What Do Regional Trade Agreements Do

Member States benefit from trade agreements, including increased employment opportunities, lower unemployment rates and increased market opportunities. Since trade agreements generally come with investment guarantees, investors who wish to invest in developing countries are protected from political risks. To the extent that atRAs go beyond WTO commitments and remain open to further participation by countries committed to their standards, they can complement the multilateral trading system. Over the years, the OECD has examined the relationship between regional trade agreements and the multilateral trading system, including specific policy areas addressed by ATRs, such as agricultural addressing, technical regulations, compliance standards and procedures, investment rules on international technology transfer, integration of environmental considerations and approaches to market opening in the digital age – to name a few. “As a result, these agreements are increasingly defining new rules that govern trade between their parties and are not extended to all other WTO members. In addition, some of these issues are not regulated by the WTO in international trade. The inclusion of these provisions indicates that there is a growing divergence between existing WTO and ATR rules. This is another challenge for the multilateral trading system, firstly because it makes WTO rules less relevant to some trading partners and, second, because WTO members who are not part of the RTA network are increasingly excluded from these rules. With regard to the first challenge, recent investigations by the WTO secretariat indicate that the divergence of some provisions may be less pronounced, given that ATRs generally tend to repeat WTO rules.

With regard to anti-dumping, safeguarding measures and, to some extent, health and plant health standards and measures, most ATRs retain the rights and obligations of contracting parties in the WTO. In other areas, although the RTA creates new rules, many parties take a similar approach that is common to all or most of their ATRs. This “model approach” could, to some extent, reduce the magnitude of the discrepancy. Many ATRs contain elements that deepen regulatory cooperation and new market opportunities are created, even as participants address structural barriers in their own economies. Next-generation RTAs are working to go further. Countries wishing to participate in and benefit from global markets must increasingly integrate trade and investment measures into their broader national structural reforms. Indeed, countries may be able to use the current and future negotiations on the “beyond the border” regime as the engine of desired internal political reforms. The major structural question of whether, when and how to multilateralize the provisions in atRs is above all a political issue that governments must address. November 2018 studies by the United Nations Economic Commission for Africa (UNCA) suggested that the implementation of the agreement would result in GDP growth of 1% and overall export growth of 3%. The greatest impact would be intra-African trade, which would reach more than 50% (and even more for some economies) depending on the ambition of liberalization.

Provisions to be negotiated in the second stage, such as investment, competition and intellectual property rights, would further strengthen regional integration, Africa.To conclude that ATRs are likely to continue to increase in both numbers and coverage, while some aspects of RTA will continue to discriminate against third-party trade. They therefore remain the second best option compared to the multilateral rules that apply to all WTO members.

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