Rtas/Ftas in the Global Economy and the Asiapacific Region

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2005/FTA-RTA/WKSP/006

RTAs/FTAs in the Global Economy and the AsiaPacific Region

Submitted by: Prof. Robert Scollay, APEC Study Centre, University of Auckland

Workshop on Identifying and Addressing Possible Impacts of RTAs/FTAs Development on APEC Developing Member Economies Hanoi, Viet Nam 28-30 June 2005

RTAs/FTAs in the Global Economy and the Asia-Pacific Region

Robert Scollay APEC Study Centre, University of Auckland and PECC Trade Forum

Multilateral, Unilateral and Preferential Liberalisation (1)

Multilateral Liberalisation Non-preferential approach to freer trade Trade barriers lowered among all members of the international trading system

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complete removal of barriers unlikely in the short-term “most favoured nation” (MFN) treatment GATT Article I

Based on non-discrimination

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Provides equality in market access opportunities Ensures imports from lowest-cost source

Multilateral, Unilateral and Preferential Liberalisation (2)

Unilateral liberalisation Individual countries lower their trade barriers without reciprocation Improves resource allocation within liberalising economy WTO members must still apply MFN APEC Unique initiative aiming at regional liberalisation on a non-discriminatory basis “Concerted unilateralism”

Multilateral, Unilateral and Preferential Liberalisation (3)

Preferential trading arrangements (PTAs) (Regional or bilateral) Barriers lowered between members but kept in place against non-members Preferences created in favour of members Market access implications

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Preferential access to members Discrimination against non-members

Discriminatory contradicts WTO’s MFN principle Non-reciprocal PTAs a special type of PTA

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Usually between developed and developing economies Preferential access granted by one partner (usually the developed economy partner), but not the other e.g. GSP

PTAs In Practice

Basic units are...