. Regional trade arrangements RTA negotiations have become the most dynamic part of the international trade system. They had once been limit...
. Regional trade arrangements RTA negotiations have become the most dynamic part of the international trade system. They had once been limited primarily to South–South agreements (often taking the form of closed regionalism among countries that took a dim view of trade liberalization) or North–North agreements between neighbouring countries (especially in Europe and North America), but today these negotiations now take place in all conceivable configurations. They include North–North and South–South negotiations that reach across oceans, plurilateral negotiations with heterogeneous memberships and a great many North–South FTAs that are sometimes called trade promotion agreements (in the case of some FTAs of the United States with developing countries) or economic partnership agreements (for several FTAs that the European Union and Japan have reached with their respective partners in the developing world). The kinds of agreement that countries have reached within their regions also differ in qualitative terms. Some countries have delegated considerable authority over policymaking to the customs unions or common markets in which they are members, others reach regional agreements that leave greater autonomy to the individual members, and still others either decline to join any such arrangements or limit themselves to associate memberships. The TPF for Namibia, for example, stresses the extent to which policymaking in SACU is dominated by the largest member of the group. “In practice,” the report notes, “South Africa has always taken decisions on the tariff structure, and
… largely continues to do so” (p.51). All of these choices affect the ability of countries to achieve an economy of scale in their representation, as well as the range of options that individual trade ministries have at their disposal. At a time when the prospects for further multilateral progress seem bleak, the negotiation of RTAs with the major economic powers is perhaps the most consequential option available to a developing country. Some have few or no RTAs, others choose to negotiate them only with their immediate neighbours and still others negotiate many and varied agreements with developed and developing countries. The data reported in table 19 shows a close association between extraregional RTAs and income. On average, incomes are seven times higher in the countries that have RTAs with three or four large partners than they are in the countries with no such RTAs. It would, however, be far too great a stretch to suggest that these RTAs — all of which are relatively recent developments — are the cause of that difference. It may be plausibly argued that it is higher income that leads to RTAs, rather than RTAs that lead to higher income, insofar as the Table 19. Relationship between extraregional trade agreements and Income (Average GDP per capita for non-oil developing countries) Sources: RTAs from WTO data at https://www.wto.org/english/tratop_e/region_e/rta_participation_map_e.htm; GDP per capita based on World Bank data at http://data.worldbank.org/indicator/NY.GDP.PCAP.CD. Notes: RTAs with large partners = number of regional trade arrangements in effect at the start of 2016 with the four largest global economies (i.e. China, the European Union, Japan and the United States). Does not include partial scope agreements, nor agreements that have not yet been concluded, approved, or implemented. RTAs with no large partners RTAs with one or two large partners RTAs with three of four large partners Africa Income: $1 820 Number: 40 Income: $4 460 Countries: 10 Income: — Countries: 0 Americas Income: $7 491 Countries: 6 Income: $8 527 Countries: 19 Income: $9 786 Countries: 4 Asia and the Pacific Income: $3 647 Countries:
14 Income: $12 296 Countries: 17 Income: $40 055 Countries: 2 Total Income: $2 813 Countries: 60 Income: $9 036 Countries: 46 Income: $19 876 Countries: 6 IV. TRADE NEGOTIATIONS AND TRADE PROMOTION 43 countries with deeper pockets make more attractive negotiating partners for the larger players. The data nonetheless offer further evidence of a recurring theme: Countries tend to adopt more open policies as they move up the ladder of development. The commitments that developing countries make in RTAs with the major economies are typically wider and deeper than those made in WTO. While the tariff cuts proposed in the Doha Round are unlikely to require many changes in the applied tariffs of most developing countries, an RTA will usually oblige them to eliminate most tariffs on imports from a partner country. Beyond tariffs, RTAs are often WTO-plus in either one of two senses: Some go beyond the commitments that countries have made in topics that are subject to WTO rules, and others provide for disciplines in areas that are not covered in the existing WTO agreements. Among the issues dealt with by RTAs with the European Union are trade facilitation, trade remedies, technical barriers to trade, sanitary and phytosanitary measures, establishment, electronic commerce, the regulatory framework, protection of biodiversity and traditional knowledge, geographical indications, agricultural safeguards and government procurement. The issue coverage of the FTAs negotiated by the United States is even wider, often including separate chapters on the politically sensitive topics of labour rights and environmental protection. These are all topics with important implications for countries’ development strategies, and policymakers need to weigh their interests and their options carefully before deciding whether they are ready to make binding and enforceable commitments on these matters. North–South RTAs are, of course, not the only option available to developing countries. South– South agreements are also in vogue. One example is the Pacific Alliance in Latin America, in which Chile, Colombia, Mexico and Peru promote deeper integration and invite the participation of more parties. African countries are actively negotiating both the Tripartite Free Trade Area (a proposed free trade agreement between the Common Market for Eastern and Southern Africa, the Southern African Development Community, and the East African Community), and the Continental Free Trade Area. These South–South agreements have historically faced two difficulties: National leaders often appear more committed to such agreements in principle than they are in detail, thus leading to elongated negotiations and incomplete agreements, and even when these agreements are concluded, they do not always stimulate trade as much as the leadership had hoped. These difficulties are recurring themes in several of the TPFs. There has nonetheless been a resurgence of interest in concluding such agreements, and in making them work. They ought therefore to be the focus of special attention in TPFs.
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