Development and Finance from issue 2008/3

György Mikósdi

Multilateral Trading System Facing Challenges of Regionalism

- Abstract -

JEL F-13

In recent years, regionalism has become a very prominent and irreversible feature of the multilateral trading system. By comparing the tools of regionalism and multilateralism, it may be concluded that regional trade agreements can supplement but cannot replace multilateral rules and gradual multilateral liberalisation. This gives way to a second conclusion that many consequences of the RTA activity require the strengthening of the multilateral framework. This is needed in particular when regionalism facilitates divergence from the rules of the multilateral system, or when the system of regional agreements exerts an impact on countries not involved in such agreements, or when regionalism increases business costs. Another important conclusion is that in some very sensitive areas the regional approach is no more successful, and in some cases even less so, than multilateral activity. RTAs, for example, have achieved little in the regulatory interface domain between national regulations and the trade in services, and in certain fields the scope of their provisions is narrower than those of GATS.

György Mikósdi, economist, retired economic diplomat

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