. Regional trade arrangements
RTA negotiations have become the most dynamic
part of the international trade system. They had once
been limited primarily to South–South agreements
(often taking the form of closed regionalism among
countries that took a dim view of trade liberalization)
or North–North agreements between neighbouring
countries (especially in Europe and North America),
but today these negotiations now take place in all
conceivable configurations. They include North–North
and South–South negotiations that reach across
oceans, plurilateral negotiations with heterogeneous
memberships and a great many North–South FTAs
that are sometimes called trade promotion agreements
(in the case of some FTAs of the United States with
developing countries) or economic partnership
agreements (for several FTAs that the European Union
and Japan have reached with their respective partners
in the developing world).
The kinds of agreement that countries have reached
within their regions also differ in qualitative terms.
Some countries have delegated considerable authority
over policymaking to the customs unions or common
markets in which they are members, others reach
regional agreements that leave greater autonomy to
the individual members, and still others either decline
to join any such arrangements or limit themselves to
associate memberships. The TPF for Namibia, for
example, stresses the extent to which policymaking
in SACU is dominated by the largest member of the
group. “In practice,” the report notes, “South Africa
has always taken decisions on the tariff structure,
and
… largely continues to do so” (p.51). All of these
choices affect the ability of countries to achieve an
economy of scale in their representation, as well as
the range of options that individual trade ministries
have at their disposal.
At a time when the prospects for further multilateral
progress seem bleak, the negotiation of RTAs with
the major economic powers is perhaps the most
consequential option available to a developing
country. Some have few or no RTAs, others choose to
negotiate them only with their immediate neighbours
and still others negotiate many and varied agreements
with developed and developing countries. The data
reported in table 19 shows a close association between
extraregional RTAs and income. On average, incomes
are seven times higher in the countries that have RTAs
with three or four large partners than they are in the
countries with no such RTAs. It would, however, be far
too great a stretch to suggest that these RTAs — all
of which are relatively recent developments — are the
cause of that difference. It may be plausibly argued
that it is higher income that leads to RTAs, rather
than RTAs that lead to higher income, insofar as the
Table 19. Relationship between extraregional trade agreements and Income (Average GDP per capita for non-oil developing
countries)
Sources: RTAs from WTO data at https://www.wto.org/english/tratop_e/region_e/rta_participation_map_e.htm; GDP per
capita based on World Bank data at http://data.worldbank.org/indicator/NY.GDP.PCAP.CD.
Notes: RTAs with large partners = number of regional trade arrangements in effect at the start of 2016 with the four largest
global economies (i.e. China, the European Union, Japan and the United States). Does not include partial scope agreements,
nor agreements that have not yet been concluded, approved, or implemented.
RTAs with no large partners RTAs with one or two large
partners
RTAs with three of four large
partners
Africa Income: $1 820
Number: 40
Income: $4 460
Countries: 10
Income: —
Countries: 0
Americas Income: $7 491
Countries: 6
Income: $8 527
Countries: 19
Income: $9 786
Countries: 4
Asia and the Pacific Income: $3 647
Countries:
14
Income: $12 296
Countries: 17
Income: $40 055
Countries: 2
Total Income: $2 813
Countries: 60
Income: $9 036
Countries: 46
Income: $19 876
Countries: 6
IV. TRADE NEGOTIATIONS AND TRADE PROMOTION 43
countries with deeper pockets make more attractive
negotiating partners for the larger players. The data
nonetheless offer further evidence of a recurring
theme: Countries tend to adopt more open policies as
they move up the ladder of development.
The commitments that developing countries make in
RTAs with the major economies are typically wider and
deeper than those made in WTO. While the tariff cuts
proposed in the Doha Round are unlikely to require
many changes in the applied tariffs of most developing
countries, an RTA will usually oblige them to eliminate
most tariffs on imports from a partner country. Beyond
tariffs, RTAs are often WTO-plus in either one of two
senses: Some go beyond the commitments that
countries have made in topics that are subject to
WTO rules, and others provide for disciplines in areas
that are not covered in the existing WTO agreements.
Among the issues dealt with by RTAs with the
European Union are trade facilitation, trade remedies,
technical barriers to trade, sanitary and phytosanitary
measures, establishment, electronic commerce,
the regulatory framework, protection of biodiversity
and traditional knowledge, geographical indications,
agricultural safeguards and government procurement.
The issue coverage of the FTAs negotiated by the
United States is even wider, often including separate
chapters on the politically sensitive topics of labour
rights and environmental protection. These are all
topics with important implications for countries’
development strategies, and policymakers need to
weigh their interests and their options carefully before
deciding whether they are ready to make binding and
enforceable commitments on these matters.
North–South RTAs are, of course, not the only
option available to developing countries. South–
South agreements are also in vogue. One example
is the Pacific Alliance in Latin America, in which
Chile, Colombia, Mexico and Peru promote deeper
integration and invite the participation of more
parties. African countries are actively negotiating
both the Tripartite Free Trade Area (a proposed free
trade agreement between the Common Market for
Eastern and Southern Africa, the Southern African
Development Community, and the East African
Community), and the Continental Free Trade Area.
These South–South agreements have historically
faced two difficulties: National leaders often appear
more committed to such agreements in principle
than they are in detail, thus leading to elongated
negotiations and incomplete agreements, and even
when these agreements are concluded, they do not
always stimulate trade as much as the leadership
had hoped. These difficulties are recurring themes in
several of the TPFs. There has nonetheless been a
resurgence of interest in concluding such agreements,
and in making them work. They ought therefore to be
the focus of special attention in TPFs.
