CYIL vol. 8 (2017)

ELISA BARONCINI CYIL 8 ȍ2017Ȏ With reference to trade in goods of RTAs, the relevant provision is Article XXIV of the GATT 1994, to be considered together with the WTO Understanding devoted to the interpretation of that provision. 10 Pursuant to the recalled discipline, WTO Members are allowed to conclude preferential agreements provided the latter establish a free-trade area (FTA) or a customs union. In an FTA, only internal trade among the contracting parties has to be liberalized. In a customs union, beyond internal trade liberalization, also a joint regulation of trade with third countries has to be achieved. In both cases, Article XXIV of the GATT 1994 calls for the elimination of import duties and other restrictions to commerce concerning “substantially all the trade” between the States being part of the FTA or customs union -the so called “internal trade requirement”; when a customs union is considered, the parties have to apply “substantially the same duties and other regulation of commerce … to the trade of territories not included in the union” -and this is the external trade requirement, creating a common external trade regime or a common commercial policy. Furthermore, as a consequence of the formation of a FTA or a customs union, trade with third States does not have to be more difficult or more restricted. For RTAs also covering trade in services, Article V of the GATS has to be respected as well. Under this provision, RTAs are referred to as “economic integration agreements,” and the requirements for justifying discriminatory regional agreements are similar to those contemplated in Article XXIV of the GATT 1994. Therefore, the economic integration agreement concerning services must have substantial sectoral coverage, provide for the absence or elimination of substantially all discrimination between or among the parties in the covered sectors, and not raise the overall level of barriers to trade in services in the covered sectors for third countries. When the RTAs are among developing countries of the WTO, the 1979 Enabling Clause requires less demanding conditions for the preferential agreements, by comparison with those of Article XXIV of the GATT 1994. In fact, it simply states that “[r]egional or global arrangements entered into amongst less-developed contracting parties for the mutual reduction or elimination of tariffs and … for the mutual reduction or elimination of non- tariff measures, on products imported from one another” 11 may be discriminatory provided that “[a]ny differential and more favourable treatment provided under [the Enabling Clause] … [is] designed to facilitate and promote the trade of developing countries and not to raise barriers to or create undue difficulties for the trade of any other contracting parties.” 12 The WTO consistency of RTAs, in principle, has to be assessed by intergovernmental bodies, the WTO Committee on Regional Trade Agreements (CRTA), or the Committee on Trade and Development (CTD), the latter being competent to consider preferential agreements among developing countries. This means that such evaluation activity -establishing whether a RTA is compatible with the Marrakesh system- is in primis conceived, within the WTO legal framework, as oriented to produce a political decision, being both the Committees formed by representatives of the WTO Members.

10 Understanding on the Interpretation of Article XXIV of the General Agreement on Tariffs and Trade 1994, available at the WTO official website at the link https://www.wto.org/english/docs_e/legal_e/10-24_e.htm (accessed on January 2017).

11 Paragraph 2 (c) of the Enabling Clause. 12 Paragraph 3 (a) of the Enabling Clause.

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