A global race for free trade agreements: from the most to the least favoured nation treatment?

This article discusses this recent growth in regional networks of bilateral trade agreements and their impact on trade negotiations. The rapid growth of Free Trade Agreements (FTAs) create a danger that WTO's Most Favoured Nation (MFN) trade rules will soon apply only to a small fraction of world trade (those left out of FTAs).

The potentially harmful impact of trade preferences for outsiders, as well as the risk of marginalising the WTO, implies that more radical attempts should be made to cut tariffs at the WTO, or alternatively among rich and intermediate income countries. In the non-tariff field, the discriminatory impact of FTAs is smaller, and the most important need is to promote convergence in international rules. This may partly be done by new rules in the WTO, e.g. on rules of origin, competition and investment.