Chicago Journal of International Law, Vol. 11, No. 2, pp. 597-629, 2011
34 Pages Posted: 26 Feb 2011 Last revised: 15 Apr 2011
Date Written: February 23, 2011
With the creation of the World Trade Organization (WTO) in 1995, the pyramidal design of the international trading system placed multilateralism at the top of the pyramid, regionalism/bilateralism in the middle, and the domestic trade and economic policies of WTO Member States at the bottom of the pyramid. This article questions whether this vertical structure is still the case today, given the tremendous proliferation of regional trade agreements (RTAs) in recent years and the fact that the WTO is losing its centrality in the international trading system. The thesis of this article is that the multilateral trading system’s single undertaking is no longer feasible, hence affirming RTA proliferation as the modus operandi for trade liberalization. This article also argues that RTA proliferation implies the erosion of the WTO law principle of non-discrimination, which endangers the multilateral trading system. RTAs can help countries integrate into the multilateral trading system, but are also a fundamental departure from the principle of non-discrimination. This raises the question of whether RTAs are a building block for further multilateral liberalization or a stumbling block.
After an overview of RTAs, the article discusses the WTO rules that deal with RTAs (GATT Article XXIV, the Enabling Clause, and GATS Article V), the main trends identified in RTAs, the economic and political reasons why WTO Members engage in RTAs so frequently, as well as the positive and negative effects of regionalism on multilateralism. By doing so, the article investigates whether it is RTAs or multilateralism that is the center of gravity of the international trading system, or whether we have a symbiosis between the two and, if not, how we can get there.
The article concludes that the proliferation of RTAs implies the erosion of the principle of non-discrimination and wonders whether this means the beginning of the end of multilateralism. It also concludes that the single undertaking is no longer feasible and suggests variable geometry and sectoral agreements as the way forward in the multilateral trading system. Moreover, it concludes that bilateral and regional deals do not come close to matching the economic impact of agreeing to a global deal. Therefore, RTAs can complement but not supplant multilateralism.
Keywords: WTO, international trading system, RTA proliferation, non-discrimination, variable geometry, single undertaking
JEL Classification: F13, F15, K33
Suggested Citation: Suggested Citation
Leal-Arcas, Rafael, Proliferation of Regional Trade Agreements: Complementing or Supplanting Multilateralism? (February 23, 2011). Chicago Journal of International Law, Vol. 11, No. 2, pp. 597-629, 2011; Queen Mary School of Law Legal Studies Research Paper No. 78/2011. Available at SSRN: https://ssrn.com/abstract=1768208
By Claude Chase