Many ‘accepted’ assumptions about the global economy are currently under challenge and this applies equally to the international trade sector. This article is an attempt to step back from the noise around Brexit and begin to make sense of the wider architecture of trade agreements of which the current negotiations are merely a sub-set.
A common thread of the post Second World War ‘consensus’ was the bedrock of Multi-lateral agreements captured under GATT (General Agreement on Tariffs and Trade). A series of trade rounds ultimately brought under the umbrella of the WTO (World Trade Organisation), culminating in the Uruguay Round (1996) and subsequent implementation of the agenda defined at that point. In recent times, there has been more of an emphasis on Regional Trade Agreements.
It's a complicated area and it helps if we define a few of these terms to make it easier to understand:
- A Multi-lateral agreement, by definition, covers a number of three or more Nations. They can cover a range of areas, but in general lead to lower tariffs and make trade easier between those Nations. The Uruguay Round is arguably the ultimate example and included some 123 contracting parties, covering a multitude of topics.
- Regional Trade Agreements (RTAs) - including bi-lateral agreements - are reciprocal agreements between two or more parties. The table below is provided on the WTO website and illustrates the growth.
Examples concluded in the last year include agreement between the EU and Japan and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), covering more than ten Nations from across Regions. Also several smaller agreements have also been finalised in this period.
So, despite the headlines around trade disputes, there is still some momentum to streamline trade and we will add some more context to this in the next article.