Transparent Regional Integration - A Study of the WTO Surveillance of Regional Trade Agreements

Abstract: This study is an assessment of the functioning of the three year old Transparency Mechanism. The mechanism has a surveiling role in the WTO of the Regional Trade Agreements (RTA). Formation of RTAs has been increasing rapidly during the latest twenty years, causing a tension in the multilateral trading system. RTAs give more preferable treatment to parties within the agreement than to trading partners outside of the RTA, which clearly violates the principle of non-discrimination. Preferable treatment also has damaging effects on non-members due to trade diversion as trade shifts from low-cost producers in third countries to trade within the RTA. RTAs have for a long time had an unclear relation to the world trading system and the matter of RTAs have for the first time been included in the multilateral trade negotiations (MTN) as part of the Doha Development Agenda (DDA). MTNs on regional integration have so far adopted the Transparency Mechanism. The TM has managed to increase transparency by establishing the procedure of early announcements of negotiations on RTAs. However the provision of notifications need to be enforced so that members provide neccessary data before an agreement enters into force. The TM could further improve the transparency for regional Rules of Origin (ROO).