Regional trade agreements (ATRs) appear to be in competition with the WTO, but they can often effectively support the WTO`s multilateral trading system. THE ATRs, which have been defined within the WTO as reciprocal preferential trade agreements between two or more partners, have enabled countries to negotiate rules and commitments that go beyond multilaterally. In return, some of these rules have paved the way for an agreement within the WTO. Services, intellectual property, environmental standards, investment policy and competition policy are topics discussed in regional negotiations and subsequently developed on agreements or topics for discussion within the WTO. While the WTO uses the term “most privileged nation” to describe non-discriminatory trade treatment, since 1998, U.S. legislation has characterized this treatment as “normal trade relations.” See Internal Revenue Restructuring and Reform Act of 1998, S.L. 105-206 No. 5003, 112 Stat. 685 (1998). This report uses WTO terminology. The General Agreement on Trade in Services (GATS), which also contains a general obligation for the MFN, provides for a departure from the liberalisation of trade in regional services agreements, provided that barriers and other restrictions on trade in services are removed immediately or within a reasonable time frame and that the agreement provides significant sectoral coverage13. Finally, the contracting parties to the agreement must notify the Council for Trade in Services of the existence of such an agreement and, if it implements a deadline, 15 19 The texts of the free trade agreement between the United States and Morocco (Morocco, independent) are available from www.ustr.gov/trade-agreements/free-trade-agreements (22 February 2013). The U.S.-Morocco Free Trade Agreement, the U.S.-Peru Free Trade Agreement and the U.S.-Chile Free Trade Agreement came into force on January 1, 2006, February 1, 2009 and January 1, 2004, respectively.
THE WTO agreements recognize that ATRs can benefit countries as long as their objective is to facilitate trade between their contracting parties. They also recognize that, in certain circumstances, these agreements could harm the commercial interests of other countries. Normally, the creation of a customs union or free trade area would be contrary to the principle of non-discrimination of all WTO members (“the most favoured nation”). However, Article 24 of the General Agreement on Tariffs and Trade (GATT), Article 5 of the General Agreement on Trade in Services (GATS) and the Enabling Clause (paragraph 2, point c) allow WTO members to enter into ATRs as a specific exception, provided that certain strict criteria are met. 54 The requirement for a barrier to foreign trade would apply to domestic rules of law concerning both imports from the parties to the ATRs and third parties, since the measures are part of an “other trade regime” relating to trade with third parties under Article XXIV:5 of the GATT. However, multilateral and bilateral approaches – removing trade barriers in coordination with other countries – have two advantages over unilateral approaches. First, the economic benefits of international trade will be strengthened and strengthened if many countries or regions agree to remove trade barriers. By expanding markets, concerted trade liberalization enhances competition and specialization between countries, increasing efficiency and consumer incomes.