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WTO criticises trade agreements

Mushrooming bilateral and regional trade agreement meetings need to regulate global production so as to benefit non-members too.

But the World Trade Organisation multilateral system also has a role in reducing the resulting complexity, according to the latest edition of the organisation’s flagship publication released on July 20, 2011 in Geneva.

The World Trade Report 2011 observes that these Preferential Trade Agreements (PTAs) are becoming more complex, involving pacts between regions, as well as between countries or within regions.

Many PTAs are moving toward deeper integration that goes beyond tariffs and other measures at national borders, according to the WTO. A growing number include domestic policies such as regulations on services and investment, intellectual-property protection and competition policy, it said.

“These trends raise vital questions about the focus and reach of the WTO, and the value assigned by governments to globally based trade relations,” Director-General Pascal Lamy said on the trade arbiter’s website.

The report argues that deep PTAs reflect important changes in the world economy such as the growth of global production networks. These networks require better regulation and supervision in a range of areas, and deeper PTAs may be addressing this need.

The result is that deeper PTAs can also benefit other countries rather than discriminating against them.

On the one hand, lower preferential tariffs within these free trade agreements no longer offer much of an advantage because non-preferential tariffs (“most-favoured nation” or “MFN” in WTO jargon) are already low.


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