Legal problems of making regional trade agreements with non-WTO-member states

Abstract

In pursuing regional economic integration with non-WTO-member economies, a WTO member must be aware that WTO compliance is under question. An exchange of preferential treatment between the WTO-member party and non-WTO-member parties gives rise to a violation by the WTO member of the MFN treatment obligation of the WTO Agreement. In the case of integration in the service sector, consistency with WTO jurisprudence is guaranteed, whereas in integrating the goods sector, WTO consistency can only be guaranteed when the non-WTO-member parties are least-developed countries. Furthermore in the TRIPs sector, the WTO compliance is not questionable only when the RTA reconfirms original rights and duties arising under the TRIPs Agreement. Thus, in order to be consistent with WTO jurisprudence, regional integration agreements in the area of trade in goods need to be approved by a two-thirds majority of the WTO members, before they come into force. Or, the WTO member could encourage the non-WTO-member state to join the WTO before their RTA comes into force. On the other hand, in the case of economic integration in the service sector, as non-WTO-member status of any counterpart economies does not act as a legal impediment, the WTO members may pursue more active negotiations, while remaining consistent with WTO jurisprudence. In drafting and negotiating on IPR chapters under RTAs, WTO members must be vigilant not to mutually exchange a higher level of IPR protection than that stipulated under the TRIPs Agreement. © Oxford University Press, all rights reserved.