MEGA-TRANSREGIONAL NETWORKS OF COMMERCIAL PREFERENCES
Their impact on the global international trading system
by Félix Peña
English translation: Isabel Romero Carranza
In recent years, we have observed a trend to promote
mega-networks of commercial preferences of trans-regional scope that,
if successful, could have a greater impact, that could be positive but
also negative, on the effectiveness of the WTO as the main global institutional
framework for international trade. Mega-trade agreements, with their own
content and modalities, can include both developed and developing countries
from different regions. Some of them may even have simultaneous participation
in several agreements.
These networks are usually promoted by some of the greater powers
of world trade (the US, China and the EU). This means that they can have
a more concrete impact due to the size of their populations and their
economies, both in terms of percentages of world trade of goods and services,
of global gross product and of transnational investments, among others.
One example of this trend is the creation of the RCEP, promoted by
China. Its negotiations began in 2012 and the final terms of the agreement
were concluded in Bangkok, on November 4. The signing of the agreement
is due to happen next year. It includes sixteen countries in the Asia
Pacific region and India could eventually form part of it. However, the
text of the agreement is not yet known. It could, for example, include
a provision such as that of article 4 chapter 30 of the TPP.
If the agreement between Mercosur and the EU were to enter into force,
as announced on June 28, it would mean a step forward in the creation
of another mega-network of preferential trade agreements of trans-regional
scope. It would be the result of various modalities of possible interplay
between the commitments included in the bi-regional agreement and others
with which they could be connected. Such could be the case, for example,
of the link with the preferential trade agreements concluded by the EU
with the countries of the Pacific Alliance. Without necessarily being
identical, they could have an impact on the future development of bi-regional
networks of productive investment and reciprocal trade between a wide
variety of countries. Among other factors, the provisions referring to
the accumulation of origin, included in the agreements, would need careful
analysis by those operating within the scope of the network of preferential
The treaty that created the International Trade Organization (ITO) in
1947 was not ratified by the countries that signed it. Instead, the General
Agreement on Tariffs and Trade (GATT), which in fact became the first
global international trade agreement, was put into effect. In 1994, the
GATT was incorporated into the Marrakesh agreement whereby the World Trade
Organization (WTO) was created.
Since the Fourth Ministerial Conference of the WTO held in Doha (Qatar)
in November 2001, efforts have been made -however unsuccessful- to broaden
the scope of the commitments made in terms of development, especially
in relation to agriculture. The Doha Development Round has since sought
to renew the multilateral trading system. So far, this objective has not
been fully achieved.
We can therefore say that the WTO is going through a crisis that questions
its current and future effectiveness. Among other factors, the potential
paralysis of the dispute resolution system, as a result of the questioning
from the United States, has contributed to deteriorate its effectiveness
and its credibility as the main institution of global international trade.
Moreover, there has been a growing trend in recent years to promote new
mega- agreements of trans-regional scope that, if successful, would have
a greater negative -but eventually positive- impact on the effectiveness
of the role of the WTO as the main global institutional framework for
Such mega-agreements have a trans-regional scope and can include numerous
countries, both developed and developing, some of which have simultaneous
participation in several agreements.
They are usually promoted by the greater powers of global international
trade (the US, China and the EU). These are the countries that can have
the most impact, due to the size of their populations and their economies,
in terms of percentages of world trade of goods and services, of global
gross product and of transnational investments, among others
This trend was first expressed in the attempt to create what was called
the Trans-Pacific Partnership (TPP) that was promoted by the US. The agreement
was signed in February 2016. After the withdrawal of the US, the agreement
became the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPA-TPP), with eleven member countries.
The second example of this trend was made manifest in the Regional Comprehensive
Economic Partnership (RCEP), which has been promoted by China and which
we will describe below.
The third case of this trend involves the networks of trans-regional
trade agreements promoted by the European Union (EU), which would be reflected
in the agreements with Japan and Canada, and with Mercosur, among others.
On November 4, the negotiations to finalize the concluded in Bangkok within
the scope of the Thirty-Fifth ASEAN Summit. Negotiations began in 2012
and the final agreement is scheduled to be signed next year.
The RCEP includes fifteen countries (China, Japan, South Korea, Australia,
New Zealand, and those that make up the ASEAN: Indonesia, Thailand, Singapore,
Malaysia, the Philippines, Vietnam, Myanmar, Cambodia, Laos and Brunei).
Still pending is the incorporation of India, that also participated in
the negotiations that culminated in Bangkok. (On the topic of the RCEP,
see the analysis by Alicia González, "The battle is being
fought in Asia-Pacific", in "El País" newspaper
of November 5, 2019 and the ASEAN website https://asean.org/rcep-leaders-agree-sign-trade-pact-2020/.
For other interesting articles on the RCEP and the withdrawal of India,
If India were finally included, the RCEP would represent a population
of 3.4 billion people (47% of the world's population, 32% of world GDP,
29% of world trade and 32% of global investment).
The agreement contains twenty chapters, including among others those
related to trade in goods, services, investments, economic and technical
cooperation, intellectual property, competition, dispute resolution, electronic
trade, and small and medium-sized businesses.
At the same time, if the agreement between Mercosur and the EU entered
into force, as announced on June 28, it would mean a step forward in the
formation of a new mega-network of preferential trade agreements of trans-regional
scope. (On the topic of the Mercosur-EU agreement, see
the July and September
2019 editions of this newsletter on http://www.felixpena.com.ar/).
Such mega-network would be the result of the several forms of connections
between the commitments included in the different agreements concluded
by the EU, for example with the countries of the Pacific Alliance, which
without necessarily being identical could have an impact on the future
development of productive investment and reciprocal trade networks between
a wide variety of Latin American countries. In this regard and among other
factors, the provisions referring to the accumulation of origin would
need to be carefully analyzed by those who operate within the scope of
the corresponding network of preferential mega-agreements.
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Félix Peña Director
of the Institute of International Trade at the ICBC Foundation. Director
of the Masters Degree in International Trade Relations at Tres de Febrero
National University (UNTREF). Member of the Executive Committee of the
Argentine Council for International Relations (CARI). Member of the Evian
Group Brains Trust. More