Tax Of Lesser Importance In New-Age FTAs: WTO

The World Trade Organisation (WTO) has announced the publication of its annual World Trade Report for 2011, focusing on the role that Preferential Trade Agreements play in the development of the multilateral trading system.

With the growing number of preferential trade agreements being negotiated as a means of exiting the global downturn, the 256-page World Trade Report 2011 broadly examines why PTAs are established, their effects, and the contents of the agreements themselves. In-depth consideration is also given to the interaction of PTAs and the multilateral trading system.

Among the report's findings, the WTO has reported that freer trade globally in recent years has shifted impetus towards negotiating non-tariff areas of a regulatory nature, with tariff reductions - while key - increasingly less pertinent in negotiations between nations. "Preferential tariffs are becoming less important in PTAs," the WTO reported, "and as a result only a small fraction of global merchandise trade receive preferences."

“Global production networks may be prompting the emergence of these 'deep' PTAs, as good governance on a range of regulatory areas is far more important to these networks than further reductions in already low tariffs. Econometric evidence and case studies support this link between production networks and deep PTAs."

The report ends by examining the challenge that deep PTAs present to the multilateral trading system and proposes a number of options for increasing coherence between these agreements and the trading system regulated by the WTO.

September 18, 2011

Source: Tax News