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Under the multilateral trading system, there are diverse positions regarding
the ability of regional agreements to further trade liberalization. In practice,
opponents to RTAs have largely lost out against the promoters of regional
integration. A legal framework has been established for the creation of
RTAs under the General Agreement on Tariffs and Trade (GATT). Specifi-
cally, there are several levels at which RTAs and the multilateral trading
systems cross paths. Firstly, the multilateral trading system establishes the
margin of preference for the most-favored nation (MFN) market access of
South-South RTAs and provides a negotiation framework that determines
the conduct of developing members’ trade policy. Secondly, the “Enabling
Clause” of the GATT, negotiated in the Tokyo Round, provides the legal
backing for the creation of South-South RTAs (Davidson 2005, 11). The
waiver states:
1. Notwithstanding the provisions of Article I of the General Agreement,
contracting parties may accord differential and more favorable treatment
to developing countries, without according such treatment to other con-
tracting parties.
2. The provisions of paragraph 1 apply to the following:
...(c) Regional or global arrangements entered into amongst less-developed
contracting parties for the mutual reduction or elimination of tariffs and,
in accordance with criteria or conditions which may be prescribed by the
CONTRACTING PARTIES, for the mutual reduction or elimination of
non-tariff measures, on products imported from one another (Davidson
2005, 11).
Article I, paragraph 2c is established only for the benefit of global and
regional agreements between less-developed countries. According to this
clause and Article V of the General Agreement on Trade in Services (GATS),
developing countries face less stringent requirements than those governing
developed countries in Article XXIV of GATT. In effect, South-South
RTAs under the Enabling Clause (including COMESA and AFTA) are
not obligated to cover “substantially all trade,” do not have a specific time
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The Regulation of South-South RTAs: An Analysis of AFTA and COMESA
frame for implementation, do not have to eliminate all duties, and are not
subject to periodic examinations (Esteevadeordal 2004, 22). South-South
RTAs are only required to notify the WTO Committee on Trade and De-
velopment when they have been implemented, provide the WTO with full
access to information if a mutual change of preferences occurs, and allow
for WTO consultation regarding problematic issues (Esteevadeordal 2004,
39). These provisions have remained unchanged since their formulation.
Only recently has the Enabling Clause been considered renegotiable, as
a result of the growing discussion regarding the provisions’ effectiveness
in creating trade.
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