Trade Policy Note Final-rev08 - Development

urden of tariff liberalization in North-South RTAs weighs asymmetricaly on
developing countries. While it is estimated that trade among RTA and FTA partners
makes up nearly 40 per cent of world trade, a much smaller amount of this trade
actually benefits from preferential tariff margins as much of the trade among these
countries is in items where the MFN rate is zero.. 103 On the other hand, FTAs among
developing countries may result in meaningful tariff reductions and substantial
margins of preference. 104
More than Spaghetti!
There is a need to assess the potential concrete gains from FTAs before entering into
their negotiation, examining such aspects as the real improvement in access that can
be achieved, the likelihood that comparable results can be obtained from multilateral
negotiations and the extent to which the real access problems require a multilateral
solution. 105 There is also the need to examine the objectives of the trading partner.
These may have a strong political content, or may reflect positions they have taken
and strategies they are pursuing at the global level. Far from being the confused
“spaghetti bowl” described by some observers, FTAs are the manifestation of
coherent geopolitical strategies on the part of the major trading countries.
Developed countries are using FTAs as a means of furthering their multilateral
agendas by locking in developing partners to commitments that reflect their positions
in the WTO negotiations. One example is the treatment of GIs, where the EU FTAs
impose a TRIPS plus protection, while United States FTAs impose TRIPS minus
(eliminating the possibility of sui generic GI systems and replacing them with regular
trademark systems of protection). 106
Sectoral interests in developing countries may gain from the elimination of duties on
products not covered by preferences where MFN tariff rates present a significant
barrier to trade, such as in textiles or agriculture. However, duty free entry of textiles
and clothing is often subject to complicated rules of origin, while sensitive
agricultural products may be excluded. Furthermore, most FTAs do not establish
disciplines on agricultural subsidies in the major developed countries, thus exposing
farmers in the developing partner to unfair competition, even though some involve
bilateral disciplines on export subsidies. 107 Furthermore, agriculture safeguard
mechanisms may only be applied over the implementation period. 108 Developing
countries generally do not have the competitive strengths to take advantage of
103 See World Bank , Global Economic Prospects, 2005 p.41
104 For example only one per cent of India’s tariff lines had M FN rates of zero, Ibid.p41
105 The FTAA negotiations have not succeeded largely because the MERCOSUR countries perceived
that the main barriers facing their access to the USA market (agricultural subsidies and anti-dumping
measures) could not be effectively addressed at the regional level.
106 See Vivas, David and Christophe Spennemann, “Dialogo Regional sobre Propiedad Intelectual,
Innovación y Desarrollo Sostenible” (UNCTAD/ICTSD Project on Intellectual Property and
Sustainable Development, Costa Rica, May 2006) (www.ictsd.org).
107 Some attempt has been made to deal with agricultural export subsidies in the Chile/USA FTA,
however.
108 Bellmann, Cristophe, “Latin American Countries in Bilateral and Multilateral Agricultural
negotiations”, presentation to the Andean Development Corporation,
(www.caf.com/attach/11/default/Lat_am_Ag.pdf).
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