WORLD TRADE REPORT 2011
PTAs and the WTO:
From Coexistence to Coherence
Geneva, 20 July 2011
1
Major Themes of WTR 2011
 Preferential trade agreements (PTAs) continue to
proliferate
 Trade preferences are less and less important, so other
factors are driving PTAs
 “Deeper integration” trends are rising
 These developments have an impact on the relationship
between PTAs and the WTO
2
Number of PTAs in force (1950-2010)
300
250
developing-developing
developed-developing
Number of PTAs
200
developed-developed
150
100
50
0
Year
3
Intra- and cross-regional PTAs in force (1950-2010)
300
250
Cross-Regional
Intra-Regional
Number of PTAs
200
150
100
50
0
Year
4
PTAs by type (1950-2010)
300
250
PTA-PTA/country
Plurilateral
NUmber of PTAs
200
Bilateral
150
100
50
0
Year
5
Tariff preferences matter less and less
 Only 16% of total trade subject to preferences; 51 % MFN dutyfree; 33% positive MFN
 Average tariff only 4%, with 2 % of trade eligible for preferences
above 10%
 “Competition-adjusted” preferences: Some 87% of trade
benefiting from preferences have margins of no more than 2%
BUT
 Certain tariff peaks persist on “sensitive” products, sometimes
in both MFN and PTA trade
 About 66% of MFN trade with tariffs of 15% or more attract the
same tariff levels under PTAs
6
Other motives for PTAs
 Considerations applying to both MFN agreements and PTAs:
 Neutralizing the “beggar-thy-neighbour” effects of unilateral trade
policies
 Gaining credibility and reducing uncertainty through lock-in effects
 Signalling openness to investors
 Some other factors particular to PTAs:
 Increasing domestic market size
 Achieving deeper commitments, perhaps more quickly
 “Political” motives
7
“Deep” integration characterizes an
increasing number of PTAs
 Arrangements that go beyond a simple free trade area.
 “Intensive” and “extensive” integration: WTO+ and WTO-X
 International production networks foster deep integration, a
reflection of the complementarity between trade and
governance
 A proxy measure for production networks: trade in intermediate
goods
8
Number of PTAs covering WTO+ provisions
100
90
Sector covered
Legally enforceable
80
Number of PTAs
70
60
50
40
30
20
10
0
9
Number of PTAs covering WTO-X provisions
Provisions
Competition policy
IPR
Investment
Movementofcapital
Environmental laws
Agriculture
Research and technology
Regional cooperation
Education and training
Energy
Labour market regulation
Industrial cooperation
Visa and asylum
Cultural cooperation
Social matters
Financial assistance
Consumer protection
Information society
SME
No. of PTAs
Of which legally
enforceable
70
60
56
55
44
32
31
30
28
27
26
25
25
23
22
21
20
19
19
63
50
41
53
20
9
9
4
8
8
20
5
19
3
12
6
7
5
7
Provisions
No. of PTAs
Of which
legally
enforceable
Approximation of legislation
Statistics
Human rights
Political dialogue
Economic policy dialogue
Illicit drugs
Money laundering
Anti-corruption
Data protection
Audiovisual
Illegal immigration
Mining
Taxation
Health
Public administration
Terrorism
Nuclear safety
Innovation policies
18
15
14
14
13
12
12
11
11
11
9
9
8
7
6
5
4
2
6
2
0
0
3
0
0
5
6
0
2
2
3
1
0
0
0
1
10
Number of PTAs covering WTO-X provisions
Most frequently encountered provisions
Least frequently encountered provisions
80
80
Eforceable
Number of PTAs
60
50
40
Covered
70
Enforceable
60
50
40
30
30
20
20
10
10
0
0
Number of PTAs
70
Covered
11
Evolution of WTO+ and WTO-X provisions
WTO-X provisions
1958-79
1980-89
covered
8
6
4
2
1990-99
2000-10
enforceable
0
0
2
4
6
8
10
Number of WTO-X provisions(average)
10
WTO+ provisions
1958-79
1980-89
covered
1990-99
2000-10
enforceable
12
WTO+ and WTO-X provisions by income
group
WTO+ provisions
10
5
0
0
5
10
Number of WTO-X provisions(average)
WTO-X provisions
Developed
Developed-Developing
covered
Developing
enforceable
Developed
Developed-Developing
covered
Developing
enforceable
13
WTR2011 examines some policy areas in
greater detail
 Areas examined:
 Services, investment, TBT and competition policy (all “behind-theborder”)
 Questions addressed:
 How much harmonization occurs?
 How far beyond the WTO?
 Are there family resemblances within or among PTAs?
14
Multilateralism and PTAs
Potential synergies
 Deep integration provisions may be non-discriminatory: the MFN
dividend
 Mechanisms in some PTAs may support further integration
 “Non-party" MFN clauses
 Docking provisions
Potential systemic risks
 Trade remedies provisions in PTAs (e.g. anti-dumping and
safeguards) may reinforce discrimination
 The effect of preference erosion on multilateral action
 “Lock-in” and risks of regulatory divergence
15
Future WTO Agenda on PTAs
 Press on with MFN opening
 Strengthen GATT/WTO rules
 A possible “softer” sequential approach
 Transparency mechanism as a first stage
 Best practice in PTAs
 Define rules
 A process aimed at “multilateralizing” regionalism




Reducing transactions costs and minimizing risks of regulatory divergence
Seeking increased commonality in rules of origin
Banking (binding) preferential tariffs
Turning WTO+ and WTO-X into WTO
 Rethinking WTO decision-making as an aid to the multilateralization
process
16
Thank you
17