Discriminatory Effects of Free Trade Areas and Customs Unions

During the conclusion of the Uruguay Round in 1995, 120 countries joined the rules based WTO, whose linchpin, like the GATT is non-discrimination. Since then, the membership of the WTO has increased with the last joining country, Cape Verde bringing the membership to 153 countries and territories. Ironically the number of discriminatory RTAs has also increased dramatically since the mid-1990s, with virtually all countries being part of one or more RTAs. Since the inception of the WTO, 196 new RTAs have been notified to the WTO with an average of 11 notifications every year, compared with an annual average of three or less during the almost five decades of the GATT. For instance during the period 1948-1994, the GATT received 124 notifications of RTAs (relating to trade in goods), and since the creation of the WTO in 1995, almost 300 additional arrangements covering trade in goods or services have been notified to the WTO, with a further 65 estimated to be operational although not notified.

The real concern stems from the discriminatory effects of RTAs given the slow progress in the Doha Round. Which leads to the question, do you think the drafters of the GATT especially Article XXIV, envisioned the proliferation of cross regional FTAs rather than customs unions and how does this affect the non-discrimination objectives of the multilateral trading system?