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Pascal Lamy at the Opening of the Academic Year of the Graduate Institute at the World Trade Organization on 3 October 2012. Photo Eric ROSET.
Do you view the “mega-regionals”,
like TPP and TAP, as posing
a different challenge to the WTO
than the many bilateral RTAs
since 1990s?
At one level no and at another level
yes. We have had mega-regionals
before. The joining of Europe into a
Single Market created the largest trading
power in the world. NAFTA is an
enormous trading area. ASEAN, APEC,
all of these trading entities are big. The
WTO, and the GATT before it, continued
to operate successfully. In fact,
many of these preferential trading
arrangements affect trade far less than
you might imagine. We at the WTO
have studied this situation closely and
we have determined that around 85%
of trade today takes place under MFN
or WTO tariffs. Only about one-third
of peak tariffs (15% or higher) are eligible
for reduction under preferential
trade arrangements. Moreover, businesses
often are confused about the
multitude of rules of origin, tariff structures,
customs requirements that are
part and parcel of such bilateral agreements.
This is why only around onequarter
of businesses surveyed in Latin
America and Asia actually trade under
the terms of bilateral agreements. The
risk is a proliferation of different standards
or regulations, which are less
transparent than duties. While such
measures are normally drafted to
address real problems, they can inadvertently
or otherwise, lead to trade
slowing down and/or rising trade tensions.
These kinds of agreements are
politically cheaper, but economically
lower quality.
And we should not underestimate the
danger of competing – or even conflicting
– trading blocks. When such trading
arrangements are superimposed
over a paradigm of rising geopolitical
tension and rivalry, the danger grows.
How this situation evolves depends
on a number of factors including the
true objectives behind entering into
these relationships. If the objective
is opening trade, there can be benefits,
but this depends on how such an
opening takes place and what strings
are attached. If we are to avert this,
we need to “multilateralise” regionalism
through enhanced global rules
and market opening. •
LA REVUE DE L’INSTITUT I THE GRADUATE INSTITUTE REVIEW I GLOBE I N11 Printemps I Spring 2013
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