Bogorinitiative of the Asia Pacific Economic Co-operation (APEC) forum, launchedenthusiastically in 1994, has not made much progress despite politicalcommitment in the member countries. Its objective of ‘free and open trade inAsia-Pacific by 2010 for developed member economies and 2020 fordeveloping ones’ through autonomous MFN tariff reductions has notadvanced significantly in the recent years. MERCOSUR encounteredobstacles following the decision by Argentina, on an emergency basis, tosuspend certain regional commitments. In the backdrop of its continuingfinancial crisis, Argentina applied a surcharge on imports in the autumn of2000. Several plans to complete free trade agreements (FTAs) and customsunions (CUs) in Africa proved to be difficult to complete, or were inordinately
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delayed. There were instances when members of one RIA defected towardsanother RIA. Even when successfully launched, RIAs have their limits. Asalluded to in the preceding chapters, typically they do not provide for 100percent product coverage of free trade. Although not always successful,domestic interest groups and lobbyists often create problems for RIAs as well.
2. PARTICIPATION IN RIAs AND LINKS WITHTRADE POLICY REGIMETo examine whether there is a direct, effective and systemic link between adeveloping country’s participation in an RIA and the restrictiveness orliberalization of its trade policy, one needs to closely examine the trade policyof the members of different RIAs. If this scrutiny reveals that RIAs lead toliberalization then one can infer that RIAs are not the stumbling blocks but thebuilding blocks of a liberal global trading system. Foroutan (1998) took anintertempoal view while defining an effective RIA. According to him, simplebefore-and-after statistics should be a conclusive test of the impact of an RIAon the global trading system. That is, if data reveal that the share and intensityof intra-RIA trade in the years following the formation of the RIA issignificantly larger than in the years before, the RIA has been effective. Thisis a somewhat crude, albeit useful, criterion. It has been adjudged roughbecause, first, the very expectation of a positive trade deal may already boostthe flow of trade between potential RIA partners even before any formalagreement is signed. Second, it is plausible that an RIA may be important forone or two members of an RIA but not for others. Despite weaknesses, thisapproach has the advantage of relying on standard trade data that are readilyavailable.Trade reform can take place at three distinctive levels: unilateral initiatives,multilateral liberalization based on reciprocity, and preferential or discriminatory liberalization. Of these three, unilateral liberalization is the best option fora small country. Here a ‘small’ country has been defined as one that cannotinfluence its terms-of-trade. However, if during multilateral trade negotiationsother countries reciprocate and liberalize as well, it will indeed increase gainsfrom unilateral liberalization. But small countries cannot possibly plan theirreform strategy conditionally upon reciprocity by trading partners. Preferentialor discriminatory liberalization, as a part of a RIA, would indeed work for asmall country. Starting in the mid-1980s, most of the developing world wasmoving towards market-oriented economic reforms. In this endeavor, theywere followed by the transition economies. Unilateral trade liberalization tookplace concurrently with the multilateral efforts to liberalize trade in goods andservices in Geneva.3 An extensive analysis of the trade regimes of 75 countries
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was undertaken by Foroutan (1998). Data collected from various standardsources showed that, excluding countries (such as Hong Kong SAR,Singapore and the Gulf states) which have traditionally had a liberal traderegime, countries that became members of effective RIAs had liberalized theirtrade regimes during the 1987–97 period. This does establish a direct linkbetween trade liberalization and RIA membership.The next related query is whether the RIA participation was the causalfactor behind trade liberalization. It was not clear because many of the RIAmember economies, particularly those in Asia and Latin America, wereliberalizing unilaterally and contemporaneously became members of theRIAs. Therefore, it is difficult to determine how much of causality can beattributed to RIA participation. Besides, since the mid-1980s there were somecountries that liberalized their trade regimes significantly without beingmembers of any RIA. These countries included Chile, Korea, Mexico andTurkey, to mention a few. Conversely, there were some countries that did notliberalize their trade regimes despite being members of RIAs. The AndeanGroup (AG) and CACM countries in the early years of their RIA formationprovide a good example of this. Their participation in an RIA did not initiallylead to overall trade liberalization.Observing these propensities in trade liberalization and RIA memberships,Foroutan (1998) reasonably concluded that if acceptance of a liberal tradepolicy regime is a requirement of an RIA membership, it can be said that thesekind of RIAs generally succeed in liberalizing the trade regime of themembers. With advancing age, RIAs tended to deepen by removing tradebarriers, including non-tariff barriers. Therefore, following that deepeningprocess, some member economies may have liberalized their trade regimes.As opposed to these, as noted above, several Asian and other economies fallin the well-informed country group that did not need an RIA to persuade themto see the plausible welfare implications of a liberal trade policy regime. Thusviewed, an RIA may or may not be instrumental in liberalizing the traderegime of a member economy. It would essentially depend upon whether aparticular RIA has some degree of liberalization built into its design as aprecondition. Thus, the terms of the agreement of an RIA are the answer to thequestion whether or not the RIA would be one that liberalizes the trade regimeof the members. Mere RIA membership cannot be logically equated withliberalizing trade regime and a direct and effective link between them need notexist.2.1 Quantifying Preferential Trade Among RIA PartnersIt is intuitive to assume that with a large number of RIAs of different kinds inforce, a great deal of global trade must be influenced, if not governed, by them.
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Quantifying trade under various preferential trade agreements is not easy. Itfaces methodological problems. There are difficulties in defining what, inquantitative terms, could be taken as intra-RIA trade and what could not.Ideally, one should take customs statistics to determine, first, where eachimport consignment has originated and, second, under which trade regimeeach import consignment has entered the country. However, this kind ofestimate is not only time-consuming but also expensive. These statistics arenot readily available. Besides, one cannot ignore the fact that not all tradeamong the members of an RIA necessarily comes under the preferential traderegime. Sometime economic and administrative costs of meeting all therequirements of the rules of origin (ROO)4 within an RIA are high. Therefore,traders are forced to ignore the preferential, or free trade treatment, providedby the RIA because the most-favored-nation (MFN) tariffs are less than thecost of complying with the rules of origin and other requirements.In an attempt to quantify the share of preferential trade between RIAs at theglobal level, Serra Puche (1998) subtracted the trade of all countries that donot belong to RIAs from the total world trade. The assumption here was thatall intra-RIA trade is conducted on preferential terms – an assumption notnecessarily correct. With this assumption, 53 percent of the world trade wasestimated to be conducted under preferential trade agreements in 1997. Thisestimate could not be taken seriously because it suffered from biases. First, asubstantial proportion of intra-RIA trade is conducted on non-preferentialterms, that is, at zero MFN tariffs. Second, not all intra-RIA trade can bepigeon-holed into the preferential trade category because, as noted above,establishing the ROO is an expensive procedure. For these two reasons theestimate made by Serra Puche (1998) had an upward bias. As opposed to thesetwo, the third bias worked in the opposite direction. It was created bypreferential trade between the RIA partners that takes place on a nonreciprocal basis, like trade under the Generalized System of Preferences,which was not accounted for in Serra Puche’s (1998) study.The methodology followed by Grether and Olarreaga (1998) improvedupon the weaknesses of Serra Puche’s (1998) work and also tried to correct thebiases. Additionally, they provided comparisons across regions for twodifferent periods, 1988–92 and 1993–97. To this end, they decomposed RIAsinto partial RIAs and full RIAs. The former category was defined as thoseRIAs where trade preferences were only granted either to some specifiedproducts or unilaterally to a particular set of RIA members by the moredeveloped member of the RIA. As opposed to this, in a full RIA, as the nameindicated, there was full product coverage and all members grant preferentialaccess to other members.In their methodology they proxy the actual share of trade that entered underpreferential treatment by considering only imports within an RIA that took
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place under tariff rates of higher than 3 percent. The justification was that ifthe MFN tariff was below 3 percent, the incentive to satisfy ROO requirements and benefit from preferential tariff treatment evaporated. For thepreferential trade under GSP, they included imports where there were fullpreferences, or where there were no tariffs and no quantitative restrictions.Their conclusions were: first, preferential trade represented 40 percent ofworld trade during the 1988–92 period and 42 percent in 1993–97. Second,preferential trade in agricultural products recorded a large increase over thesetwo periods. Third, the share of trade under GSP in total preferential traderecorded a significant fall, from 7 percent to 3 percent over the two periods.This reflected the general decline of trade under GSP worldwide. Fourth, theregional distribution of preferential trade was found to be highly uneven. Asmay be expected, at 70 percent in 1993–97, Western Europe had the highestshare of preferential trade. Latin America had a low value (27 percent), whileAsia and Oceania had a still lower proportion of preferential trade. Lastly, theyconcluded that countries that have highly open economies also tended to havea larger share of preferential trade.According to the 2002 Annual Report of the WTO, intra-RIA trade couldsoon ‘account for more than half’ of world trade.5 WTO (2002a) alsocomputed the extent to which imports of RIA members are subject topreferential treatment. The same caveats as mentioned above also apply to thisset of computations. As mentioned above, these calculations can only providean indicative picture because not all the imports of members of RIAs from theother members are subject to preferential treatment. It was noted above thatonly a part of intra-RIA trade could be expected to come under the preferentialagreements. The reason is that many tariff lines are MFN-bound at zero. Forinstance, 25 percent of all Japanese imports fell under the MFN-bound zerotariffs, while for the EU this proportion was more than 40 percent. For thesereasons, the proportions of trade that derived from RIA partners computed bythe WTO (2002a) study should be taken with a pinch of salt. It is not counterintuitive that there is a wide variety in the trade, which is derived from the RIApartners. The EU economies are participants in a large number of RIAs. Littlewonder that they also derive a significant proportion of their imports fromtheir RIA partners. Their proportion of RIA-controlled trade ranged between60 percent and 80 percent in 2001. Asian economies were found to be at theother extreme in this regard, while the proportions for economies in Africa andLatin America showed wide variations. The conclusions reached by Gretherand Olarreaga (1998) for an earlier period are comparable to those reached bythe WTO (2002a) for the contemporary period. They are not only similar butalso reinforce each other.Eighty percent of the total imports of Mexico, Namibia, Lesotho, Malawi,and Uganda came from their RIA partners. In some cases, it was found that
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countries which did not enter into many RIAs, had a large proportion of theirimports coming from their RIA members. In such cases the members were (ora particular member was) also their large trading partners. Canada, forinstance, has entered into only five RIAs, but 70 percent of its imports arefrom its RIA partners. The US is Canada’s largest trading partner and a fellowmember of NAFTA. Chile provides an illustration of the other kind. It is amember of seven RIAs but these RIA partners only accounted for 34 percentof its total imports. Therefore, number of RIA memberships cannot representintensity of RIA trade. What is of capital importance is which countries areRIA partners.Several significant expansions and new initiatives were underway in theearly 2000s. For instance, there is the finalization of a 34-member FTAA,potential expansion of the ASEAN to include China – which is fast emergingas a highly successful trading economy – and after that Japan and Korea, andmost importantly the expansion of the EU6 to include ten more Central andEast European countries (CEEC) as members in 2004. Given the fact thatpreferential trade agreements represent the greatest exception to the WTO’sfundamental principle of non-discrimination, the future increase andstrengthening of RIAs would naturally result in an increase in erosion of tradeconducted under the MFN principle (WTO, 2002a).A word about the rules of origin would not be out of place here. As the tradepreferences are assigned only to member countries, the ROO are an importantelement for trade among the members of any RIA. They are not of anysignificance for the members of a customs union because in a customs uniontreatment of imports from third countries is harmonized. For the other kind ofRIAs it is important to determine whether the imports are eligible forpreferential treatment in the importing country. The justification for theapplication of the rules of origin is prevention of imports from the non-RIAmembers, which may try to gain preferential access to the RIA marketsthrough a country that maintains the lowest tariff restrictions. In addition, theMFN tariffs rates vary for the members of the RTA for third-country imports.Besides, each member of an RIA may participate in separate bilateralpreferential trade arrangements with third countries.RIAs have a large diversity in their preferential ROO regimes. As the RIAsfrequently overlap, different sets of ROO may exist for any one economy. Infact, it is a frequently found feature of ROO. In a majority of the RIAs in force,preferential ROO requirements tended to be product-specific. They were oftensupplemented by other provisions, which could either make them morecomplex and flexible, or less so. As a rule, the preferential ROO were morestringent than MFN rules of origin. The ROO also become progressively morestringent with the increase in margin of preference between the MFN andpreferential tariffs.
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2.2 Quantifying Preferential Agricultural Trade among RIA PartnersTo examine the global and regional trends in agricultural trade, long-term timeseries of agricultural trade were constructed for APEC, EU-15, MERCOSUR,and NAFTA by Diao et al. (1999). Based on statistics for 1970–95, theyinferred that while the average annual growth of world exports in agriculturalproducts was 3.4 percent over this period, that in APEC was 4.4 percent,EU-15 was 4.8 percent, MERCOSUR was 4.5 percent and in NAFTA3.9 percent. Therefore, the share of agricultural exports of these four RIAs inthe world exports expanded from 70 percent in 1970 to 85 percent in 1995.The four RIAs exhibited considerable diversity among themselves, asmeasured by their respective shares in global GDP and agricultural trade. Theyalso found that the growth rate of intra-RIA trade in agricultural productsexceeded the growth rate of this sector from these RIAs. Total trade is madeup of intra-RIA trade plus trade with the rest of the world. As intra-RIAagricultural trade accounted for a significant share of each RIA’s total ofagricultural trade, rapid expansion in intra-RIA trade contributed to growth inworld agricultural trade.Owing to considerable diversity in RIAs, their shares of intra-RIA trade inagriculture in their total agricultural trade also differed considerably. Besides,these shares should also be expected to vary between periods. Diao et al.(1999) computed concentration ratios for the entire 1970–95 period and forvarious sub-periods, and found that with the exception of MERCOSUR, on anaverage over the entire period, a typical member of these RIAs did not appearto have traded substantially more with another member than with anothertrading partner located anywhere on the globe. However, if the entire period issub-divided into four equal periods, interesting results emerge. Theconcentration ratio of intra-trade steadily rose and reached its highest point inthe 1990s for all the four RIAs. This result implies that the neighborhoodrelationship within the RIAs – in terms of adjacency and cultural similarities– is not likely to be the only explanation for relatively recent appearance ofhigh concentration ratios in intra-trade in agricultural products. There must besome other causal factors explaining the rise in intra-RIA trade in the recentperiods. Preferential trade arrangements and rising intra-RIA trade, which is arelatively recent phenomenon, is one important factor behind risingconcentration of intra-trade in agriculture. Declining transportation costs andtechnological changes were also helpful factors in this regard.To be sure, adjacency and neighborhood characteristics influence tradebetween neighbors. This effect is greater if the neighbors change their tradepolicy orientation, liberalize and adopt outward-orientation of policy stance.This would indeed enhance trade dynamism between neighboring economies.As intra-regional trade grows, neighbors tend to harmonize their trade
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policies, customs procedures; technical barriers to trade; and sanitary andphytosanitary barriers are removed, leading to intra-trade expansion.Computing trade concentration ratios for the four large RIAs supports thisconclusion.
2.3 RIAs AND REGIONAL ECONOMIC COOPERATIONEven in a situation of few trade barriers in the global markets, there can begoods and services that can only be traded regionally. This amounts to bothregional trade and cooperation in regional development endeavors. Largerpartners in the RIA generally take initiatives in such collaborative regionalendeavors. As noted above, regional trade liberalization of this kind in goodsand services can result in welfare gains that accrue from multilateral tradeliberalization. An apt example is the increasing trade in electricity betweenneighboring countries. Likewise, regional development of dams and waterresources can broadly be put in the same category. A good example isSingapore and Indonesia signing an agreement (in 1991) to cooperate in thedevelopment of water resources in the Indonesian province of Riau in returnfor a guaranteed water supply for Singapore for half a century. Trade in certainservices is also popular regionally. For instance, there are Filipino labor forcesin all the Southeast Asian countries and Indian and Pakistani labor forces inMiddle Eastern countries employed in sectors like construction, and health, aswell as performing mostly blue collar and basic clerical jobs.A new liberal and optimistic institutionalist approach to the global tradingsystem is possible. Taking this approach, liberal institutionalists justify RIAson the following grounds (Trebilcock et al., 1990). They view multilateraltrade in a decentralized framework of negotiations and maintenance ofmutually advantageous bargains among states. They seek ways of designingprocesses that, by reducing information, transaction, surveillance andverification costs, facilitate Pareto-superior deals7 between or among states.Trebilcock et al. (1990) believe that performance of these contracts ispromoted by both reputation effects and tit-for-tat retaliation strategies thattend to solve the Prisoner’s Dilemma problems in multi-period games.
3. BILATERAL, REGIONAL AND CROSS-REGIONALINITIATIVESAs regards the global spread of RIAs, Western Europe has the densestconcentration (WTO, 2002a). Both the EU and EFTA and their constituentmember economies have formed a networks of RIAs. Prevalence of RIAs inEurope and neighboring regions is noteworthy. They account for almost half
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of the total RIAs in the world. This is the result of a half-century-long traditionin using RIAs as an instrument of forging closer ties with neighbors on the partof the European nations.Numerous small and medium-sized RIAs exist among and between theBaltic States, central Europe, and Turkey. In the late 1990s, RIA formationextended to the Southern and Eastern European economies. The Stability Pactwas signed between the countries of former Yugoslavia, under which theystarted negotiating bilateral preferential agreements with each other in 1999.By 2004, the EU will have 10 more members, 8 of which are CEECs, plusCyprus and Malta. This would reduce the number of RIAs in Europe becausethe bilateral preferential agreements of the EU with these ten countries will bevoid. Concurrently, the participation of these countries would become moreintense because they would participate in the EU’s network of RIAs directly.Next to Europe, concentration of RIAs is most dense in Latin America. TheLatin American countries were inspired by the example of EU initiative. Theylaunched into serious RIA negotiations earlier than other developingeconomies. Therefore, the process of forming regional trading blocs is older inthis part of the globe than in other areas. During the 1990s and early 2000s,the process of regional integration intensified with the launching of a largenumber of bilateral and plurilateral (between three or more members)agreements. These initiatives took place both at regional and sub-regionallevels. The integration process not only covered the entire continent but alsoextended to other continents. Chile made a preferential trade agreement withCanada in 1996, while Costa Rica and Canada concluded a similar agreementin 2001. Several Central and Southern Latin American economies are in theprocess of doing the same. Chile and Mexico developed a network of bilateralpreferential agreements in the region. Having completed that, the twoeconomies were looking farther afield to form cross-continental RIAs withEuropean economies and those in East and Southeast Asia. The NAFTAhas reached its last stage of implementation. At the plurilateral level,MERCOSUR and EU were engaged in preferential trade negotiations.In early 2000s, several North African and Middle Eastern economies beganstrengthening their trade ties with the EU by exchanging reciprocalpreferences with it. Their objective was to be a part of a free-trade area withthe EU under the Euro-Mediterranean Partnership Agreement (EMPA), whichenvisaged completing a free-trade area by 2010. This group of economiesincluded Algeria, Tunisia, Morocco, Egypt, Israel, Jordan, Lebanon, thePalestinian Authority, and Syria. During the same period, these countries weretrying to enter into similar free-trade area agreements with EFTA, bothcollectively and with individual member economies. They were alsonegotiating bilateral preferential trade agreements among themselves.Concurrently, North African and Middle Eastern economies were negotiating
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for other regional trade initiatives in both the geographical regions. In 2001,the Arab League launched an initiative for an Arab Free Trade Area by 2007.This was expected to include members of the Gulf Co-operation Council(GCC) and Jordan, Tunisia, Egypt, Sudan, Syria, Somalia, Iraq, the PalestinianAuthority, Lebanon, Libya, Morocco, and Yemen.8 The members of the GCChad another initiative afoot. On their own, they were working towardsdeepening their integration endeavors and having common external tariffs by2005. They were also engaged in discussions with the EU and EFTA,exploring the possibilities of RIAs. Some progress was made in thesenegotiations with the EFTA and a Declaration of Cooperation was signed withthe EFTA states. All these initiatives by the GCC were still underway in theearly 2000s. They were far from reaching their culmination point.In sub-Saharan Africa, regional integration endeavors have been going onbut have not gained momentum. Their progress was unsteady and could not beascertained because of the complex web of overlapping RIAs and theirmemberships. To be sure, the intensity of the regionalization process increasedin the 1990s. In West Africa, eight regional economies were endeavoring tobuild the West African Economic and Monetary Union (WAEMU or UEMOAin French).9 Similarly negotiations were underway for establishing the CentralAfrican Economic and Monetary Community (CEMAC in French) betweensix economies.10 Another major ongoing endeavor was between the countriesof eastern and southern Africa. Members of the Common Market for Easternand Southern Africa (COMESA) were negotiating in the direction of creatinga free trade area grouping of 20 countries. A similar project was underway inSouth Africa, where the members of South African Development Community(SADC) were working towards their objective of establishing a free trade areaby 2004. SADC negotiations were not progressing rapidly and were having agood deal of difficulty due to overlapping membership of the aspiringcountries in other African RIAs. The South African Customs Union (SACU)has survived for a long time.11 South Africa has been active at cross-regionallevel and completed a free trade agreement with the EU. Having completedthat, South Africa was exploring the possibilities for a similar agreement witheconomies on other continents. An Africa-wide, continental initiative hasbeen on the drawing board. It has been named the African EconomicCommunity (AEC). Efforts to establish an African Economic and MonetaryUnion (AEMU) by 2028 are gradually advancing. The ultimate goal ofestablishing the African Union, which is aimed at the economic integration ofthe continent, was announced in March 2001.12The countries of the former Soviet Union have created several RIAs amongthemselves since its break up, as well as with their neighbors. Several bilateralpreferential agreements were also being negotiated and a customs union hasbeen agreed between the Kyrgyz Republic, the Russian Federation, Belarus,
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Kazakhstan, and Tajikistan. In 2001, Georgia notified the formation of an RIAwith Armenia, Azerbaijan, Kazakhstan, Turkmenistan, Ukraine, and theRussian Federation. By the early 2000s, a network of bilateral RIAs existed inCentral Asia. It is likely to be rationalized and consolidated in the mediumterm.Historically, Asian economies were known for their strong bias for MFNonly trade liberalization. However, this region has undergone a considerabletransformation in this regard. In forming APEC, they moved away from theirlong-standing historical preference for MFN-only liberalization. Although theAPEC adopted ‘open regionalism’, it began to be counteracted by members’drive towards preferential trade initiatives. Several successful traders in thisregion (Japan, South Korea and Singapore) took initiatives for entering intobilateral preferential agreements as well as for creating RIAs amongthemselves. The three countries also took the initiative in entering into crossregional preferential trade agreements. Negotiations were held between HongKong SAR and New Zealand for a closer economic partnership. Japan andSingapore initiated discussions for a similar agreement. Likewise, Australiaand New Zealand have been trying to negotiate RIA and bilateral agreementswith the dynamic Asian economies. They were also endeavoring to enter intopreferential trade agreements with cross-regional partners, particularly thosein Latin America. However, the most notable initiative in this regard was theproposed expansion of the Association of South East Asian Nations (ASEAN)to include China.13 An agreement to this effect was reached. Japan and theRepublic of Korea were also endeavoring to follow suit. Negotiations toachieve this objective were under way. In spite of these developments andrising number of RIAs, Asia continues to be the region with the smallestnumber of RIAs currently in force.Looked at from a global perspective, the current emerging trend is towardsnegotiating bilateral preferential agreements and forming cross-regionalFTAs. Most of the major regional players are looking for non-regionalpartners for forming preferential bilateral trade agreements. The pioneers ofthis new trend are the EU and EFTA. Latin American countries are activelyfollowing this trend. Several bilateral agreements were under negotiationsduring the early 2000s.14
4. THE WTO DEBATE ON REGIONALISMIn the early 2000s, several pluri-dimensional and inter-linked issues were thesubjects of raging debates among the members of the WTO. Some of them hadlegal overtones, while other were institutional issues. Some age-old economicchestnuts were also the focus of attention of the members. For instance, as
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alluded to above, Article XXIV of the WTO has a requirement regarding‘substantially all the trade’ between the constituent members of an RIA beingcovered. Similarly, Article V of the General Agreement on Trade in Servicesmentions ‘substantial sectoral coverage’ of trade in services between theconstituent members being covered under the RIA. However, membersdisagree regarding what these wordings imply and interpret them in severaldifferent ways.Second, some institutional issues were also part of the on-going debates.They related to anomalies between rules in RIAs and those in the WTOsystem. RIAs differ not only in product coverage, but also in areas of tradediscipline. That is, some of them cover areas that have not been covered bythe WTO system as yet. For instance, investment or competition policies, theso-called ‘Singapore issues’ are covered by some RIAs, while the WTOdebate on these issues is still far from complete. In addition, some RIAs gobeyond the WTO provisions in several areas of trade regulations, while othershave regulatory policies which differ from WTO in areas like anti-dumping,subsidies, intellectual property rights, and standards. This has caused concernamong policy makers and these issues have also been discussed outside theWTO forum. Robert B. Zoellick, the United States Trade Representative,expressed concern in this regard. In one of his depositions he informed the USSenate that, ‘Each [RIA] agreement without us [the US] may set the new rulesfor the intellectual property, emerging high technology sectors, agriculturestandards, customs procedures or countless other areas of the modern,integrated global economy rules that will be made without taking account ofAmerican interests’ (Zoellick, 2002).15Third, several important economic issues continue to generate a good dealof disagreements and debates among WTO members. Although the impact ofregional agreements on the constituent members and non-members has beendebated since the Vinerian initiative (1950) in this regard, the last word is notyet in, and the raging debate on this issue has not died down. The sameobservation applies to the impact of regional agreements on the ‘shaping anddevelopment of world trade itself’. The relationship between regionalism andmultilateralism has continued to remain a critical systemic issue (WTO, 2001).4.1 Multilateral Regulations and RIAsArticle I of the GATT (or GATT-1947) was, as well as Article I of theMarrakesh Agreement (or GATT-1994) is, the cornerstone of the globaltrading system.16 It established the central requirement that