RESTRICTED
WORLD TRADE WT/REG/W/4
27June1996
ORGANIZATION(96-2465)
Original: English Committee onRegional Trade Agreements
COMMUNICATION FROM REPUBLIC OFKOREA
Thefollowing communication, dated 20June1996, hasbeenreceived from thePermanent
Mission oftheRepublic ofKorea withtherequest thatthisdocument bedistributed toallMembers.1
_______________
SYSTEMIC IMPLICATIONS OFREGIONAL TRADE AGREEMENTS
AND REGIONAL INITIATIVES FOR THE MULTILATERAL TRADING SYSTEM
Challenges
1. Over thelasthalfacentury, regional trade agreements (RTAs) andregional initiatives have
evolved inamanner anddirection thatthefounders ofthemultilateral trading system (MTS) could
notforesee. Geographically, RTAs haveproliferated tonearly allWTO Members. Aside from the
rapid increase inthenumber ofRTAs, theircoverage ofsubject matters hasexpanded aswell. Their
focus hasalsoshifted: from tariff preference tonon-tariff preferences. Such developments have
inevitably posed serious implications ontheMTS.
2. TheWTO should facethischallenge byattempting toredefine theproper relationship between
regionalism andtheMTS, andtoexplore ways andmeans ofharmonizing theformer withthelatter.
Ifwearetoensure thehealthy development oftheMTS intothenextMillennium, thisfundamental
taskshould notbesidestepped anylonger.
Systemic Issues
3. Pastmultilateraldeliberationsonregionalism,includingthoseduringtheUruguayRound,focused
ontheinterpretation ofArticle XXIV oftheGATT. These deliberations, however, hadfundamental
limitations. Itwasoften hardtoreach agreement onclearinterpretation oftheclause because ofits
inevitable impacts orprejudices onexisting RTAs. Furthermore, interpretation alone oftheexisting
rules, which weredevised halfacentury agowithfewchanges made thereafter, could notcopewith
fundamental changes taking place inthenature andscope ofRTAs.
1Anon-paper ofthesame content asthisdocument wasintroduced bythedelegation oftheRepublic ofKorea
tothe13June1996 meeting oftheinformal Heads ofDelegations process forthepreparation oftheSingapore
Ministerial Conference.WT/REG/W/4
Page2
4. Suchfundamental changes require ustoextend ourhorizon beyond theexisting rulesandhave
afresh lookintotherelevance oftheWTO 'slegalregime onregionalism withaviewtorealigning
therelationship between RTAs andtheMTS sothattheformer could converge better towards the
objectives ofthelatter. Thisnewapproach should becontinuously guided bythefounding belief of
theMTS thatthepurpose ofRTAs should be"tofacilitate trade between theconstituent territories
andnottoraisebarriers tothetradeofother[WTO Members] withsuchterritories."2Thenewapproach
should bebased, inter alia,onthepremise thatanRTA isnotanobjective initself butrather a
transitional scheme leading eventually to"anintegrated, more viable anddurable multilateral trading
system."3
Singapore Objectives
5. Given thecritical importance ofthisissue, thefirstWTO Ministerial Conference should provide
catalytic guidelines tothework oftheGeneral Council andother relevant WTO bodies intheirpursuit
oftheissue ofregionalism.
6. Inthisrespect, Ministers should reaffirm astrong policy commitment tothecompatibility of
RTAs withtheMTS. Asapractical steptoensure suchcompatibility, Ministers should alsoendorse
thefacilitation oftheRTA examination process currently undertaken bytheCommittee onRegional
Trade Agreements (CRTA).
7. Given themagnitude ofchallenges posed byregionalism totheMTS, however, amerepolitical
commitment tothecompatibility ofRTAs withtheMTSwillnotbeenough. TheMinisterial Conference
should gofurther. Itisimportant thatMinisters provide theGeneral Council withaspecific direction
forfuture deliberations ofsystemic issues, authorizing ittolookintothefundamental aspects ofthe
issue, i.e.thepossible improvement intheWTO 'slegalregime onregionalism.
8. Ministers should therefore direct theGeneral Council toembark, onitsownorbyutilizing
theCRTA andother appropriate WTO bodies, onspecific work programmes overthenexttwoyears.
Theresult ofthiswork, including appropriate recommendations, should bereported tothesecond
Ministerial Conference.
9. Thedirection tobegiven byMinisters totheGeneral Council foritswork onregionalism
for1997-98 mayinclude, interalia,thefollowing:
(a) Toidentify elements ofregionalism which mayconflict withtheobjectives oftheMTS
(e.g.those which stand inthewayofpromoting tradebetween parties andnon-parties
ofRTAs), withparticular emphasis onnon-tariff areas, andtoexplore waysandmeans
ofaddressing suchelements;
(b) Toexplore creative means ofcapturing trade liberalizations advanced byregional
initiatives andincorporating them intotheMTS;
(c) Toreview thevalidity oftheWTO 'scurrent legalregime onregionalism, embodied
inArticle XXIV ofGATT 1994 andArticle VofGATS, inlightofitsrelevance in
thevastly changed global trade environment;
2Paragraph 4,Article XXIV ofGATT 1994.
3Preamble oftheMarrakesh Agreement Establishing theWorld Trade Organization.WT/REG/W/4
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(d) Toredefine, onthebasisoftheabove, RTAs 'proper relationship withtheMTS, and
toexplore ways andmeans bywhich toensure thatregionalism complements and
reinforces theobjectives oftheMTS; and
(e) Toreport theresults ofsuchworks tothesecond WTO Ministerial Conference, with
appropriate recommendations.