Re-Thinking Reciprocity: A New Framework for WTO Disciplines on North-South Regional Trade Agreements

Abstract

The Economic Partnership Agreement (EPA) negotiations between the European Union and its African, Caribbean and Pacific (ACP) partners represent the most significant free trade agreement negotiations between developed and developing countries to date, and hold valuable lessons for the ongoing review of WTO rules on development aspects of regional trade agreements. These negotiations, which have proceeded on the basis of existing WTO rules, serve neither trade nor development objectives. The central reason for this is that existing WTO rules – principally Article XXIV GATT – have a ‘tariff bias’ in which only liberalization in goods is taken into account in determining the legality of a regional trade agreement. Based on an analysis of the development and trade issues in the EPA negotiation process, this paper proposes a new view of measuring RTA liberalization in which account is also taken of a broader set of economic interests – including services, aid-for-trade and trade facilitation. This paper also demonstrates that such an understanding of regional trade liberalization does not conflict with the original purpose of Article XXIV, even if there is a need for some reform of this provision to bring it up to date. The paper concludes with a series of legal options that reflect this outcome, ranging from a re-interpretation of existing RTA disciplines to formal reform.

Keywords: Regional trade agreements, free trade agreements, developing countries, Economic Partnership Agreements, EU-ACP trade relations, tariff negotiations, Article XXIV GATT.