The evolving nature of trade agreements, Pg8

Key Highlights:

• The U.S. under President Trump has signed Agreements on Reciprocal Trade (ART) with countries like Malaysia, Cambodia, Argentina, and Bangladesh.
• These ARTs differ from Free Trade Agreements (FTAs) and are not signed under GATT Article XXIV, raising legal concerns.
• ARTs reflect the "America First" trade policy, potentially undermining trade multilateralism.
• The General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) established multilateral trade agreements.

Detailed Insights:

• Multilateral trade agreements, established by GATT and the WTO, promote a non-discriminatory trading regime based on the most-favoured-nation (MFN) rule.
• Preferential Trade Agreements (PTAs), including FTAs and Customs Unions (CUs), are exceptions to the MFN principle under GATT Article XXIV but are subject to stringent conditions.
• FTAs have proliferated in recent decades, often going beyond WTO rules to include provisions on labor, environment, and foreign investment.
• ARTs lack institutional linkage with the WTO and contain one-sided provisions that bolster U.S. interests, such as requiring partners to adopt complementary restrictive actions.
• ARTs may restrict the data sovereignty of U.S. treaty partners, exemplified by prohibitions on customs duties on electronic transactions.
• Unlike FTAs, ARTs are not notified to the WTO, preventing scrutiny from other countries and potentially harming developing nations.

Key Concepts Involved:

• Most-Favoured-Nation (MFN): A principle where preferential treatment granted to one country must be extended to all others.
• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate trade barriers.
• Customs Union (CU): An agreement where countries eliminate internal trade barriers and establish a common external trade policy.
• Trade Multilateralism: A system of international trade relations based on non-discrimination and cooperation among many countries.