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'''Mario Marconini, ICTSD EPAs and Regionalism Programme, Issue N° 4, Diciembre 2009'''

Regional trade agreements (RTA) have become a distinctive feature of the international trading landscape. Their number has increased significantly in recent years, as World Trade Organization (WTO) member countries continue to pursue these agreements. Some two hundred odd agreements have been notified to the WTO but their number may be actually higher, as some agreements are never notified to the multilateral bodies and many more are under negotiation. As a result, more and more trade is now covered by such preferential deals, prompting many analysts to suggest that RTAs are becoming the norm rather than the exception.

Many regional pacts contain obligations that go beyond existing multilateral commitments, and others deal with areas not yet included in the WTO, such as investment and competition policies, as well as labour and environment issues. Regional and bilateral agreements between countries at different stages of development have become commonplace, as have attempts to form regionwide economic areas by dismantling existing trade and investment barriers, an objective that figures prominently in East Asian countries’ trade strategies.
Yet the effects of RTAs on the multilateral trading system are still unclear, as is their impact on trade and sustainable development. They represent a departure from the basic Non-discrimination principle of the WTO, and decrease the transparency of global trade rules, as traders are subject to multiple, sometime conflicting requirements. This is particularly the case in relation to rules of origin, which can be extremely complex and often vary in agreements concluded by the same countries. Also, the case that WTO-plus commitments enhance sustainable development is far from proven, and it is not readily apparent whether RTAs enhance trade rather than divert it.

However, developed and developing countries alike continue to engage in RTA negotiations, and this tendency seems to have been intensified recently due to the slow pace of progress in the multilateral trade negotiations of the Doha Round. Countries feel the pressure of competitive regional liberalization and accelerate their searches for new markets. Thus, while most countries
continue to formally declare their commitment to the multilateral trading system and to the successful conclusion of the Doha negotiations, for many bilateral deals are taking precedence.

Thus, gaining a better understanding of the workings of RTAs and their impact on the multilateral trading system is a key concern of trade analysts and practitioners. 

There are many interpretations of the dynamic relationship between RTAs and the WTO. The fact remains, however, that RTAs are here to stay. If anything, they will continue to increase in number in the coming years. They are already an integral part of the international trade framework, and influence the behavior of governments and traders. They co-exist with the multilateral trading system and impact it in manners that have yet to be fully understood. Regional rules
often replicate multilateral disciplines, but sometimes go beyond them by going deeper into some commitments, with implications for sustainable development that need to be highlighted.

It is for these reasons that ICTSD has decided to initiate a research, dialogue and information programme whose main purpose is to contribute to filling in these knowledge gaps and gaining a better understanding of the evolving reality of RTAs and their interaction with the multilateral trading system.

This issue paper, titled “Revisiting Regional Trade Agreements and Their Impact on Services Trade” written by Mr. Mario Marconini, is a contribution to that process. The paper exhaustively reviews services disciplines included in several Federal Trade Agreements (FTA). The aim of the paper is to enable stakeholders to understand how rules and commitments regarding trade in services
have been introduced in FTAs, and how those policies might impact sustainable development in developing countries.

In the light of the great importance of services trade for developing countries, concluding chapters complement the technical analysis with a discussion on the interaction of services disciplines and development objectives including the crucial aspects of free movement of capital and labour.

The main conclusion of the paper is that the incorporation of services disciplines in FTAs has thus far delivered little either in terms of liberalization or in terms of development. Rather services agreements tend to bind the status quo. Regional agreements have also fallen in short of achieving
progress in matters that were supposedly better tailored for preferential agreements and have not been included in the multilateral trading regime – such as mutual recognition. Coequally, the co-habitation of FTAs covering services and the GATS seems to have been accepted by the international trade community. In any case, the difficulty for developing countries is less the choice of forum than the identification of their specific interest in services negotiations. The fact that some agreements may include development provisions is no guarantee that the individual country interests are adequately contemplated.

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