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Preferential Trade Agreements Discrimination

Policy coverage in ATPs, particularly in regulatory areas, has expanded and deepened over time. Based on a sample of nearly 100 PTAs, the report ranks the provisions of the PTA in the areas of the WTO and the X domains of the WTO1. The report also distinguishes between the legal feasibility or otherwise of these measures within the epZ dispute settlement mechanism. Not surprisingly, WTO rules generally include tariffs on industry and agricultural products (Figure 2). A growing number of ATPs now includes provisions for technical barriers to trade, services, intellectual property and trade-related investment measures. WTO-X provisions generally cover competition policy, investment and capital flows (Figure 3). About one-third of the EPZs in the sample also include environmental legislation, labour market legislation and visa and asylum measures. Trade in the 21st century, as defined by Baldwin (2010), is a much more complex phenomenon than pre-trade in the early 1980s. The increase in international production networks is a testament to the complementarity between trade and governance, which is at the heart of successful in-depth agreements. To ensure the smooth operation of cross-border production networks, it is necessary to harmonize or make compatible certain national policies in order to facilitate activity in several countries (see Lawrence 1996). Empirical evidence2 and case studies presented in the report support this link between production networks and deep EDPs. Current literature suggests that deep integration is often not discriminatory.

By their very nature, some deep integration provisions are de facto extended to non-members, as they are part of broader regulatory frameworks that apply to all trading partners. Preferential trade agreements can also refer directly to WTO rules on deep integration measures and automatically support the multilateral trading system. However, there may be discriminatory aspects to some of the deep provisions of preferential trade agreements, which can create tensions with the multilateral trading system. Trade diversion means that free trade agreements divert trade from a more efficient supplier, a non-member, to a less efficient supplier under the free trade agreement. Let`s take an African country, Rwanda. Rwanda imports food, machinery and equipment, steel, petroleum products, cement and building materials, and its main suppliers are Kenya and Uganda. However, its export partners are China and Belgium. I think Rwanda imports mainly from Kenya and Uganda because they are part of the East African community and not because they have comparative advantages. In addition, Rwanda`s main export is coffee, tea and tin, and these are also produced and exported by Kenya. Instead of interacting with countries that have an absolute or comparative advantage, Rwanda is obliged to act with countries that have difficulty producing.

This is not a good thing for both countries and the question is whether developing countries are prepared to bear the consequences of trade diversion. The rules of the PTA seem too strict for the economies of developing countries and should be revised accordingly.

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