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Benefits and Drawbacks of RTA

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Benefits and Drawbacks of RTA
3.4 Benefits of RTAs

Under the current legal system of the World Trade Organisation (WTO), there are two categories of rules on the RTAs in the area of trade in goods: the first is based on the Article XXIV of the General Agreement on Tariffs and Trade, which generally applies to all RTAs; the second is based on the so-called Enabling Clause, which in exceptional circumstances, provide special and differential treatment (SDT) for RTAs among developing countries.

3.4.1. Advantages of Regional Initiatives

Regional initiatives have a number of advantages which explain why so many countries are members of such agreements:

• Region Specific Issues
Firstly, a regional agreement can help in dealing with region-specific issues, such as border controls, transit, migration, or movement of labour. Countries recognize that other more opaque barriers than tariffs can hinder trade. These include border controls, phytosanitary restrictions, weak transport systems, and regulatory differences. RTAs therefore increasingly cover some of these issues, which are more suitably addressed at the regional level. Some RTAs have also included dispute resolution mechanisms, which, in the implementation phase of the arrangement, have proven to be extremely useful.

• Reinforcement Of Internal Regulatory Or Structural Reforms
Secondly, RTAs can reinforce internal regulatory or structural reforms. This can be done through external treaty obligations and visible political commitments. Often, small countries participating in a RTA have just made, or are trying to push ahead, major reforms.

• Liberalization Of Services
Turning to large industrial countries, trade in goods as such no longer appears to be the dominant factor for participating in RTAs. A growing number of RTAs includes provisions on liberalizing services (including financial), investment, protecting intellectual property rights, labour and environmental standards, and dispute resolution. Industrial countries

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