15.05.07 A Global Race for Free Trade Agreements
From the Most to the least Favoured Nation Treatment?
NUPI-notat 653 | 34 sider.
The working paper examines the currently expanding worldwide network of bilateral free trade agreements.
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The article examines the currently expanding worldwide network of bilateral free trade agreements. Following regional integration in Europe and later the Americas, the process in East Asia has accelerated from 2002. A Distinctive feature of the current stage is the expansion of FTAs beyond geographical regions and into global space, hence challenging WTO supremacy on inter-continental trade rules. Setbacks in the WTO Doha Round may stimulate a further move towards “global bilateralism”. While integration between geographical distant countries will have a smaller impact than integration between neighbours, countries may nevertheless gain from “global bilateralism”. The more such agreements in place, the greater is the incentive for new once. Even if political obstacles hinder some agreements, the process is currently accelerating. While it is rational for countries to pursue such agreements, they should parallel work for multilateral trade liberalization in order to reduce the discriminatory impact of FTAs. This is needed if we are to avoid that “Most Favoured Nation” treatment under WTO actually becomes “Least Favoured Nation” treatment: Rules that only apply to countries that are left outside the “free trade race”.
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