This panel was convened at 1:00 p.m., Thursday, March 26, by its moderator, Amelia Porges of the Law Offices of Amelia Porges PLLC, who introduced the panelists: Alberta Fabbricotti of the University of Rome, Faculty of Law; Gabrielle Marceau of the University of Geneva, Cabinet of the WTO Director General; Joost Pauwelyn of the Graduate Institute of International and Development Studies; and Kati Suominen of the Inter-American Development Bank. *
THE PARADOX OF MULTILATERALIZING REGIONALISM THROUGH FLEXIBILITY
I am greatly honored to have been invited to speak on this panel today. I consider this invitation a unique privilege. Let me start with a fact we must reckon with. The proliferation of Regional Trade Agreements (RTAs) has accelerated exponentially since the years of the Uruguay Round negotiations. In fact, it is only after the world trading order shifted its legal foundation from the 1947 GATT to the 1994 World Trade Organization (WTO) that centripetal forces creating regional groupings inevitably generated. And it is not a pure coincidence that this shift meant a dramatic expansion and strengthening of WTO rules concomitantly with considerable enlargement of WTO membership. Fragmentation and, hence, calls for defragmentation, are viewed as being physiological outputs of a fully-fledged worldwide WTO.
Legally, the attitude towards regional negotiations was, and still is, admitted and even encouraged by GATT Article XXIV, permitting the formation of regional groupings, provided certain requirements were fulfilled. But I will not dwell on Article XXIV here. Should Article XXIV have worked effectively in governing the formation and further enhancement of RTAs, we would not be here today to discuss how to multilateralize regionalism.
So let us begin again from where we were before digressing on Article XXIV. I would like to recall the remarks regarding the interplay between multilateralism and regionalism made by the International Law Commission's (ILC) Study Group on Fragmentation of International Law. The Study Group pointed out the unusual role of regionalism in international trade law compared to the functions it normally performs within other sub-systems of international law. The starting standpoint being the common assumption that international law develops in a regional context because the relative homogeneity of the interests of actors will then ensure a more efficient or equitable implementation of the relevant norms. The ILC' s Study Group noted that this general assumption is clearly contradicted by the proliferation of RTAs since the stronger the pull for a global trade regime within the GATT/WTO system, the faster the escalation of RTAs!
So, in practice, efforts made at a global level to reach the same standards of deeper economic integration pursued regionally do not act so much as convergence factors to cement WTO membership. On the contrary, they push WTO members to embark on regional initiatives or to intensify those regional dealings already in place.
This apparent paradox--that is, the existence of a direct dynamic relation between strengthening of legal ties among states at a global level, on the one hand, and the upsurge of RTAs, on the other hand--suggests the prospect of a paradoxical strategy in parallel. I will use the somewhat provocative slogan "multilateralizing regionalism through flexibility" to define this strategy.
As I am aware of the negative connotations often attached to the term "flexibility," it is important to understand what exactly this word entails. What I am talking about comprises different techniques or formulas introducing adaptable options in the WTO rules, so as to allow WTO members to undertake different levels or sets of commitments. These techniques are often identified with the more sophisticated terminologies of "enhanced cooperation," "by concentric circles," "variable geometry," and "integration a la carte." The first two formulas allude to different rhythms in integration--that is, gradations in economic integration depth--while the third refers to geographical differentiations and the fourth to different substantial or functional spheres of application. Sometimes, these terms are used interchangeably. Also, there are more denominations. From now on, however, I will use the term "variable geometry," as it is the most frequently used in WTO language.
A common denominator of all these approaches is that they undermine the single undertaking achievements of the Uruguay Round Agreements, that is, all the instruments composing the complex body of WTO law, with the exception of a few plurilateral agreements, are equally binding upon all members, irrespective of level of economic and social development or of differences in domestic legal systems. The launching of the single undertaking approach was greeted enthusiastically by most economists and lawyers, as they regarded it as putting an end to the fragmentation created by the plurilateral regime under the Tokyo Round Agreements (the so-called Tokyo Round Codes). Given this background, should the WTO now return to a variable geometry?
In my view, promoting pluralism through variable geometry could be the way--by accommodating the factual differences among WTO members--to reduce outward pressures giving rise to RTAs. Partly as a result of the single undertaking approach, in fact, regionalism has become the "first best" for a majority of WTO members. Regionalism has attracted both members criticizing the WTO for not going far enough, especially in avoiding commitments on issues such as investment, labor standards, competition, and environment, and members charging the WTO with having gone too far by having forced them to accept undertakings which were not in their interest and beyond their implementation capacities.
Mirroring these two opposite frustrations, the reasons for resorting to variable geometry are essentially twofold. The first reason is that certain Member States are reluctant to take part in some form of deeper or wider integration while other members wish to pursue it. The second reason is the fact that, because of their political, economic, or social conditions, some WTO members are incapable of implementing their present undertakings and obviously of taking part in further integration. The launch of enhanced cooperation among European Union (EU) members in 1997 was based on similar reasons.
As far as plurilateral agreements work as "meeting points" or "recipients" for a significant number of WTO members sharing interests and outlooks on specific trade or trade-related issues on a trans-regional basis, I would assume that variable geometry could be instrumental in multilateralizing regionalism.
Also, is the Baldwin theory on the RTAs' domino effect and on sequencing applicable to larger plurilateral agreements as well? I do not feel very comfortable with pure economics, but it seems to me that if the answer is in the affirmative, then an additional aggregating effect would seize up from plurilateral agreements, progressively bringing in WTO members that originally did not want to take...