Multilateralising Regionalism
The World Trade Organisation must intervene over the massive proliferation of regional agreements that is undermining efforts to strike a multilateral deal on world trade that could deliver billions of pounds of welfare to the world�s poorest countries, according to a book published today (29 February 2008).
The WTO has been an �innocent bystander� to this explosion in regional deals. The organisation, which oversees the current Doha round of trade talks, faces a clear choice between watching as new regional deals add to the tangle of trade rules, and taking action to harness the system into a multilateral friendly system.
A new report by CEPR Policy Director Richard Baldwin and Phil Thornton calls for a WTO Action Plan on regionalism to steer the world back towards the multilateralist ideal that has guided the world trade system since 1947. It says that the WTO and its 151 member countries can find a way to restrain the malign elements of regional deals while using their benign elements as a springboard towards a new multilateral arrangement.
The report, which was based on a three day conference of academics and trade experts held at the WTO�s Geneva headquarters last year, shows that regional deals are a bad way to organise the world�s trade system as they conspire to inject both inefficiency and discrimination against poor countries into the multilateral system.
However it also explains how any solution must work with the existing network of 400 regional bilateral and preferential trade agreements regionalism, not against it. The solution must multilateralise regionalism. The report also criticises member countries of the WTO for failing to use legal remedies available to them to challenge and review RTAs.
The action plan outlined in the book calls for:
� Quicker and more detailed disclosure of the start and extent of negotiations on regional trade agreements.
� A WTO-sponsored forum for small countries to exchange experiences of RTAs.
� The creation of a WTO advisory centre on RTAs for developing countries.
� Voluntary guidelines on disciplines for new RTAs and modifications of existing ones.
� Harmonisation of key elements of RTAs, such as �rules of origin� to create templates for existing and new deals.
� The adoption of �most favoured nation� (MFN) clauses in future RTAs that give other countries the protections offered by the RTA.
� Countries to lower their MFN tariff rates on goods that dominate inter-regional trade.
