that: (a) with respect to a customs union, or an interim agreement leading to a formation of a customs union, the duties and other regulations of commerce imposed at the institution of any such union or interim agreement in respect of trade with contracting parties not parties to such union or agreement shall not on the whole be higher or more restrictive than the general incidence of the duties and regulations of commerce applicable in the constituent territories prior to the formation of such union or the adoption of such interim agreement, as the case may be.
The same note is mentioned for free trade area in paragraph 5(b).
Paragraph 5(c) specifies that the customs union or free trade area should have a plan for the formation within a reasonable period of time. The 1994 understanding specifies that the reasonable period should exceed ten years only in exceptional cases.
The application of paragraph 5 has raised some difficulties. As result, two important issues have merged: the first is about how does the WTO judge if the RTA meets these requirements or not. And the second is about what guarantee that RTA countries will not use this paragraph to justify introducing otherwise illegal trade barriers [12, p. 9].
There is no agreed definition of the expression 'other [than duties] regulations of commerce' as used in GATT Article XXIV: 5.
Paragraph 8 of Article XXIV also provides substantive control of the formation of RTAs, through its definition of what qualifies as a customs union or free trade area. Paragraph 8 defines a customs union as follows:
A customs union shall be understood to mean the substitution of a single customs territory for two or more customs territories, so that (1) duties and other restrictive regulations of commerce (except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) are eliminated with respect to substantially all the trade between the constituent territories of the union or at least with respect to substantially all the trade in products originating in such territories...
Paragraph 7 of Article XXIV requires that All RTAs concluded by WTO Members require notification. RTAs notified to the WTO are subject to surveillance in various Bodies.
RTAs notified under GATT were examined by an ad hoc working party established for that purpose. But recently, on 6 February 1996, the General Council established the committee on Regional Trade Agreements CRTA, with the aim of rationalizing RTA-related procedures contained in different WTO provisions.
It is not clear when a country must notify the WTO. Most of RTAs are already in force before WTO is notified of their existence, and other RTAs are simply never notified to the WTO. In addition there is no provision for counter-notification of agreements under current WTO rules. Even the status of those agreements that have been notified and examined remains unclear. Only one of the reports on the examination of RTAs adopted to date (the Czech Republic-Slovak Republic Customs Union) states clearly that the RTA is fully compatible with the relevant GATT rules.
Unfortunately, because of the consensus requirements for decisions in WTO/GATT and the imprecision in the definition of several key terms for applying the requirements of Article XXIV, the GATT working parties and the new WTO committee have been incapable of reaching any conclusions in respect of RTAs that have been reviewed by them [13, p. 10].
While WTO rules provide for a multilateral assessment of the consistency of an RTA with the rules, the possibility of recourse to dispute settlement is explicitly referred in paragraph 12: of the 1994 Understanding specifies:
"Dispute Settlement
The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding may be invoked with respect to any matters arising from the application of those provisions of Article XXIV relating to customs unions, free-trade areas or interim agreements leading to the formation of a customs union or free-trade area."
The provisions of Articles XXII and XXIII of GATT 1994, as elaborated and applied by the Dispute Settlement Understanding, may be invoked with respect to any matters arising from the application of those provisions of Article XXIV relating to RTAs. While there were some questions raised in the WTO as to whether this language was sufficient to give the dispute settlement system general jurisdiction over claims arising under RTAs, two Appellate Body decisions made clear that this was the way that the above text should be interpreted.
Special treatment for developing countries. An "Enabling Clause" dating from 1979 regulates RTAs on goods between developing country members. The Enabling Clause permits:
"Regional or global arrangements entered into among less-developed contracting parties for the mutual reduction or elimination of tariffs and... non-tariff measures, on products imported from one another".
Two aspects of this provision can be highlighted. First, it allows for RTAs that fall short of either a FTA or a customs union. Thus, it does not require the elimination of duties, nor does it require that substantially all trade should be liberalized. Second, the only constraints on the operation of preferential trade arrangements between developing countries are: (1) they shall be designed to facilitate and promote the trade of developing countries and not to raise barriers or to create undue difficulties for the trade of any other contracting parties; (2) they shall not constitute an impediment to the reduction or elimination of tariffs and other restrictions to trade on a most-favored-nation basis. The enabling clause is less demanding than the corresponding injunction in Article XXIV. The post-agreement trade policies shall not be more restrictive than the trade policies in force in the constituent countries prior to the formation of the agreement. Finally, there is no requirement for any indicative timetable for such liberalization with respect to trade in goods.
Controversies in the interpretation of WTO rules. Over the years, the WTO/GATT system has had considerable difficulties in dealing with situations and interpreting terms on substantive issues. There was an attempt to clarify the rules through the WTO Understanding on the Interpretation of Article XXIV of the GATT 1994, adopted as part of the Final Act of the Uruguay Round. However, the WTO Understanding has not resolved the more difficult issues. For example, are antidumping rules permitted to exist in RTAs? And is it possible to exclude a significant sector to a substantial degree, such as agriculture, from the coverage of a RTA?
Even CRTA, which also has in its mandate the responsibility to check RTAs and their implications for the multilateral trading system and the relationship between them, was incapable to provide further clarifications to reach consensus on the interoperations of WTO provisions [14]. Probably, the most important issues are related to the interpretation of paragraphs 5 and 8 of article XXIV, as we sited before. There is no agreed definition of the expression "other [than duties] regulations of commerce" as used in GATT Article XXIV:5. In turn, only in one instance, the agreements concluded in 1994 on non-tariff matters in the goods area refer specifically to RTAs. At the same time, as multilateral non-tariff trade-policy disciplines were developing well beyond the original GATT rules, Article XXIV provisions with respect to these matters have thus remained static and their relationship with the new disciplines undefined.
Another problem concerning the Measuring of the neutrality tariff policy in RTAs is to be evaluated on the basis of applied rates. In sum, how does WTO compare pre and post RTA trade barriers to judge a RTA's compatibility with paragraph 5?
Relating to paragraph 8 of article XXIV, a new issue come out: the interpretation of the term "substantially all the trade", which relates to the requirement that "duties and other restrictive regulations of commerce ... are eliminated on substantially all the trade between the constituent territories", as defined in GATT Article XXIV:8.9. The majority of RTAs formed in the past have made use of the let-out that only "substantially all trade" need to be covered by an agreement in order to exclude significant parts of agricultural trade. More often than not, agricultural commodities or food products were classified as "sensitive" and subjected to reduce concessions, longer transition periods, or excluded altogether from the scope of RTAs. A number of participants in existing RTAs argue that account should be taken of whether a RTA facilitates trade in a sector even where trade barriers are not fully eliminated. Others consider that trade not covered by elimination of duties and other restrictive regulations of commerce remains subject to the MFN principle, and that partial duty reduction is not permitted under Article XXIV [11, p. 11].
Another related matter is the introduction of new quantitative restrictions justifiable when countries join or form a customs union. This question highlights contradiction between paragraph 8 of Article XXIV (which requires all members of a customs union to apply substantially the same trade policies to third countries) and paragraph 5 (which requires that non-tariff barriers should not be more restrictive on average). In 1999, "Turkey -Restrictions on Imports of Textile and Clothing Products" became the first dispute settlement case in GATT-WTO history that addressed issues raised by article XXIV. In the WTO Turkey-Textiles case, the Appellate Body found that: "Article XXIV may justify a measure which is inconsistent with certain other GATT provisions. However, in a case involving the formation of a customs union, this "defence" is available only when two conditions are fulfilled. First, the party claiming the benefit of this defence must demonstrate that the measure at issue is introduced upon the formation of a customs union that fully meets the requirements of sub-paragraphs 8(a) and 5(a) of Article XXIV. And, second, that party must demonstrate that the formation of that customs union would be prevented if it were not allowed to introduce the measure at issue. Again, both these conditions must be met to have the benefit of the defence under Article XXIV."
The issue arises of how to compensate third countries in order to maintain the overall neutrality of trade policy before and after belonging to RTA
In the concern of the parallel, GATS article V is still less advanced than the debate on systemic issues related to trade in goods under GATT Article XXIV, may be it is due to the weak of RTAs in services.
Another issue related to the developing countries under the so called enabling clause, developing countries are free to establish whatever agreements they choose. Unlike article XXVI, the enabling clause does not require that internal barriers should be removed on "substantially all trade" among participants in those arrangements. Moreover, this clause legitimizes non-reciprocal programs (like generalized system of preferences GSP), this rise a problem in the relation between article XXIV and the enabling clause. This relation can be viewed in different ways, one view is that RTAs among developing countries should be treated only under the enabling clause. Other view is that the clause only imposes certain requirements on contracting parties, thus dealing with RTAs should be done under article XXIV. This question raised particularly when MERCOSUR was formed and notified to the GATT under the enabling clause, not under article XXIV. The enabling clause dilutes the weak discipline that Article XXIV imposes. Even if Article XXIV does not actually stop many harmful practices, it does at least avoid automatically giving them the respectability of legal cover.
A major question is whether Article XXIV should be considered as derogation from the MFN obligation (Article I of the GATT) only, or from other GATT provisions as well. As noted above, it is obvious that the WTO rules on RTAs are too weak, the ambiguities of article XXIV and the other provisions make it even clearer that problem of the consistency of RTAs and WTO rules is very serious and that reforms are needed to strengthen the multilateral trade system in attempt to minimize this problem
Reforms proposals. It was hoped that the Doha round will be successful in reaching a common consensus in clarifying terms and to resolve the controversy surrounding GATT article XXIV and the other provisions. But what has been done in Doha negotiations? Not so much; there are still many issues remaining unsolved. In plus, Trade Agreements Committee has failed to complete its assessments of whether RTAs conform to WTO provisions.
The negotiations on RTAs are complicated by the fact that most WTO members are parties to some RTAs, and even those members that have traditionally not participated much in RTAs have recently started to do so. As a result, the negotiations may well not produce much in the way of change in the current situation. Currently, all major trading countries belong to one, or more typically, two or three, RTAs. Therefore, it would appear that trade on a most-favored-nation (MFN) basis is more likely to be the exception than the norm.
The real challenge for the WTO, therefore lies not only in trying to change the rules of article XXIV, instead the challenge lies in other GATT rules in ensuring that the rules of article XXIV are actually followed, and in speeding the process of global multilateral liberalization [15, p. 52].
WTO member's proposals. Few members have expressed their willingness to renegotiate the rules relating to RTAs. In addition, many proposals got dropped on the wayside in informal discussions and never even being actually tabled.
The government of Japan in 1999, for example, proposed to work on the interpretation of certain elements of the provisions related to RTAs. First, by clarifying the meanings of: (1) "other regulation of commerce" (paragraph 5 article XXIV); (2) "substantial all the trade" (paragraph 8 article XXIV), (3) "substantial sectoral coverage" (article V-1of the GATS). Secondly, they propose to strengthen the examination of process from a systemic point of view in the course of the next negotiations.
The government of Australia goes a bit further on the systemic issues in their proposals. In 10 July 2002, Australia submitted to the WTO a proposal regarding the clarification of rights and obligations, to clarify thresholds for meeting basic requirement that RTAs cover "substantial all the trade" in GATT article XXIV, or have "substantial sectoral coverage" in GATS article V. The proposal prescribes a benchmark of eliminating all duties, Australia considers that a percentage criterion of tariff lines at the six digit level in the harmonised system of tariff classification lines should be established at a sufficiently high level to prevent the carving-out of any major sector, to satisfy the requirements of an effective discipline under Article XXIV, and yet retains sufficient flexibility to accommodate the exclusion of certain product lines.
In 28 February 2005, Australia submitted a new proposal as response to the Doha Declaration mandate for negotiations to clarify and improve the WTO disciplines and procedures related to regional trade agreements. The approach outlined in this proposal has as its key objectives the conscientious implementation of the Doha mandate, the promotion of comprehensive regional trade agreements that deliver genuinely trade-liberalizing and less trade distorting outcomes, and the development of a mutually supportive multilateral, regional and bilateral trade architecture by ensuring that regional trade agreements to which WTO Members are a party accurately reflect their WTO commitments. However, the Australian proposal did not address the problem surrounding committee of regional trading inability to control RTAs.
Another proposal was anticipated by the European Union, reflecting its own experience (the European Union has itself developed as the product of an ambitious process of deep and wide-ranging regional integration). The EU have always been persuaded that regional trade agreements must be "stepping stones" towards multilateral liberalisation, rather than "stumbling blocks" and that regionalism and multilateralism must be mutually supportive rather than contradictory. Thus, consideration should be given to how the WTO framework could serve to encourage and channel such more far-reaching integration and trade liberalisation. The EU's proposal does not seek to discuss the weakness of article XXIV, gives alternatives, and favours deep integration. The problem with EU's proposal is that it is seen by some in the WTO rules negotiating group as being vague, general, and not connected to reforming RTAs covering rules [12, p. 27]. Instead, they see it as way for the EU to negotiate more agreements with developing countries under pretext of RTAs rather than under unilateral preference arrangements.
It seems that these proposals failed to give a clear framework of the proposed reforms, and to reach a common census among WTO members, as we sited previously. The fact that all most of WTO members are parts in different RTAs make the reforms a very hard topic, in essence, each proposal was initiated and manipulated by individual interests.
Economists proposals. In addition to the proposals previously sited, this topic has taken a significant position in the literature of regionalism. Economists have analysed the multilateral trading system and it's provisions for RTAs, they pointed that are clear violations of the GATT/WTO system, and this system should be enforced. Hence, other authors have made more concrete proposals.
As Bhagwati suggested, any proposed CU could be approved only when its common external tariff is set at the minimum of the pre-union import tariffs of the member countries. An implication of this is that the CU will engage in free trade with all non-members, the Bhagwati proposal could lower welfare of some members of the CU and raise that of non-members. Since such a possibility could discourage the formation of a union, the Bhagwati proposal may still be treated as a desirable reform, which in effect sets a price or hurdle on WTO members who wish to enter a customs union, and thus compromise the MFN principle [16, p. 510]. Bhagwati also suggests indirect options including modifying article XXIV to rule out RTAs with divers external tariffs by members (free trade agreements) and permit only RTAs with common external tariffs (customs unions).
Instead of focusing on tariffs, McMillan suggests a test of admissibility, whether a regional integration agreement is admissible or not [17, p. 18]. These extraneous sources of change must somehow be filtered out of the data. The question is: are external trade volumes lower than they would have been in the absence of the regional integration agreement? Furthermore, he argues that Article XXIV could be made more workable by phrasing its requirements not in terms of the height of tariffs but in terms of trade volumes; that is, by looking at the results of the trade restrictions rather than trying to measure the trade restrictions themselves. McMillan state: "Any law that is rarely complied with is a bad law. That Article XXIV is ineffective is explainable, at least in part, by the fact that it is subject to a wide range of interpretations [17, p. 14]."
Srinivasan proposes that RTAs can be permitted only temporarily by requiring all RTA concessions to be extended to all countries within, for instant, five years. This is effectively a ban on RTAs, and certainly foregoes any gains that they might offer in terms of deep integration or nation building. It is not a serious contender.
As for Panagaria he gave more explicit proposal, for him regionalism cannot escape being non-discriminatory [8, p. 490-495]. Thus he disused five point to limit eth effects of regionalism:
1) placing a moratorium on the expansion of RTAs beyond those already in an advanced stage of negotiation, simultaneously to bring the unfinished agenda of multilateral trade liberalization to its conclusion. He emphasize that such liberalization will not only promote the cause of multilateral liberalization directly, it will also do so indirectly by neutralizing the impact of trade preferences within;
2) modifying the GATT Article XXIV so as to require each RTA member to bind its tariffs to the actual levels prevailing at the time of negotiations for the RTA. This will ensure that tariff protection against nonmembers is not raised in the future;
3) since that the anti-dumping and safeguard measures can be substituted for higher tariffs on outside countries by enforcing these measures more aggressively against the latter, we also need to introduce changes in Article XXIV which will prevent such a shift in policy;
4) limiting the duration for of a tariff preference to a RTA member diversion. This means that countries forming a RTA will have to go to free trade with the rest of the world as well within the specified time limit;
5) eliminating rule of origin on a product in a member country with the lowest tariff in the union on that product to contain the spaghetti-bowl phenomenon (conception used by Bhagwati to describe the interactions between the main elements in the world economy).
In addition to these proposals, there are attempts to resolve the questions of conformity between RTAs and multilateral trading system, although theses proposals are essential unfortunately it will need many years to be considered, because the lack of a real willing to change rules.
IV. Conclusion
Regardless of what economists think, regional trading agreements are here to stay. RTAs are an increasingly important element of the global trade environment. Developing countries in particularly are active participants in the formation of RTAs and an increasing number of these are being formed on a North-South basis.
The growing interest in regionalism, when tariff barriers are becoming less and less important in world trade, is a paradox. Why do countries go to the trouble of constructing elaborate institutional arrangements to remove?
But do RTAs actually help or hinder multilateral trade liberalization? In fact, they can do both and it is perhaps this dual characteristic which helps explain why it is so difficult for the WTO's Committee on Regional Trade Agreements to establish whether particular RTAs conform to WTO rules and obligations. In many ways, RTAs complement the multilateral trading system, by helping to foster a culture of market. RTAs can also cause friction between systems by generating potentially incompatible rules and standards between different RTAs and the rules and disciplines of the WTO.
This existing debate highlights the importance of WTO rules governing the establishment of RTAs to minimize RTAs adverse systemic effects on multilateral trade system. The developments within GATT/WTO have played a large role in stimulating the formation of RTAs, specifically the growth in GATT/WTO membership, the periodic multilateral trade negotiation rounds, and the poor performance of the GATT/WTO enforcement system have led its members to seek entrance in RTAs.
Consequently, the relevant question is not whether RTAs are a good thing for itself, but how to design international laws that ensure they are structured to avoid conflict between the tow policies of the world economy.
The only certain conclusion is that the interrelationship between regionalism and multilateralism depends on the management of the process by the key countries involved. If they seek constructive synergism between the two, the historical record suggests that they can achieve it. If they wish to pursue one at the expense of the other, the outcome in earlier eras reveals that is quite possible too. The inherent dynamics of the process seem to be sufficiently balanced that the policy decisions of the participants themselves are determinative.
This conclusion can not be achieved with out enforcing GATT/WTO rules in order to make the tow rivals complementary.

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