Bilateral and Regional Trade Agreements as a Challenge to the Multilateral Trading System

Abstract

Whether bilateral or regional trade agreements are rather friends or rivals of the multilateral trading system is an evergreen question of international economic law. Recent times clearly show an ever faster increase of such agreements in numbers and their regional as well as substantial reach grows dramatically. Economic theory seems to be unclear as to the conditions under which RTAs might be useful or harmful. The rules on RTAs embedded in the WTO legal framework are far from being precisely phrased and the institutional oversight of RTAs – with an unresolved delineation of competences between political and judicial bodies – has proven completely ineffective. The new 2006 Transparency Mechanism adopted in the course of the Doha Round will not change this to the better. Some of the more intricate questions that are raised by full membership of RTAs such as the EC in the WTO have not even be seriously be addressed. However, the rather nebulous and unclear rules combined with an inconclusive institutional setup may be exactly what is necessary to deal with RTAs in order to ensure the survival of the multilateral trading system. A more restricted approach to the obvious desire of WTO Members to pursue bilateral and regional trading strategies could as well turn out against the multilateral system itself if Members were seriously confronted with the need to choose between one or the other.