The WTO and Regional Trading Agreements: Is it All Over for Multilateralism?

Abstract

Regional Trading Arrangements (RTAs) have always posed problems for the GATT/WTO. Although during the negotiations leading up to the GATT it appeared as if tight restrictions would be placed on the creation of RTAs, in the event US foreign policy considerations led to much weaker rules being adopted. And since then, geo-political forces have prevented the system from enforcing even these weaker disciplines. At the same time, the GATT has reduced tariffs so that since 1994 trade policy issues in the WTO have mostly been regulatory. These are difficult to negotiate among the full membership and so we have seen the growth of the so- called mega-regionals - mainly the TPP and TTIP - that have attempted to deal with them. Two important features characterise these mega-regionals: they explicitly aim to write trade and trade-related regulations not only for their members but for the whole WTO membership as well, and China is excluded from their deliberations. This paper sets out these processes and argues that the mega-regionals violate multilateralism because either the countries excluded from them cannot accept their rules for world trade, thus fragmenting the world trading system, or they do accept the rules but have played no role in their design.