Summary

Since 1947, many nations have agreed that more or less uniform global trade rules are in the best interests of the global economy.  The General Agreement on Tariffs and Trade (GATT) and its successor organization the World Trade Organization (WTO) reflect this consensus. A major benefit of this system is that companies seeking to do business across borders can receive some assurance that their goods and services will be protected from discriminatory tariff and non-tariff treatment, and receive the same treatment as their competitors in the target market or from third countries. However, at this time and depending on how one counts, dozens if not hundreds of "extra-WTO" bilateral and regional trade agreements have been negotiated worldwide.  By their nature, these agreements provide benefits to signatory nations that are not available to non-signatory nations.  This presents the question of whether these agreements will eventually undermine the WTO and the world economy.

Analysis

As a trade policy professional, I have testified before Congress on the Doha Development Round, organized three U.S. business delegations to WTO ministerial conferences (Doha, Cancun and Hong Kong) and worked with companies from many sectors that recognize the need to advocate comprehensive, uniform global trade and investment rules.  The WTO has organized negotiating topics into many different categories; some of the more prominent categories include (1) agriculture, (2) non-agricultural market access, (3) trade-related intellectual property rights, and (4) trade in services.


However, WTO negotiations require the consensus of dozens of signatories and, for that reason and others, tend to take years to achieve results.  In part due to impatience with this process, many countries have opted to negotiate agreements with smaller numbers of neighboring countries with who they share more immediately obvious interests.  While in some cases, these bilateral or regional agreements actually achieve benefits that are superior to those that can be expected from a global WTO agreement, they run the risk of causing fragmented and differentiated commercial rules that present high compliance costs to companies attempting to navigate these rules.  perhaps more worrisome, they may present a risk of undermining consensus support for a global trade regime itself.

Together, Russia, Kazakhstan and Belarus possess significant economic resources and clout.  It remains to be seems whether their intended regional pact will enable them to negotiate more effectively with other countries, at the expense of those other countries and the WTO system itself.

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