signatorygovernments were required to extend unconditionally to all other contractingparties17 any advantage, favor, privilege or immunity affecting customs duties,charges, rules and procedures, that they give to products originating in or
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destined for any other country. This is referred to as the much-vaunted MFNprinciple, which was defined in Chapter 2, section 5.18The superstructure of multilateral trade regulations is squarely based on theclassical economic principle of comparative advantage.19 The MFN principleinter alia applies to tariff concessions. The WTO members are rule-bound notto discriminate between imports from different sources. All the WTOmembers are obliged to treat all the other members equally as ‘most-favored’sources. Freedom and equality to import from any origin in the globalmarketplace is intended to ensure purchase from the lowest-cost producers orsellers, which in turn underpins and reinforces the all-important principle ofcomparative advantage (WTO, 1995). It promotes competition and minimizesthe cost of production, promoting efficiency in the process. This bindingstipulation of treating all WTO members as equal in commercial policy is aneffective restraint on discrimination against imports from a particular source,for any reason.20The fundamental benefit of the MFN principle is to guard against the extentto which a country can play favorites in its trade relations, and ensure thatglobal trade is conducted on the basis of comparative advantage rather thanpolitical advantage. The MFN principle depoliticizes global trade and makesit more efficient. It helps in promoting equal treatment of exports from smallerand larger trading nations. Therefore, non-discrimination or the MFNprinciple is believed to contribute to the ‘regularity, orderliness, andpredictability’, which is the essence of a rule-based global trading system(WTO, 1995). By taking down the trade barriers and reducing or eliminatingdistortions in the global economy, the MFN principle works towards helpingthe price mechanism to work more efficiently at the global level. Due to theMFN principle, the additional trading opportunities created by the GATTrounds of MTNs were automatically extended to all its members. The postwartrading system has served the global economy well. It is credited withfacilitating unprecedented expansion of global trade in goods and services.According to WTO statistics, global trade in goods increased 6.5 percentannually in real terms since the creation of the GATT in 1947. There was atwelvefold increase in world trade between 1947 and 2000, versus a sixfoldincrease in world output. This trade expansion has also led to global economicintegration as well as more rational allocation of global productive resources.The flip side of the coin is that while the MFN principle has had a longhistory, it has not been controversy-free. Its basic premise and purpose havebeen called into question. On the one hand, this principle seems to encouragerampant free riding21 by countries on concessions negotiated between othercountries. At one extreme, it might encourage every country to withholdconcessions in the hope of being able to free-ride on concessions made byothers, thus paralysing the process of trade liberalization. At the other, it might
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be argued that tariff concessions might be more readily negotiated betweentwo countries, that is if each country is assured that the other country will notsubsequently negotiate more generous concessions with third countries, andthus weaken the benefits that would have accrued from the initial exchange ofconcessions. There is substance in both of these contradictory stands. Thenegotiating process in the GATT and WTO always presupposed the existenceof the free-rider problem, and members have always been concerned aboutlack of reciprocity.Any form of regional integration contravenes the MFN principle, thefundamental tenet of the GATT–WTO system. Yet, a provision for RIAs wasincluded in the superstructure of multilateral trade regulations. The GATT andWTO allowed members to conclude RIAs as an exception to the fundamentalprinciple of non-discrimination set out in the MFN clause of Article I. Thisbreach of the regulation has been allowed by the global trading system. Thisis not as incongruous as it appears on the face of it. One reason to allow thisdeviation from the MFN principle was to accommodate the reality. RIAs havehad a long history (refer to Chapter 1, section 4). Many countries would nothave joined the GATT if it had prohibited future RIAs among neighbors andthe multilateral trading system would have been much less multilateral. Littlewonder that Article I, Paragraph 2, of the GATT-1947 had explicitly exemptedfrom the MFN requirement, all the RIAs in force at the time the GATT cameinto effect. These included the erstwhile British Imperial Preferences,preferences in force in the French Union, preferences given by the Beneluxcountries, by the US and the preferences granted by the Lebano-SyrianCustoms Union to Palestine and Transjordan. However, these preferenceswere ‘capped’ and they could not be raised above the existing (in 1947) levels.This pragmatic move laid the foundation for the future growth of world tradeon the basis of the MFN principle (WTO, 1995).The WTO literature demonstrates that genuine free trade agreements andcustoms unions were viewed as possibly compatible with the MFN clause inthe past. Perhaps this was done to distinguish various forms of ad hoc andpartial discrimination that were being formed during the inter-war period(1919–39). By entering into an RIA, economies dismantle trade barriers,which was considered an important step in the direction of liberalizinginternational trade on the same lines as liberalizing trade between differentprovinces of the same country. This line of logic apparently persuaded thefounders of the GATT. Economic integration between several countries canpotentially have an economic effect analogous to the process of integrationwithin a single sovereign state (WTO, 1995). Under these circumstances RIAswere not seen as an inherent threat to the global trading system. A deviationfrom the MFN principle has, therefore, been allowed since the inception theGATT.
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Therefore, RIAs in trade in goods fall under three WTO categories,although they are generally treated as falling under the same rubric. As evidentfrom the foregoing exposition, the three categories are (1) the Article XXIVarrangements, (2) the Enabling Clause arrangements limited to developingcountries and permitting partial preferences to these under the GeneralizedSystem of Preferences and (3) the arrangements permitted by the WTOthrough a grant of an exception of Article I. Finally, the conclusion of RIAs intrade in services is governed by Article V of the General Agreement on Tradein Services. After an RIA is launched, the WTO has to be notified of its dateof launch, membership details, coverage and the category under which it hasbeen launched.A word about the Enabling Clause is necessary here. The Tokyo Round(1973–79) led to the creation of an ‘Enabling Clause’. Following this Roundof MTNs, the contracting parties (CPs) of the GATT allowed this ‘derogation’to the MFN clause in favor of developing economies. This derogationprovided legal cover for trade concessions granted to developing economiesunder the GSP initially for a period of ten years. Under the provisions of PartIV, industrial countries were encouraged to allow developing countries toaccess the industrial country markets on a non-reciprocal basis. It alsopermitted preferential arrangements among developing countries in trade ingoods. Paragraph 2(c) of the Enabling Clause allowed special treatment toregional or global arrangements entered into among developing country CPsfor mutual reduction or elimination of tariffs and non-tariff barriers. Theauthority granted under this Clause to enter into regional arrangements isconstrained by several conditions. One of its key requirements is that any sucharrangement should be designed to facilitate and promote the trade ofdeveloping countries, and not to raise barriers to or create undue difficultiesfor the trade of other CPs. This requirement is identical to the requirement ofArticle XXIV, Paragraph 4.Multilateral regulations of the GATT and WTO on RIAs reflect thefounders’ desire to accommodate and provide for such agreements. In doingso, they were cautious in guarding the trading interests of the non-RIAmembers. They ensured that RIAs were compatible with a ‘rule-based andprogressively more open world trading system’ (WTO, 1995). Therefore, theprovisions (enumerated below) on RIAs establish numerous conditions, whichthe RIAs must comply with. Transparency is strictly required so that they canbe closely monitored by the multilateral system, which the WTO represents.The first condition for trade in goods was set out in Article XXIV ofGATT-1947. It stated that the purpose of a RIA should be to facilitate tradebetween the constituent countries and not to raise barriers to the trade of otherWTO members not parties to the RIA. During the Uruguay Round, ArticleXXIV was clarified to some extent and updated by the Understanding on
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Interpretation. Paragraphs 4 through 10 of Article XXIV of the GATT-1947(as clarified in the Understanding on the Interpretation of Article XXIV of theGATT-1994) contain the principal provisions of the multilateral tradingsystem related to regional integration agreements.22 Barriers against nonmembers cannot be made more restrictive than before the formation of theRIA. Article XXIV, Paragraph 4, stated that closer integration of the membereconomies must not adversely affect the interests of the non-membercountries. Any common external tariff (CET) should be set at a level that is‘on the whole’ not higher or more restrictive than was imposed by the RIAmembers before joining in. If the level of CET of any individual member ishigher than before, Paragraph 6 provides a procedure for the withdrawal ofpreviously negotiated tariff commitments.Second, Part IV of the Articles of Agreement of the GATT comprisesArticles XXXVI, XXXVII and XXXVIII. Provisions in this Part relate to nonreciprocity in trade negotiations between industrial and developingeconomies. They also provide for the former to adopt special measures andplans to promote the expansion of imports from developing countries. The‘Enabling Clause’, discussed above, had several provisions permitting the CPsof the GATT to grant differential and more favorable treatment to developingcountries, notwithstanding the non-discrimination requirement in Article I.Chapter 3, section 5, provides details regarding these non-reciprocal RIAs.Third, there is a WTO provision relating to the coverage of trade. When anRIA is created, reduction or removal of trade barriers and NTBs should cover‘substantially all the trade’ and/or sectors of trade. Roessler (1993) pointed outthat Article XXIV forbids stopping short at partial preferences or excludingmajor sectors or trade from the RIA. This emphasis on ‘substantially all thetrade’ helps in fending off the inevitable political pressures to avoid orminimize tariff reductions in inefficient import-competing sectors. Thesubstantially-all-the-trade requirement also ensures that RIAs are not abusedas a cover for narrow or sectoral discriminatory arrangements. In addition, awider sectoral coverage enhances the trade-creating effect of RIAs. Thusviewed, this stipulation helps ‘differentiate between politically unavoidableand containable deviations from the most-favored-nation principle’ bydetermining ‘the point where trade policy is allowed to give way to foreignpolicy’ (Roessler, 1993).The fourth condition related to the systemic dynamics of the RIA. After theformation, progress towards economic integration should be expeditious.Article XXIV, Paragraph 5 (c), states that an RIA agreement ‘shall include aplan and schedule for the formation of such a customs union or of such a freetrade area within a reasonable length of time’. The objective is to eliminate orminimize the danger of interim agreements, which are often abused byintroducing discriminatory preferences for a long time. In the Uruguay Round
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this timespan was defined as not exceeding 10 years under normal conditions.Therefore, GATT-1994 in its Understanding on the Interpretation of ArticleXXIV notes that ‘reasonable length of time’ ‘should exceed 10 years only inexceptional cases. In cases where Member parties to an interim agreementbelieve that 10 years would be insufficient they shall provide a fullexplanation to the Council for Trade in Goods of the need for a longer period’.Fifth, for the purpose of dispute settlement, the provisions of Article XXIIand XXIII of GATT-1994, as elaborated and applied by the DisputeSettlement Undertaking may be invoked with respect to any matters arisingfrom the application of those provisions of Article XXIV relating to customsunions, free trade areas or interim agreements leading to the formation of acustoms union or free trade area.4.2 Article XXIV: A Barrier to Free Trade?Article XXIV of the GATT-1947 has been decried as antithetical to the spiritof the GATT–WTO system, because it allows members of a trade bloc todiscriminate against non-members. However, as we saw above, the authors ofArticle XXIV, in their pragmatic desire to accommodate RIAs, were cautiousin guarding the interests of non-RIA members. They attempted to ensure thatRIAs were compatible with a disciplined and progressively liberalizing globaltrading system. The conventional wisdom in this regard is that Article XXIVensures that trade bloc formation ensures free trade. However, several tradeanalysts hold the view that in reality Article XXIV is partly responsible for thedifficulties in further multilateral trade liberalization.23An RIA can be of the kind where the members drop all the protectionistbarriers. It can also be of another kind where they decide the CET strategytogether. Such a trade bloc comes to have a power in the world markets, whichcan be invoked by raising the level of CET. To be sure, as stated above, theprovisions of Article XXIV, Paragraph 4, do not allow the RIA to becomemore protectionistic toward non-members. Some hold the opinion that evenunder the stipulations of Article XXIV, free trade would not be in equilibriumwhen groups of economies are allowed to form RIAs. Zissimos and Vines(2000) believed that those who argued against the ability of Article XXIV tosupport free trade in the global economy did not make a convincing case anddid not allow the structure of RIAs to affect free trade in their models. Theycontended that the RIA structure that emerges under Article XXIV isdetermined endogenously, and it is not conducive to free trade.The conventional view was remiss because it neglected the fact that evenwhen RIAs do not (or are not able to) flex their muscles by raising the level ofCET, when members become better off, non-members become worse off. Thishappens when RIAs are perfectly WTO-consistent. The process works
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through exchange rate and/or terms-of-trade effect. Let us take the case of theEU to illustrate how it works. As the EU Single Market Programmeprogresses, ceteris paribus members will progressively trade more with eachother and less with the non-members. Consequently, their currencies wouldgradually appreciate vis-à-vis the non-European currencies, like the dollar andthe yen. The resulting wealth effect would be increased purchasing power ofthe EU currencies to buy goods from the rest of the world, leaving the EUbetter off. On the flip side, the same process reduces the purchasing power ofthe non-European currencies, leaving this group of economies worse off. Thishas taken place because the trade within the EU has been driven by the SingleMarket rules, and no measures were taken to make trade with non-membersmore difficult.This set of circumstances would discourage expansion of free trade, becauseif the Single Market framework provides certain concrete benefits to the EUmembers (while non-members do become worse off), they would be reluctantto let the non-members in and give up their benefits. Consequently, membersdo not have any incentive to allow non-members into the EU. If the membersdo allow non-members in, they apparently are not behaving like rationaleconomic agents. There will always be limits to expansion of the EU, and freetrade would never be encouraged by the members (Zissimos and Vines, 2000).4.3 Article XXIV: Evidence of ReciprocityIf non-discrimination is the first pillar of the global trading system, reciprocityis a close second. Whether Article XXIV is in accord with the principle ofreciprocity is unclear. Article XXIV emphasizes a ‘balance of concessions’among the members and when concessions are withdrawn, the trade partnersare permitted to withdraw ‘substantially equivalent concessions’. Among RIApartners, literally interpreted, Article XXIV calls for trade barriers ‘to beeliminated with respect to substantially all trade between the constituentterritories’. RIAs do involve some degree of reciprocity because partners areexpected to exchange trade concessions. This reciprocity may not replicate thereciprocity in the multilateral trade negotiations (MTNs). Typically RIAs donot have equivalent concessions because they are formed between economieswhich differ in terms of size of GDP, and having widely different levels oftrade barriers. Yields in terms of gains in market access for such economiescannot possibly be symmetric.In MTNs, reciprocity has a strong theoretical foundation. Motivated bypossibilities of improvements in terms of trade, countries try to maintainpositive tariffs, creating a ‘prisoner’s dilemma’, whereby all countries wouldbe better off if they cooperate and reciprocate in lowering tariffs (Bagwell andStaiger, 2000). In MTNs, the benefit of reciprocal tariff concessions is to help
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governments undo inefficient trade barriers of all kinds that generate terms-oftrade externality. Reciprocal trade negotiations provide an opportunity fornegotiations among the trading partners to credibly commit to lower tariffsand, thereby, reach a higher welfare level.24In RIA negotiations, unlike those for MTNs, the utility of reciprocity is notso clear because it furthers discriminatory tariff reductions. If an RIA is beingnegotiated between a developing and industrial economy, reciprocity can bedetrimental to the interests of the developing economy. Asymmetries in sizeof the economies would make it necessary for the smaller developingeconomy to make large-scale concessions to achieve an agreement with thehigh-income industrial economy. A corollary of this line of logic is that anRIA between a small developing economy, having low tariff barriers, anda large industrial economy may just not be possible. The gains from tradefor the potential partner industrial economy would be so puny that it wouldnot be worth its while to form an RIA with the small developing economy.Taking this line of logic one step further, in such an RIA negotiation theprinciple of reciprocity provides incentives for the small developing economyto keep its tariff levels as high as it can so that it can obtain concessions fromthe large industrial economy, and in the process generate greater tradediversion.Using trade, tariffs and income data of 91 RIAs negotiated between 1980and 2001, Freund (2003) tested for reciprocity in RIAs. The results offeredstrong support to the existence of reciprocity in RIAs between industrialeconomies as well as those between developing economies. After controllingfor the determinants of trade preferences, the results suggested that ‘a onepercent increase in preferences offered leads to about one-and-a-half percentincrease in preferences received’ in both industrial country RIAs anddeveloping country RIAs. However, there was little evidence of reciprocityin RIAs between industrial and developing economies. Results alsosupported the hypothesis that ‘large countries extracted greater tradeconcessions from smaller countries. This led to a modified form of reciprocityin North–South agreements: a large increase in access to a developing-countrymarket leads to only a small increase in access to a rich-country market’.Using a repeated game model, Freund (2003) examined the kind of RIAsthat are sustainable. She concluded that ‘trade preferences granted areincreasing in trade preferences received’. That is, a country can extract higherconcessions from an RIA partner if it has managed to keep higher tradebarriers. However, if the developing economy does maintain its trade barriershigh so that they can work at the appropriate time as a bargaining chip, thismay not always produce desired outcome because in an RIA negotiation thevalue of tariff concessions of a small developing economy for an industrialeconomy is very small in terms of gains from trade. Another important
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conclusion was that ‘reciprocity is more likely to be observed in North–Northand South–South agreements’, while in the case of agreements betweendeveloping and industrial economies, its place is dubious.4.4 WTO Committee on Regional Trade AgreementsUnder the GATT regime, the multilateral examination of RIAs was conductedin individual working groups set up in an ad hoc manner for performing thistask. The WTO attempted to bring consistency and uniformity to theexamination of RIAs. To this end, in February 1996, the WTO GeneralCouncil25 established a single committee named the Committee on RegionalTrade Agreements (CRTA) to examine individual regional agreements andconsider the systemic implications of the agreements for the multilateraltrading system and the relationship between them. The Committee ismandated to develop procedures to facilitate and improve the examinationprocess and to ensure that the reporting on the operations of the regionalagreements is adequately carried out by the parties to the agreements.The CRTA also studied how to correctly interpret expressions like‘substantially all the trade’, ‘on the whole’ and ‘other regulations ofcommerce’ which are found in Article XXIV (WTO, 1998). To this end, theWTO Secretariat and delegations of several large trading countries madewritten contributions.26 CRTA proposed that ‘substantially all the trade’requirement should be measured in terms of tariff lines and trade flows. Thedebate on economic and legal perspectives of the term on ‘other regulationsof commerce’ continued to rage. However, the issue is far from settled andthe Secretariat has been asked to conduct further analysis on these issuesby the General Council. In addition, the CRTA was assessing whether RIAsand EIAs are consistent with WTO discipline. At the time of the DohaMinisterial Conference in November 2001, over 100 regional agreementswere under examination in the CRTA (WTO, 2001). Since its inception, theCRTA has accomplished several of its objectives, although due to lack ofconsensus on legal yardsticks a large and increasing backlog of unexaminedRIA reports existed in the early 2000s. The accomplishments of the CRTAsincludes:●●●
Restructuring and improving the RIA examination process;Standardizing the information requirements for RIAs’ examination;Determining a streamlined method of evaluating each RIA in terms ofits consistency with WTO provisions.
RIAs are examined to analyse whether the system of rights and obligationsunder the WTO, related to the RIAs, should be modified and clarified further.
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So far WTO members have not reached a common ground regarding RIAs’contribution to the multilateral trading system. Whether they strengthen or goagainst the growth of multilateral trading system is still beyond agreement.Some WTO members believe that RIAs, by moving faster than the multilateraltrading system, represent a way of strengthening the global trading system.The impact of RIAs on integrating the developing economies into the globaltrading system is cited as a favorable effect. Other members disagreeregarding the systemic implications of RIAs. Many WTO members alsobelieve that in the contemporary period, a redefinition of relationship betweenRIAs and the multilateral trading system is badly needed, so that a bettersynergy is developed between the two vitally important institutionalarrangements. They feel that a mere modification or reinterpretation of rulesformulated half a century ago would not suffice to take into account thefundamental changes observed in the nature and scope of RIAs during thepresent period.
5. LAUNCHING THE DOHA ROUND OF MTNs AND RIAsThe Fourth Ministerial Conference of the WTO was held in Doha, Qatar,9–13 November 2001, with 142 members participating.27 The MinisterialConference is the highest-level decision-making body of the WTO. It meets‘at least once every two years’, as required by the Marrakesh Agreementestablishing the WTO. As the Third Ministerial Conference, in Seattle, was aspectacular failure, the preparations for the fourth one started in earnest inJanuary 2000 (Das, 2000c). One of the many reasons for the collapse of thethird Ministerial Conference was the breakdown of the Green Roomconsultation process.28 With 135 WTO members participating in the ThirdMinisterial Conference, it was not possible for the Green Room consultationprocess to be functional. While the Green Room process could not work noalternative to it was devised or in sight in Seattle. Being left out of theinformation sharing and consultation process, many developing economiesfelt marginalized.Although theoretically the WTO – and its predecessor, the GATT –operated by consensus, the reality was generally different.29 The members ofthe Quadrilateral Group, the so-called Quad, namely Canada, the EuropeanUnion, Japan and the US, had traditionally functioned as an informal steeringcommittee for the WTO system.30 They continued to function in a nontransparent manner and held important meetings on crucial issues in smallgroups to which many of the developing countries’ ambassadors were notinvited. It must, however, be stated that the principal trading developingcountries were frequently invited for consultations along with the members of
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the Quad. These Green Room consultative meetings were criticized by manydeveloping member countries of the WTO for their lack of transparency.After the breakdown of the Green Room consultation process, a system offrequent, open-ended and informal head-of-delegations meetings was devised.The objective of this system was regular meetings, for consultation andexchange of information with all the WTO members. All the continuingactivities across a broad spectrum were taken up for discussion in themeetings. Before the fourth Ministerial Conference was launched in Doha, theChairman of the General Council and the Director-General of the WTO heldhundreds of consultations with the delegations of member countries in avariety of formats, ranging from heads-of-delegations meetings to one-on-onediscussions. Regular meetings of the Director-General with the trade ministerprovided further strength to the consultation process. This approachsupplanted the Green Room process of yore and won praise from thedeveloping-country members for being open, transparent and efficient (Das,2002).Serious disagreements over the agenda items were the other major reasonfor the collapse of the third Ministerial Conference. Notwithstanding thepreparations by the WTO secretariat and the general perception of a strongperformance by the global economy in 1999, seeds of discord existed wellbefore. There were deep divisions of opinions, beliefs and expectations, whichcould be divided into both North–South and East–West axes. Further divisionsexisted which were more complex and could not be divided along thesetraditional axes. The difference of opinion and expectations between the US,the EU and Japan on the one hand, and among the industrial and developingeconomies on the other, were too large to bridge in a short space of time.Numerous contentious issues existed between countries and country groups.Before the Doha Ministerial Conference, the WTO secretariat adopted abottom-up approach to the process by encouraging a proponent driven system,where those member countries that are in favor of including a certain topic onthe agenda would meet in an effort to raise support for their positions. Themember countries met outside the formal General Council process to test thelevel of support on a range of issues, which included non-agricultural marketaccess, investment, competition, the environment, fisheries subsidies, andreform of the Dispute Settlement Understanding. The trade ministers’meetings, noted above, helped in bridging differences between positions.Certain adjustments in the global trading system were needed for it to be abetter reflection of the social, economic and financial realities of the rapidlytransforming global economy. The system still remains fairly vague onprecisely how existing rules should be changed and what form the newregulations should take. At Doha the WTO achieved what many skepticsbelieved was beyond the reach of the organization, namely, the launch of a
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new round of MTNs. The 142 WTO members agreed upon the DohaDevelopment Agenda.31 It offered the prospects of a stable trade framework,against the background of a sharp slowdown in global economic growth andtrade. In 2001, global GDP and trade recorded their weakest performance inmore than a decade. The early 2000s have been a problem-ridden period forthe global economy.Paragraph 4 of the Doha Ministerial communiqué of 14 November 2001stressed the commitment of the WTO members to regional trade agreementsand the Conference Declaration highlighted the importance of regionalism:●
●
●
through its recognition that regional trade agreements can play animportant role in promoting the liberalization and expansion of tradeand in fostering development;through agreement to negotiations aimed at clarifying and improvingdisciplines and procedures under the existing WTO provisions applyingto regional trade agreements;through agreement that in the work of the WTO Working Group on theRelationship between Trade and Investment account should be taken, asappropriate, of existing bilateral and regional arrangements oninvestment.
Following the Doha Ministerial Conference, the multilateral round of tradenegotiations was launched, scheduled to end in January 2005. Despite itssuccessful launch, the developing country members were not enthusiastic.Many of them were opposed to it because they felt that they got a raw dealfrom the Uruguay Round and were not convinced that they had much to gainfrom a new round. In addition, many developing economies were havingdifficulties implementing the recommendations of the Uruguay Round. Theywere persuaded to go along with the Doha round of MTNs because theindustrial countries held out the prospect of significant concessions in severalareas, including agriculture. In early 2003, it appeared that the developingcountries’ initial skepticism was justified (The Economist, 2003a). Thepromised changes to existing trade agreements, aimed at helping developingcountries, were yet to materialize – even though the deadline was the end of2002. A deal to improve poor countries’ access to cheap medicines was alsodue to have been concluded by the end of 2002. American refusal to go alongwith the deal agreed by everyone else scuppered the long drawn outnegotiations. In addition, there was the usual impasse in negotiations onagricultural trade. On the whole, at the end of the first quarter of 2003, theprogress in the Doha round was inadequate and it was being felt that theschedules were likely to be delayed. Real possibilities of the round collapsingbegan to appear (The Economist, 2003a).
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A work program was designed for the MTNs, which included RIA relatedissues. In Paragraph 29 of the work program it says that: ‘WTO rules sayregional trade agreements have to meet certain conditions’. But interpretingthe wording of these rules has proved controversial, and has been a centralelement in the work of the Regional Trade Agreements Committee. As aresult, since 1996 the committee has failed to complete its assessments ofwhether individual trade agreements conform to WTO provisions. This is nowan important challenge, particularly when nearly all member governments areparties to regional agreements, are negotiating them, or are consideringnegotiating them. In the Doha Declaration, members agreed to negotiate asolution, giving due regard to the role that these agreements can play infostering development. The declaration mandates negotiations aimed at‘clarifying and improving disciplines and procedures under the existing WTOprovisions applying to regional trade agreements. The negotiations shall takeinto account the developmental aspects of regional trade agreements.’ Thesenegotiations fall into