Regionalism under the WTO and the prospect of an East Asian free trade area

Abstract

Regional trade agreements (RTAs) were permitted under Article XXIV of the General Agreement on Tariffs and Trade (GATT) 1947 and the Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (Enabling Clause). RTAs are classified into customs unions, free trade areas and interim agreements leading to the formation of either, based on the criteria of ‘substantially all the trade’ and ‘not on the whole higher or more restrictive’. RTAs formed by developing countries are afforded more favourable treatment. Article XXIV of the GATT 1947 and the Enabling Clause were incorporated into the World Trade Organization (WTO) agreements, together with a new Understanding on the Interpretation of Article XXIV of the General Agreement on Tariffs and Trade 1994. The General Agreement on Trade in Services (GATS) adds another dimension to these exceptions from the most-favoured nation (MFN) principle, namely RTAs involving trade in services, with similar conditions applying as to RTAs on trade in goods.