RTAs and Trade Integration

While 123 countries participated at the Uruguay Round negotiations (1986-94), the corresponding figure in 2002 and 2023 reached 140 and 164 respectively. In light of the growing reach of the WTO, it is somewhat baffling that the cumulative number of regional trade agreements (RTA) has increased to 817 in 2023. Ironically, several RTAs were signed during the Uruguay Round, which was the result of many countries treating them as strategic insurance against a probable failure of a consensus-based multilateral trade deal. Inclusion of a designated RTA agreement within the WTO fold can be considered as an attempt to ensure that the preferential trading arrangements do not end up being too heavily trade-distorting in nature. The WTO provisions accordingly intend to ensure that the RTA preferences are not extended to partner countries for increasing effective protection against the non-RTA countries. However, potential trade diversion and RTAs emerging as a stumbling block to the multilateral negotiations may not be a time-invariant outcome, given the dynamic nature of sectoral competitiveness patterns across countries. In addition, one of the defining features of the RTAs in the recent period has been their ‘WTO-Plus’ nature, i.e., embodiment of provisions which are yet to be concluded at the multilateral forum. This has the potential to facilitating discussions on these newer areas in upcoming WTO negotiation rounds.