Chapter

Disciplining Trade Agreements: Toward Multilateralization?

A. Estevadeordal and K. Suominen

in The Sovereign Remedy?

Published in print April 2009 | ISBN: 9780199550159
Published online May 2009 | e-ISBN: 9780191720253 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199550159.003.0005
Disciplining Trade Agreements: Toward Multilateralization?

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This chapter addresses the growing concerns that PTAs may fall short of complying with GATT Article XXIV, which sets out the conditions for the format of free trade agreements and customs unions. The chapter also examines the effects of PTAs on unfettered flow of global trade. It then proposes ways to enhance the complementarities between the PTA system and multilateral trade rules, including through ‘multilateralizing PTAs’ that aims at enhancing compatibilities between PTAs and the global trading system, and to strive to advance toward global free trade by way of PTAs. Multilateralization can be pursued through global, regional, and case-by-case policies alike. While any multilateralization approach has its challenges, all approaches, when smartly sequenced and receiving the backing of the major trade agreement hubs, could revitalize and add value to the multilateral trading system. At the minimum, they would help ensure that PTAs do not erode the gains of the past sixty years of multilateral trade liberalization. Besides the complexities of the PTA-multilateralism interplay, there are growing concerns that the proliferation of PTAs is creating an unmanageable ‘spaghetti bowl’ of rules that risks degenerating the world trading system into hundreds of miniblocs. The PTA spaghetti could, in turn, generate new frictions and transactions costs to firms operating in multiple PTA theaters at once.

Keywords: preferential trading arrangements; WTO; PTAs; multilateralism; tariffs; investment; services; rules of origin; spaghetti bowl

Chapter.  13554 words.  Illustrated.

Subjects: International Economics

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