2.1 - Geographically-Discriminatory Trade Policies

RTA no. over time

Since 1992 the no. of RTAs has exploded

• RTAs easier to agree on than multilateral agreements

• Not all between geographically close nations

Post 2015 no. new RTAs has fallen

• Countries running out of plausible new partners

• Lower incentives to deepen integration

Spike in 2021 from disintegration - Brexit & its new deals

GATT / WTO and RTAs

GATT / WTO based on multilateral approach

Regionalism is the most significant exception to the non-discriminatory rules

3 sets of rules:

• Article 24 of GATT

• Enabling clause

• Article 5 of GATS

Article 24 of GATT

FTAs & CUs allowed if trade barriers post integration don’t rise on average

• tariffs or NTB barrier not raised

Enabling clause

Allows preferential treatment towards developing countries + Permits RTAs between developing countries for trade in goods.

• Theory is that RTAs increase growth

This is the basis for GSP

• Developed nations offer non-reciprocal preferential treatment to goods from developing

  • Sometimes GSP used for political reasons BAD

GATS article 5

Establishes conditions that permit trade liberalisation in services among regional partners

Structures of RTAs

Split of RTAs notified to WTO

FTAs - 60%

CUs - 10%

Other - 30%