Week 5: Regional Trade Agreements and the trading system video. Flashcards
What is the legal basis for Regional Trade Agreements within the WTO framework?
RTAs are legal under Article 24 of GATT/WTO
What is the ‘spaghetti bowl problem’ associated with RTAs?
the ‘spaghetti bowl problem’ refers to the overlapping and complex rules of origin due to numerous RTAs
How do RTAs benefit trade liberalization compared to WTO agreements, according to Gary Hufbauer
RTAs reduce trade barriers faster than WTO agreements, addressing areas like services and investment, and often lowering tariff barriers to zero
What are Bhagwati’s concerns about developing countries signing RTAs with bigger entities?
Bhagwati is concerned that developing countries might sign unfavourable terms with larger entities like US and EU
What are the potential misleading aspects of preferential agreements?
Preferential agreements can be misleading as they might offer only temporary benefits that do not account for long-term impacts.
Why does Gary Hufbauer believe both RTAs and the multilateral system are permanent features of global trade?
Hufbauer believes both systems are permanent because they are integral to current global trade dynamics
What challenge does the session highlight regarding the alignment of RTAs and global trade?
The challenge is to align RTAs with the global trade framework such that smaller nations are supported and not disadvantaged
How many Regional Trade Agreements are currently in existence, and what systemic issue does this cause?
Around 400 RTAs are in existence, causing complication in global trade and challenging the Most Favoured Nation (MFN) principle
What does MFN mean in global trade?
The Most Favoured Nation (MFN) principle is based on the idea that countries should treat all their trade partners equally- that no one country should be “more favoured”
