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Regional Trade Agreements

Examines the challenges and opportunities associated with the proliferation and consolidation of regional and plurilateral trade agreements for the global trade system; analyses the implications of the increasingly wider and deeper policy coverage of these agreements and their effects on third-parties; and proposes policy options to enhance coherence and inclusiveness among these agreements and the multilateral trade system.

Regional Trade Agreements and Plurilateral Approaches

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Over the past decades, regional trade agreements (RTAs) have proliferated with more than 300 in place and even more in negotiation, including the so-called “mega-regional” agreements (i.e., Trans-Pacific Partnership agreement (TPP) and Transatlantic Trade and Investment Partnership agreement (TTIP)). The OECD estimates such agreements – including investment agreements – now account for 90 percent and 60 percent of cross border trade in goods and services, respectively.

All these agreements have evolved through time and most now contain disciplines that are wider in scope, deeper in their integration nature and significantly more sophisticated than the multilateral trading system. RTAs have also served as focal points of inter-state cooperation, as well as incubators and testing grounds for new global trade rules. Overtime, they have become the de facto locus to deepen integration and further trade liberalisation. As such, many of these agreements effectively enable today’s international production-sharing possibilities and are at the centre of developments in supply chains and the fragmentation of value-addition in the global economy.

At the WTO, after several years of intense debate, multilateral efforts to regulate RTAs have at best generated mixed results. Thus, as RTAs emerge as the locus of liberalisation and rule-making in global commerce, the question is not so much whether the WTO can or should discipline RTAs, but rather how to mitigate the real challenges posed by RTAs while at the same time harnessing the opportunities they create to foster economic integration and advance sustainable development. What lessons or best practices can be learned from RTAs which have emerged as incubators and laboratories of new trade disciplines? How could such innovations be multilateralised under the WTO? How to design future initiatives including mega-regionals and new plurilateral approaches in a way that doesn’t disadvantage third-parties, in particular the poorer countries?

As a contribution to this debate, the E15 Initiative partnered with the Inter-American Development Bank (IDB) to convene a group of leading thinkers from around the world, representing a wide range of perspective ranging from former policy makers, academics, trade practitioners, private sector or representatives of IGOs. Led by Kati Suominen, the group examined the challenges and opportunities associated with the proliferation and consolidation of regional and plurilateral trade agreements for the global trade system. It then analysed the implications of the increasingly wider and deeper policy coverage of these agreements and their effects for third-parties and finally proposed a set of critical options to enhance coherence and inclusiveness among these agreements and the multilateral trade system.

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