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Authors’ Concluding Response: Assessing the Case for More Plurilateral Agreements

Published on October 2, 2015        Author: 

Editor’s Note:  This is the authors’ concluding response in a series of posts discussing the article in the current issue of EJIL Vol. 26 (2015) No 2, by Bernard Hoekman and Petros Mavroidis. The original post is here. See also the  posts  discussing the article by Junji Nakagawa, Diane Desierto, and Geraldo Vidigal.

We have profited a lot reading the responses to our article by our three colleagues. Undoubtedly, this discussion will help us streamline our thinking going forward, since we believe the discussion regarding the institutional design of the WTO is about to start. Indeed, the passage from the Tokyo round ‘GATT clubs’ approach to the ‘WTO single undertaking’ was not discussed in depth among the institutional stakeholders. It is high time it takes place now, and this is what we hope our contribution will help happen.

We would like at the outset to set the record straight regarding property rights on this issue. We claim no originality in making a case for more plurilateral agreements (PAs). The main contribution on this front is a paper by Robert Z. Lawrence (2006), to which we refer a number of times in our article, and which, surprisingly had been left unanswered. Lawrence brought together discussion that preceded him, and provided a clear framework to think in concrete policy terms about clubs within the multilateral system. Academic literature on ‘clubs’ or ‘codes’ (the term used during the Uruguay round, in the GATT, and more generally, “minilateral” liberalization and cooperation goes back to the 1980s). A notable contribution on this score is B. Yarborough and R. Yarborough (1992), Cooperation and Governance in International Trade: The Strategic Organizational Approach.

Our basic point, simply put is that there are three factors that all bolster the case for PAs, and the ensuing ‘club of clubs’ approach originally advocated by Lawrence almost ten years ago. These factors are:

  • the proliferation of PTAs (preferential trade agreements) following the advent of the WTO, that is, at a time when tariffs are at an all-time low. Modern PTAs deal to a significant extent with regulatory matters;
  • the geo-political dynamics associated with the rise of China and other emerging economies; and
  • the fact that the trade agenda increasingly centers on regulatory differences, an area where the ‘single undertaking’ approach has not proved to be much of a success.

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WTO ‘à la carte’ or ‘menu du jour’? Assessing the case for more Plurilateral Agreements

Published on September 30, 2015        Author: 

Editor’s Note:  This is the first in a series of posts discussing the article in the current issue of EJIL Vol. 26 (2015) No 2, by Bernard Hoekman and Petros Mavroidis. See also the  posts  discussing the article by Junji Nakagawa, Diane Desierto, and Geraldo Vidigal. For the authors’ concluding response, see here.

The WTO and … ‘clubs’

The long-running Doha Round deadlock illustrates how difficult it has become to get agreement on new rules of the game among 161 WTO Members. The Agreement on Trade Facilitation that was negotiated at the 2013 WTO Ministerial meeting in Bali demonstrated that this is possible, but the proliferation of preferential trade agreements (PTAs) illustrates that many countries have been moving away from using multilateral trade agreements to liberalize international commerce and agree to new policy disciplines. Recent examples of PTAs that involve major trading nations include the agreements signed by Korea with the EU and the US and the ongoing Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP) negotiations. It may be that one of the consequences of the Doha deadlock has been to give countries greater incentives to engage in PTAs. But there may be a reverse causality effect as well: the existence of the PTA option may reduce the incentive to agree on rules on a multilateral basis. Whatever the case may be, the proliferation of PTAs results in fragmentation of the global trading system and generates substantial information and transactions costs for traders.

There has been some action in the WTO on market access issues. This has taken the form of so-called critical mass agreements, under which concessions negotiated among a subset of countries are extended to all WTO Members a nondiscriminatory, most-favoured-nation (MFN) basis. Examples include ongoing negotiations to liberalize trade in environmental goods and the effort to extend the coverage of sectoral initiatives to liberalize trade, most notably the 1997 Information Technology Agreement (ITA). Critical mass agreements have always been an important mechanism in the GATT/WTO setting: if enough large players participate in a liberalization exercise they need not worry about free riding by other countries that do not want to participate.

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