This is a stepping stone for the future of liberalization according to few economists. The transactions are efficient as smaller groups are parties to the transaction and consensus on matters of sensitive sectors can be reached quickly. Economists have argued that the transactions are smoother and straightforward as compared to WTO negotiations. It is believed that regional trading blocs allow promoting liberalization more efficiently than multilateral agreements. One such example of a trading bloc is the European Union. The number of trading blocs has grown ever since the 1900s. The WTO does not consider RTA to be under its purview and off late has commented on the discriminatory nature of RTAs despite it being in line with the multilateral trading system. The unfortunate circumstance, in this case, is that the countries that are not part of the RTAs tend to lose out. This would help them get easier market access than what applies to the nations that are part of WTO. WTO rules permit countries to form regional trading blocs and trade amongst themselves. Even though trading blocs promote the reduction of trade barriers, they do tend to impose restrictions on other states that are not part of the trading bloc. The Principle of Most Favoured Nation requires equal treatment of foreigners and locals in trade matters. However, the second foundation of WTO that lies on the premise of the Most Favoured Nation ( MFN) is said to be in clear conflict with the principles of a trading bloc. The very objective of GATT and now WTO is that there must be economic openness and trade barriers must be lessened for the benefit of all.Īlso Read: REVIEW OF ARTICLE 27.3(B) UNDER TRIPS AGREEMENT: OURLEGALWORLD The underlying foundation of this principle states that no discrimination must be made between GATT members. General Agreement on Tariffs and Trade and WTO (the successor of GATT) both follow the principle of non-discrimination. The very principle for the establishment of trade blocs is in line with the principles of the World Trade Organization. Secondly, it is discriminatory as it is only applicable to those who are member states and non-member states are not given the same treatment. The essential features that one must vary of when talking about trade blocs is that trade blocs firstly aim at removing trade difficulties and permit trade efficiency. A trading bloc is a trade agreement between various states aimed at removing trade barriers for member states. However, the increase in regional trading blocs is now seen as a major cause of concern for the system of trade under WTO. Initially, the growth of regional trading blocs was encouraged by the World Trade Organization (WTO). Regional trading blocs have been a striking feature of international trade ever since the 1900s. Regional trading blocs: Stumbling or building blocks? INTRODUCTION
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