Rise in regional trade initiatives

Regional initiatives cannot substitute for the multilateral trading system--Roberto Azevêdo
The debate on regionalism versus multilateralism in trade is not a new one. Given, however, the merits and inadequacies of their respective schemes of things in world trade, there are occasions when the debate hinges on loud disagreements. For the most part, countries that are more inclined to region-centric trading, prefer to blame the World Trade Organisation (WTO) for not doing the needful. This largely explains the major reason for the surge in the number of regional trading arrangements. In other words, the alleged failure of the WTO, so far, to deal with the long-stalled and emerging trade issues on an equitable plane are viewed as largely instrumental that left many countries with no better option than seeking recourse to regional trade agreements (RTAs).
Ever since regional and bilateral trade agreements in various shapes and forms began to emerge during the past decades, one of the key factors the contracting countries considered motivational was the creation of a level playing field, a scenario not in clear sight in the globalised trade environment packaged by the WTO. The frenzy is still on, although there were many regional trade deals where because of asymmetries in the economic standings of the countries, the playing field did not assume to be levelled enough for all to take part in equitable terms. Interestingly, as against multilateralism which is viewed to promote global trade irrespective of regions, regionalism in trade is pronounced in terms of promoting both trade and cooperation at regional levels.
In the initial years after the General Agreement on Trade and Tariffs (GATT) came to 'nurse' global trade, though not in as pronounced and rule-based manner as the WTO, regional arrangements were considered exceptional. Although there were preferential agreements initiated by the then European Community (EC) and followed by others, it was not until the nineteen eighties that they started to become a significant component of world trade. The nineties saw a massive surge in the number of regional agreements - both preferential and free trade. Currently, there are nearly 400 preferential trade agreements in operation, and each member of the WTO belongs to several separate agreements. Strong advocates of multilateralism, mostly from within the WTO, consider these agreements instrumental to 'policy fragmentation', affecting 'coherence' in the rule-based multilateral system. The mega regional trade deals such as the US-led Trans Atlantic Trade and Investment Partnership and Trans Pacific Partnership are considered potential deterrents to the fulfilment of multilateral goals. It is a general perception that as global powers like the US and the European Union (EU) are in a position to sort out their problems themselves, they have little stake in multilateral principles. Former WTO director general Pascal Lamy, known for his strong views on regional trade arrangements, once referred to regional trade alliances as largely responsible for the stalemate in the Doha Development Agenda.        
On the other hand, defenders of the mega regional deals argue the US and its partners are trying to inject fresh blood into the global trade negotiating agenda after a long period of stagnation. Together with other regional initiatives, supporters argue, they could eventually form the building blocks of a global agreement. But the fact that these arguments do not at all address the global trade scenario and are actually meant to consolidate EU-US hegemony is evidenced from the fact that neither of them would ever put on their negotiation agenda the much contentious issue of trade-distorting subsidies, especially agricultural subsidies.   
Judging the rise of regional trade arrangements (RTAs) from the way these are orchestrated by the big powers is indeed misleading, for it does not explain the situations that prompted most counties, especially the developing ones, to go for such agreements. A number of reasons may be discerned to explain the incremental presence of the RTAs. From political or strategic considerations, they may be found more inspiring. Countries may wish to go faster in the direction of economic integration than they can expect to achieve under the auspices of the WTO. They may be motivated by a fear of exclusion as competing countries secure better access to markets of their interest. Thus, RTAs may be seen as a shield against possible future protectionism. They may act as a signaling device to attract foreign investment as well. Viewed from this context, bilateral and regional trade deals could be stepping stones rather than stumbling blocks for integration into the multilateral domain.
It is often strongly argued that regional initiatives are often more encompassing than the focused concerns of the WTO. It is also believed that regional neighbours share concerns and interests that do not necessarily relate to those further away. There may be more than one agenda for cooperation in similar and sometimes overlapping areas of policy or economic activity.
The WTO director general Roberto Azevêdo, known for his much praised conciliatory approach while sitting on the trouble-ridden issues, is not as dismissive as his predecessor about regional initiatives. In a lecture delivered at the Stockholm School of Economics in Riga, Latvia late last month, he mentioned that frustration with negotiations at the multilateral level is often cited as a contributing factor to the increase in bilateral and regional trade negotiations.  These initiatives, he said, co-exist with the multilateral system and can bolster international trade in a significant way. At the same time, he referred to the rule-based multilateralism as the ultimate recourse, particularly in curbing various trade distorting policies and protectionist practices. He also referred to the positives that he expects would emerge from the Trade Facilitation Agreement. Once implemented, he remarked, 'this agreement will help to cut red tape and streamline border procedures in all WTO member economies, reducing the time and cost of trade operations worldwide'.
In his lecture, the WTO boss, however, recognised the challenges that beset multilateralism. The first challenge he referred to was the pace of progress in negotiations. No doubt, the slow, almost stagnating pace of negotiations is the foremost barrier to deliver results at the WTO. This   constitutes a key element to cause frustration among the majority of the member countries.  In this connection he recognised the need to reenergise the global body in order that its capacity to deliver is strengthened. "The bulk of our current trade rules" he said, "were agreed 20 years ago when the organisation was founded. Despite the fact that many of those rules embody basic and perennial principles, the reality is that our legal texts are yet to properly enter the 21st century."
Is it the archaic nature of the texts convoluted by overlapping references he hinted at? What is clear enough is the need to deliver more meaningful and result-oriented outcomes for the sake of global trade, which in the long run may also serve as a defence of multilateralism.
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