Think Piece

When the Immovable Object Meets the Unstoppable Force: Multilateralism, Regionalism and Deeper Integration

December 2013
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The experience of trade negotiations of the past decade shows that the multilateral system is at an impasse. Not only has it been difficult to get agreement on traditional issues such as meaningful reductions in tariffs and subsidies, but it also has been impossible to obtain agreements that require developing countries as a group to implement rules that constrain their domestic economic and social policies in new areas. Many developed and developing countries are seeking to pursue zero for zero tariff reductions together with deeper integration through regional and mega-regional agreements in precisely the areas that have been roundly rejected by the WTO as a whole.

On the one hand, as large emerging economies become increasingly important, it has become more difficult to either ignore them or to coerce them into signing agreements they deem against their interests. On the other hand, the forces driving deeper integration have also become stronger.

So what happens when (the immovable object of) resistance to the erosion of domestic policy space by emerging economies meets the (unstoppable) force driving deeper regional integration? Thus far the clash has left the WTO at an impasse. But could the regional initiatives be a way in which they could be reconciled?

Regional agreements can be discriminatory and can introduce unwarranted complexity to the trading rules. However, by creating markets that are more easily contested; by implementing standards that others voluntarily adopt; and by setting precedents that make countries more accustomed to signing deeper agreements, RTAs could make deeper agreements at the WTO easier to negotiate.

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