Executive Summary

Multilateral trade rules provide the best guarantee for securing substantive gains from trade liberalisation for all WTO members. Nevertheless, WTO rules also allow the possibility of regional integration and bilateral agreements for members who wish to liberalise at a quicker pace. In this sense, Regional Trade Agreements (RTAs) should be seen as a complement rather than an alternative to multilateral agreements.

RTAs have allowed groups of countries to negotiate rules and commitments that go beyond what was possible at the time multilaterally. In turn, some of these rules have paved the way for agreement in the WTO. Services, intellectual property, environment, investment, and competition policies are all issues that were raised in regional negotiations and later developed into agreements or topics of discussion in the WTO. On the other hand, there are concerns that the proliferation of RTAs could create problems of coherence and consistency in trade relations, put developing countries at a disadvantage when negotiating RTAs, and generally divert negotiating resources and energy from multilateral negotiations. In order to limit the problems and maximise the benefits of regionalism, it is important to promote transparency in RTAs and to ensure the consistency of RTAs with WTO rules.

Over the last few years, the number of RTAs has significantly increased. RTAs have become so widespread that practically all WTO members are now parties to one or more of them. In the near future, if RTAs reportedly planned or already under negotiation are concluded, the total number of RTAs in force might soon approach 400.

While the purpose of many RTAs is to reduce tariffs, an increasing number of agreements also deal with other trade-related issues, such as labour and environment. Today, RTAs negotiated by most OECD members include some type of environmental provision.

The scope and depth of environmental provisions in RTAs varies significantly. Among OECD members, Canada, the European Union, New Zealand, and the United States have included the most comprehensive environmental provisions in recent RTAs. The agreements by the United States are unique in that they put trade and environmental issues on an equal footing. Among non-OECD countries, Chile’s efforts to include environmental provisions in its trade agreements are particularly noteworthy.

In spite of these developments, the number of RTAs including significant environmental provisions remains small. There is still much scepticism, especially among developing countries, toward dealing with environment in the context of trade agreements. Some countries consider that trade agreements are not the appropriate place to deal with environmental issues; others fear delays in the negotiations; some think that environmental provisions may lead to imposing higher environmental standards upon them, or that they be misused for protectionist purposes.

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