Analysis of the proposed china asean free trade area a gravity model and RCAI approach

ANALYSIS OF THE CHINA -ASEAN FREE TRADE AREA: A GRAVITY MODEL
AND RCAI APPROACH

BENJAMIN A. ROBERTS

NATIONAL UNIVERSITY OF SINGAPORE

2003


ANALYSIS OF THE CHINA -ASEAN FREE TRADE AREA: A GRAVITY MODEL
AND RCAI APPROACH

BENJAMIN A. ROBERTS
(M. Soc. Sci., NUS)

A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF SOCIAL SCIENCE
DEPARTMENT OF ECONOMICS

NATIONAL UNIVERSITY OF SINGAPORE

2003


Acknowledgement

I would like to thank Dr. Shandre Thangavelu and Professor Thampapillai for all their
support and encouragement during my not so fascinating candidature at the National
University of Singapore. Special regards goes to all my colleagues and friends who
made my days at NUS enjoyable.

i


TABLE OF CONTENTS
1.

Introduction
1.1 Overview of GATT/WTO/RTAs &
the Multilateral Trade System

1-2

2.

Literature Review
2.1 The Gravity Model
2.2 The GTAP Model

19-23
23-26
26-29

3.

Research Methodology

30-32

4.

Economic Overview of China & ASEAN
4.1 Overview of Macroeconomic Indicators
4.2 Industrial Sector Decomposition
4.3 Summary of the Trading Partners of the CAFTA Economies
4.4 Trade Policy Summary of the CAFTA Economies
4.5 Overview of AFTA

33
34-38
39-40
41-46
47-53
53-56

5.

CAFTA Framework Agreement
5.1 The Articles of Agreement
5.2 Articles Pertaining to Trade in Goods

57-58
58
59-63

6.

Exposition of the Revealed Comparative Advantage Index
6.1 The Index
6.2 Complementarities in the Production Activities of
China & ASEAN

6.3 Necessary Steps to a Mutually Beneficial
Free Trade Area

64-65
65-80

A Gravity Model Approach to the Proposed FTA
7.1 Conceptual Framework
7.2 Model Specification
7.3 Data Used in Estimating the Model
7.4 Estimation Results
7.5 Sensitivity Analysis
7.6 Graphical Depiction of the Evolution of the
Explanatory Vars
Conclusion
Appendix 1
References

97-98
98-101
101-104
105-110
110-121
121-122

7.

8.

2-18

80-86
86-96

123
126-127
128-131

ii


LIST of TABLES
Table 1: RTAs Notified to the GATT & in Force in the 1948-1989 Period

9-10

Table 2: Definitions & Abbreviations of Regional Trade Agreements

11

Table 3: RTAs Notified to the GATT/WTO & in Force in the
Post 1989 Perio d

12-17

Table 4: Definitions & Abbreviations of Regional Trade Agreements

18

Table 5: Macroeconomic Indicators of China & the ASEAN Economies

34

Table 6: Industries making up the Industrial Sector in China & ASEAN

39

Table 7: China & ASEAN Trading Partners

41

Table 8: CAFTA Trade Policies Summary

45

Table 9: Tariff & Non-Tariff Highlight of the CAFTA Economies

47-49

Table 10: AFTA CEPT Package

55

Table 11: CEPT Tariff Rates

55

Table 12: RCAI Indices for the Top Five Exports of the CAFTA Economies

67-68

Table 13: RCAI Calculations for 1996

72

Table 14: World Market Share of Commodities in which the CAFTA Economies
Have a Revealed Comparative Advantage
Table 15: Sector Contribution to GDP & Employment

76
81

iii


Table 16: China's Revealed Comparative Disadvantage Index

83

Table 17: Geographical Distribution of Global FDI Flows to Selected Countries 91

Table 18: Inward FDI Stock in ASEAN

92

Table 19: Intra-ASEAN FDI Flows

93

Table 20: Explanatory Variables Descriptive Statistics

108-109

Table 21: F-Statistic and p-Values of Trade Flows

111

Table 22: OLS Regression Coefficients for Exports

112

Table 23: OLS Regression Coefficients for Imports

113

Table 24: Tobit Regression Coefficients for Exports & Imports

114

iv


LIST of FIGURES
Figure 1: Per Capita GDP of CAFTA Economies

35

Figure 2: GDP & Per Capita GDP of China

36

Figure 3: GDP & Per Capita GDP of ASEAN

37

Figure 4: Sector Composition of GDP of CAFTA Economies

38

Figure 5: Import Origination of the CAFTA Economies (2000)

40

Figure 6: Export Destinations of the CAFTA Economies (2000)

40

Figure 7: Percentage Changes in ASEAN Exports
to the US/EU/Japan/China

116

Figure 8: Percentage Changes in ASEAN Imports
to the US/EU/Japan/China

116

Figure 9: Relative Importance of Explanatory Variables
in the Gravity Model Overtime

123

v


SUMMARY

In this thesis, I have attempted to analyze the economic feasibility of the proposed
China-ASEAN Free Trade Area by first evaluating the Framework of Agreement and
objectives underlying both CAFTA and AFTA. That the objectives of both regional
trade arrangements were almost synonymous meant that the aspired integration is a
possibility. Other areas of concern pointed out include the liberalization of tax
regimes and the tarrification of non-tariff barriers among some of the ASEAN
members vis -à-vis China. Under a still limiting three-digit SITC classification, I was
able to show that only some of the CAFTA economies had similar RCAI. An
examination of the Revealed Comparative Disadvantage Indices of China also showed
that the ASEAN countries were in a position to tap on China's import market. Whilst
ASEAN economies like Singapore, Malaysia, and Thailand could easily do so, others
like Cambodia, Laos, Malaysia, and Vietnam (CLMV) will have to realign their
industrial strategies to take advantage of China's Revealed Comparative Disadvantage
Indices. Broadly taken, the inter member RCAI indices reveal some similarities but
vast differences exist to allow for complementarities in their production activities.
Like most FTAs, the proposed China-ASEAN FTA will have its effect on the global
trading system. The underlying assumption of trade creation meant that members of
the FTA had a potential to improve their welfare. This welfare improvement is not
automatic and requires conscious effort on the part of the less developed ASEAN
economies. The results of the model were convincing enough to label the proposed
FTA a 'natural' trading bloc. The model also showed a potential for increased trade
flows, both for Imports and Exports, within the Regional Trade Agreement.

vi


1.

INTRODUCTION

The economic benefits realised from the formation of the European Union (EU) and
that of NAFTA1 have led to an appreciation of the benefits inherent in economic
integration. Economic theory claims that the potential benefits from economic
integration are much more likely to be realised provided that integrating members were
trading amongst themselves ex ante . This postulation is premised on the need for the
avoidance of trade diversion. In this regard integration is beneficial if it is trade
creating and not trade diverting, that is, if it is dynamic.

The recent proposed China-ASEAN Free Trade Area (FTA), like other regional trade
agreements (RTA), has drawn some concerns. Sceptics writing on the subject have
downplayed its economic feasibility and prospects despite projections that the FTA will
create an economic region of 1.7 billion people with a GDP of US$2 trillion and a trade
value of US$1.23 trillion (2001). The China-ASEAN FTA, like all FTAs, must be
evaluated from an economic as well as from a social and political dimension if one is to
make an informative finding. Though acknowledging the de jure dimension of the
proposed FTA, emphasis is placed on the de facto dimension with an assumption, albeit
a logical one, that the economic is synonymous to the social.

The Thesis comprises of eight chapters. Chapter one is the introductory chapter and it
gives an overview of the GATT/WTO/RTAs and the Multilateral Trade System.
Chapter two surveys the existing literature on the static and dynamic models to regional
trade agreements. Chapter three outlines the research methodology of the thesis.

1


Chapter four gives an economic overview of the economies with which this thesis is
concerned. Chapter five provides a succinct overview of the agreement underlying the
China -ASEAN Comprehensive Economic Co-operation. Emphasis is given to the trade
aspects of the Agreement. Chapter six details the Revealed Comparative Advantage
Indices of the production activities of the economies concerned. Chapter seven deals
with the dynamic aspects of the proposed FTA using the Gravity Model of Trade.
Chapter eight, the concluding chapter gives a synthesis of the static and dynamic
analyses to trade and gives an overview of what the two approaches revea l for the
proposed FTA.

1.1

OVERVIEW of GATT/WTO/RTAs & the MULTILATERAL TRADE
SYSTEM

Since the adoption of GATT in 19472 (by way of the Geneva Round) and up until the
end of 1994 there were 124 regional trade agreements notified to the GATT. This
number increases to 150 if trade in services is accounted for. With the creation of the
WTO in 1995, the international trade environment has seen an exponential growth in
the formation of FTAs/RTAs. Following its creation, the WTO has received over 100
notifications for the formation of FTAs/RTAs in both Goods and Services. This works
out at an average of 3.4 RTAs per year in the GATT period compared to over 12.5
RTAs per year in the WTO period for both Goods and Services. The average number
of notifications between the two periods has therefore grown by over 260%. This is an
1

Ment ion is only made of these two FTAs (RTAs) but there are currently 224 RTAs that have been

notified to the WTO. This is inclusive of the GATT years and includes RTAs in both Goods and
Services.
2
There were 8 Trade Rounds negotiated under the auspices of the GATT most of whose objective was to
reduce tariff levels within the multilateral trading system. Since the inception of the WTO there has been
4 Ministerials of which 3 went well with Seattle having failed. The last of these was the Doha

2


astronomical rate, especially if we consider the fact that not all FTAs/RTAs formed
were notified to the GATT or notified to the WTO.

Given this exponential growth in

notifications it is only logical to ask why this upsurge of interest among nations to form
FTAs and why now? Answering this question requires an understanding of what an
FTA/RTA is; what its creation does to the multilateral trade framework; and what
purpose it serve s.

In the broadest sense a regional trade area (RTA) refers to the geopolitical integration
of countries with the aim of promoting trade (either in goods or services) within the
integrating area and among the integrating members. Pursuant to this definition, a RTA
is all encompassing in that it is inclusive of a Free Trade Area, Customs Union,
Common Market, and Monetary Union, respectively. The ordering is, however, not
strict as is evidenced in the real world. The European Union as we know it today, for
example, started with the formation of the European Economic Community (Common
Market) 3 and not with a Free Trade Area. Actually five of the founding fathers of the
European Free Trade Agreement (EFTA) including pioneering Britain would later
leave the EFTA to join the European Community4. Another example of a RTA that did

not follow the prescribed economic path is the South African Customs Union (SACU)
and the ECOWAS of West Africa, though these are less binding compared to its
Ministerial or better yet the Doha Declaration of 2001. The Cancun Ministerial will be held September
2003.
3
The EEC was established in 1958 by a treaty among original members Belgium, France, Italy,
Luxembourg, The Netherlands, and West Germany. It was, however, the European Coal and Steel
Community of 1952 that laid the foundation to the EEC. In 1958 Britain proposed for the expansion of
the EEC into a transatlantic FTA but was turned down. It however succeeded in forming the European
Free Trade Area (EFTA) with signatories Austria, Denmark, Norway, Portugal, Sweden and Switzerland.
Iceland joined in 1970 with Finland joining in 1986 along with Liechlenstein in 1991. However, in 1973
Denmark and Great Britain will leave EFTA to join the European Community. Portugal followed in
1986 and then Austria, Finland, and Sweden in 1995. As it stands today the EFTA is comprised of the
original members of Iceland, Norway, Switzerland, and Liechlenstein. However, the EFTA has forged
trade relations with some of its East European counterparts. These include the EFTA-Bulgaria FTA, the
EFTA-Czech Republic FTA, the EFTA-Hungary FTA, the EFTA-Poland FTA and the EFTA-Israel
FTA.

3


counterparts in Europe 5. The logical path is, however, enhancing given the stepping
stone guidance to forming a formidable RTA.

The encompassing nature of the definition of a RTA has made it synonymous to its
different levels and forms. It is therefore very common to use the term RTA
interchangeably with either a Customs Union or a FTA. Strictly speaking, the three are
not synonymous especially if we consider the fact that an FTA and a Customs Union
have a 'trade in goods' connotation whereas a RTA can be taken to mean either trade in
goods or in services or both. To this end, an RTA covers both the GATT and General

Agreement on Trade in Services (GATS) whereas an FTA is primarily concerned with
the GATT. This distinction between an RTA and an FTA is conveyed further by the
distinction made within the Committee on Regional Trade Agreements (CRTA) which
was formed in February of 1996 by the WTO6. The CRTA is comprised of three
bodies- the Council for Trade in Goods (CTG); the Council for Trade in Services
(CTS) and the Commit tee on Trade and Development7. The objective of the CRTA is
to allow for transparency of RTAs and to enable its country members the opportunity to
evaluate compliance of a RTA to the World Trade Organisation rules.

The earlier question regarding the upsurge in the number of FTAs in the World Trade
Organisation (1995-onward) compared to the GATT (1948-1994) is an important one.
An examination of the depth and coverage of the RTAs in the two periods will help us

4

See EU Web-site (www.eurunion.org) for history of the Union.
See subsequent pages for a list of the RTAs with or without notification to the WTO.
6
See the WTO web-site (www.wto.org/english/tratop_e/region_e/regcom_e.htm) for further details .
7
The CTG handles all notifications falling under Article XXIV of the GATT (trade in goods) whereas all
notifications of RTAs falling under the Enabling Clause are made to the CTD. The CTS tracks all
notifications of RTAs covering GATS.
5

4


in answering the question - why an upsurge in the number of RTAs following the
creation of the WTO.

The growth rate in the average number of RTAs in the two period referred to earlier is
alarming. It is alarming not because of the inter-period comparison of the RTAs
notified to the GATT/WTO but because of the potential consequences it might have on
the multilateral trade framework which the WTO is responsible for promoting. An
evaluation of the RTAs formed after 1989 contrasts sharply with the RTAs formed in
the 1948-89 period. Perhaps the only exception that could be cited in terms of
complexity and degree of product coverage is the EC. It should, however, be pointed
out that the EU, which became effective in January 1993, is more encompassing than
the EC was. Other Customs Union or FTAs formed before 1989 (see table 1) were less
comprehensive and less binding by way of legal framework. In fact some, PTN and
LAIA, were merely protocols to the facilitation of trade. While others like the GSTP
are mere non-binding preferential agreements. It is no coincidence therefore that these
RTAs fall under the classification of "other" in the "Type of Agreement" heading in
table1. Looking at table1 it becomes evident that the RTAs formed from 1948-89
involved less of developing countries and even lesser RTAs among developing
countries. In fact most of the RTAs involving developing countries were through
plurilateral/bilateral agreements with the EC. The RTAs that existed exclusively
among developing countries were not RTAs in the strict sense of the word but had
objectives of fostering trade amongst themselves without necessarily harmonising,
reducing tariffs, or intending for a broader product coverage.

5


Besides the above differences in the RTAs of the two periods, another major distinction
between the two concerns the Rules of Origin (ROO8). Regarding the ROO it is safe to
say that all RTAs in the 1948-89 period were less conscientious of the ROO primarily
because the GATT MFN principle (clause) did not come into play until 1994.
However, there are other ROO besides the "MFN rules of origin." There is also the
"Preferential rules of origin" which as the name suggests allow for preferential access

(of goods) to RTA member countries. This is considered an integral part to the
formation of FTAs albeit the MFN principle of the GATT. Reconciling this integral
aspect to a FTA with the MFN principle of the GATT is not free of problems and has
indeed resulted, in part, to the existence of two major models of the ROO - the "panEuropean" and the NAFTA-model of ROO. Wide differences exist between the two in
terms of regional content requirements (%), rules of tolerance, and exceptions for
sector specific goods. Variations are lesser in the ROO within the "pan-European"
model than it is in the NAFTA-model. T his should not be surprising given that the EU
is, in terms of level, in the final stage of a RTA whereas the NAFTA is still in the first
stage. Despite these level differences, it is evident that RTAs with lesser exceptions, in
terms of coverage, and lesser or harmonised standards (Sanitary and Photo-sanitary)
would tend not to hamper the multilateral trade framework (WT/REG/W/45, 2002).

RTAs formed in the post 1989 period are relatively more harmonising than those
formed in the 1948-89 period. The most noteworthy of mention been NAFTA, AFTA,
and MERCUSOR (see table3&4). These RTAs provide for a wider product coverage,
harmonisation of tariffs, harmonisation of standards, and some go as far as providing
for some harmonisation in procurements along with addressing issues of IPRs and
8

Rules applied in FTAs to determine whether goods qualify for duty-free admission. Normally such
rules specify a minimum percentage of inputs which have to come from member countries.

6


competition policy. The RTAs of this period also tend to be more aligning with WTO
guidelines and are relatively more transparent. Another important distinction between
the RTAs of the two periods is the number of RTAs forme d exclusively among
developing countries in the post 1989 period that have remained effective in terms of
objective. Good examples are AFTA and MERCUSOR and to a lesser extent

CARICOM (see table3&4). Despite these differences in RTA type, transparency,
product coverage, harmonisation, and safeguard provisions the pertinent question of
their effect on the multilateral trade framework is still to be answered. Do RTAs, in the
words of Bhagwati (1992), act as "building-blocs" or "stumbling-blocs" to the
multilateral trade system?

The question of whether RTAs foster or hinder the multilateral trading system is argued
to be too early to answer. Winters (1998) points out in his "Regionalism versus
Multilateralism" study that the verdict is still out on the question given the short history
of effective RTAs. He argues that "one can build models that suggest either conclusion
but to date these are sufficiently abstract that they should be viewed as parables rather
than sources of testable predictions"(pg.1). Putting aside economic models and
invoking logic against a backdrop of RTA objectives would perhaps shed some light on
the question. To clarify the point, one can look at the different RTA forms along with
their objectives and provisions and ask what their effect on the multilateral trading
system is likely to be. This possibility would perhaps allow us to not wait for time
series data to make for an informed empirical analysis, albeit its importance. This
possibility was undertaken in Viner's (1950) pioneering work on the conventional
analysis of RTAs along with Meade (1955) and Lipsey (1960). All three evaluated
RTA implications (at different degrees) on the multilateral trading system by way of a

7


Customs Union and the resulting concerns of trade diversion. Obviously the partial
equilibrium analysis, the underlying assumptions, and the focus on a CU meant that a
thorough analysis would be shortcoming. I will return to this issue in more details
under the Literature Review section of the thesis. For now the important point to note
is that an awareness has been created that RTAs have an effect on the multilateral
trading system but how the different levels (forms) of RTA affect the RTA and whether

they do in different ways has yet to be conveyed by research. A priori it is safe to posit
that an FTA, Customs Union, Common Market, and Economic Union will affect the
multilateral trading system in different ways even if this reasoning is solely based on
the differences in the encompassing nature and objectives of the different RTA forms.

The objectives of RTAs are different and this difference is reflected in the policies and
agreements underlying them. An FTA, for example, provides an agreement for the
harmonisation of tariffs, amongst others, among integrating members whereas a CU
allows for this along with a common trade policy toward countries outside of the
Union. An economic Union, the EU for example, goes well beyond the provision of
the two. Against this framework we can then make a case for why there has been an
explosion in the number of RTAs, especially in the post 1989 period. RTAs have been
and are currently in the rise because they facilitate trade and lend a sense of belonging
to the multilateral trade framework even if it may concomitantly hinder globally freer
trade.

8


TABLE 1:

Agreement

RTAs Notified to the GATT and in Force in the 1948-1989 Period
By date of entry into force

Date of
entry into
force

GATT/WTO notification
Date

Related
provision

EC (Treaty of Rome)

1-Jan-58

10-Nov -95 GATS Art. V

EC (Treaty of Rome)

1-Jan-58

24-Apr-57

EFTA (Stockholm
Convention)

Type of
agreement

WT/
document
series

Examination process
Status

Ref.

Services
agreement

REG39

Under factual
examination

…

GATT Art.
XXIV

Customs
union

…

Report adopted

6S/70 & 109
29.11.57

3-May -60 14-Nov -59

GATT Art.
XXIV

Free trade
agreement

REG85

Report adopted

9S/70
04.06.60

CACM

12-Oct-61

24-Feb-61

GATT Art.
XXIV

Customs
union

REG93

Report adopted

10S/98
23.11.61

TRIPARTITE

1-Apr-68

23-Feb-68

Enabling
Clause

Other

…

Report adopted

EFTA accession of Iceland 1-Mar-70

30-Jan-70

GATT Art. Accession to
XXIV
free trade
agreement

…

Report adopted

18S/174
29.09.70

EC — OCTs

1-Jan-71

14-Dec -70

GATT Art.
XXIV

Free trade
agreement

REG106

Report adopted

18S/143
09.11.71

EC — Malta

1-Apr-71

24-Mar-71

GATT Art.
XXIV

Customs

union

REG102

Report adopted

19S/90
29.05.72

EC — Switzerland and
Liechtenstein

1-Jan-73

27-Oct-72

GATT Art.
XXIV

Free trade
agreement

REG94

Report adopted

20S/196
19.10.73

EC accession of Denmark,

Ireland and United
Kingdom

1-Jan-73

7-Mar-72

GATT Art. Accession to
XXIV
customs
union

…

Report adopted

C/M/107
11.07.75

PTN

11-Feb-73

9-Nov-71

Enabling
Clause

Other

…

Examination not
requested

…

EC — Iceland

1-Apr-73

24-Nov -72

GATT Art.
XXIV

Free trade
agreement

REG95

Report adopted

20S/158
19.10.73

EC — Cyprus

1-Jun-73

13-Jun-73

GATT Art.
XXIV

Customs
union

REG97

Report adopted

21S/94
21.06.74

EC — Norway

1-Jul-73

13-Jul-73

GATT Art.
XXIV

Free trade
agreement

…

Report adopted

21S/83
28.03.74

CARICOM

1-Aug-73

14-Oct-74

GATT Art.
XXIV

Customs
union

REG92

Report adopted

24S/68
02.03.77

Bangkok Agreement

17-Jun-76

2-Nov-76

Enabling

Clause

Other

…

Report adopted

EC — Algeria

1-Jul-76

28-Jul-76

GATT Art.
XXIV

Free trade
agreement

REG105

Report adopted

24S/80
11.11.77

PATCRA

1-Feb-77

20-Dec -76

GATT Art.
XXIV

Free trade
agreement

…

Report adopted

24S/63
11.11.77

EC — Egypt

1-Jul-77

15-Jul-77

GATT Art.
XXIV

Free trade
agreement

REG98

Report adopted

25S/114
17.05.78

EC — Jordan

1-Jul-77

15-Jul-77

GATT Art.
XXIV

Free trade
agreement

REG100

Report adopted

25S/133
17.05.78

9

16S/83
14.11.68

25S/109

14.03.78


GATT/WTO notification

Date of
entry into
force

Date

EC — Lebanon

1-Jul-77

EC — Syria

Agreement

Related
provision

Type of
agreement

15-Jul-77

GATT Art.
XXIV

Free trade
agreement

1-Jul-77

15-Jul-77

GATT Art.
XXIV

31-Aug-77

1-Nov-77

SPARTECA

1-Jan-81

EC accession of Greece

WT/
document
series

Examination process
Status

Ref.

REG100

Report adopted

25S/142
17.05.78

Free trade
agreement

REG104

Report adopted

25S/123
17.05.78

Enabling
Clause

Other

…

Report adopted

20-Feb-81

Enabling
Clause

Other

…

Examination not
requested

…

1-Jan-81

24-Oct-79

GATT Art. Accession to
XXIV
customs
union

…

Report adopted

30S/168
09.03.83

LAIA

18-Mar-81

1-Jul-82

Enabling
Clause

…

Examination not
requested

…

CER

1-Jan-83

14-Apr-83

GATT Art.
XXIV

Free trade REG111
agreement

Report adopted

31S/170
02.10.84

19-Aug-85 13-Sep-85

GATT Art.
XXIV

Free trade
agreement

…

Report adopted

34S/58
14.05.87

GATT Art. Accession to
XXIV
customs
union

…

Report adopted

35S/293
19.10.88

Enabling
Clause

…

Examination not
requested

…

Services REG40
agreement

Consultations on
draft report

…

…

Examination not
requested

…

ASEAN

United States — Israel
EC accession of Portugal
and Spain
CAN

1-Jan-86

11-Dec -85

25-May -88 12-Oct-92

CER

1-Jan-89

GSTP

19-Apr-89 25-Sep-89

22-Nov -95 GATS Art. V
Enabling
Clause

Other

Other

Other

Source: Adopted from WTO (RTAs in effect as of January 31, 2002).

10

26S/321
29.01.79


TABLE2:

Acronym
ASEAN
BANGKOK
CAN
CARICOM

Definitions and abbreviations

Name
Association of South East Asian
Nations
Bangkok Agreement
Andean Community
Caribbean Community and
Common Market

Participating Countries
Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar
Philippines Singapore Thailand Vietnam
Bangladesh China India Republic of Korea Laos Sri Lanka
Bolivia Colombia Ecuador Peru Venezuela
Antigua & Barbuda Bahamas Barbados Belize Dominica Grenada
Guyana Haiti Jamaica Monserrat Trinidad & Tobago St. Kitts & Nevis St.
Lucia St. Vincent & the Grenadines Surinam
Costa Rica El Salvador Guatemala Honduras Nicaragua

CACM

Central American Common Market

CER

Closer Trade Relations Trade
Agreement

Australia New Zealand

EC

European Communities

Austria Belgium Denmark Finland France Germany Greece Ireland Italy
Luxembourg Netherlands Portugal Spain Sweden United Kingdom

EEA
EFTA

European Economic Area
European Free Trade Association

EC Iceland Lichtenstein Norway
Iceland Liechtenstein Norway Switzerland

GSTP

General System of Trade
Preferences Among Developing
Countries

LAIA

OCT

PTN

Algeria Angola Argentina Bangladesh Benin Bolivia Brazil Cameroon
Chile Colombia Cuba Democratic People's Republic of Korea Ecuador
Egypt Ghana Guinea Guyana Haiti India Indonesia Islamic Republic of
Iran Iraq Libya Malaysia Mexico Morocco Mozambique Nicaragua
Nigeria Pakistan Peru Philippines Qatar Republic of Korea Romania
Singapore Sri Lanka Sudan Thailand Trinidad and Tobago Tunisia
United Republic of Tanzania Uruguay Venezuela Vietnam Yugoslavia
Zaire Zimbabwe
Latin American Integration Association Argentina Bolivia Brazil Chile Colombia Cuba Ecuador Mexico Paraguay
Peru Uruguay Venezuela
Overseas Countries and Territories

Greenland New Caledonia French Polynesia French Southern and
Antarctic Territories Wallis and Futuna Islands Mayotte Saint Pierre and
Miquelon Aruba Netherlands Antilles Anguilla Cayman Islands Falkland
Islands South Georgia and South Sandwich Islands Montserrat Pitcairn
Saint Helena Ascension Island Tristan da Cunha Turks and Caicos
Islands British Antarctic Territory British Indian Ocean Territory British
Virgin Islands
Protocol relating to Trade Negotiations Bangladesh Brazil Chile Egypt Israel Mexico Pakistan Paraguay Peru
among Developing Countries
Philippines Republic of Korea Romania Tunisia Turkey Uruguay
Yugoslavia

SPARTECA

South Pacific Regional Trade and
Economic Cooperation Agreement

TRIPARTITE

Tripartite Agreement

Australia New Zealand Cook Islands Fiji Kiribati Marshall Islands
Micronesia Nauru Niue Papua New Guinea Solomon Islands Tonga
Tuvalu Vanuatu Western Samoa
Egypt India Yugoslavia

Source: Compiled from WTO CTRA

11


TABLE 3:

RTAs Notified to the GATT/WTO and in Force in the Post 1989 Period
By date of entry into force

Laos — Thailand
EC — Andorra

20-Jun-91 29-Nov -91

Enabling

Clause

Other

…

Examination not
requested

1-Jul-91

25-Feb-98

GATT Art.
XXIV

Customs
union

REG53

Factual examination
concluded

…

MERCOSUR

29-Nov -91

5-Mar-92

Enabling
Clause

Customs
union

COMTD/1

Under factual
examination

…

AFTA

28-Jan-92 30-Oct-92

Enabling
Clause

Other

…

Examination not
requested

…

EC — Czech Republic

1-M ar-92

13-May -96

GATT Art.
XXIV

Free trade
agreement

REG18

Factual examination
concluded

…

EC — Slovak Republic

1-Mar-92

13-May -96

GATT Art.
XXIV

Free trade

agreement

REG18

Factual examination
concluded

…

EC — Hungary

1-Mar-92

3-Apr-92

GATT Art.
XXIV

Free trade
agreement

REG18

Consultations on
draft report

…

EC — Poland

1-Mar-92

3-Apr-92

GATT Art.
XXIV

Free trade
agreement

REG18

Factual examination
concluded

…

EFTA — Turkey

1-Apr-92

6-Mar-92

GATT Art.
XXIV

Free trade
agreement

REG86

Report adopted

40S/48
17.12.93

EFTA — Czech Republic

1-Jul-92

3-Jul-92

GATT Art.
XXIV

Free trade
agreement

REG87

Report adopted

41S/116
08.12.94

EFTA — Slovak Republic

1-Jul-92

3-Jul-92

GATT Art.
XXIV

Free trade
agreement

REG88

Report adopted

41S/116
08.12.94

Czech Republic — Slovak
Republic

1-Jan-93

30-Apr-93

GATT Art.
XXIV

Customs
union

REG89

Report adopted

41S/112
04.10.94

EFTA — Israel

1-Jan-93

1-Dec-92

GATT Art.
XXIV

Free trade
agreement

REG14

Factual examination
concluded

…

CEFTA

1-Mar-93

30-Jun-94

GATT Art.

XXIV

Free trade
agreement

REG11

Consultations on
draft report

…

Kyrgyz Republic —
Russian Federation

24-Apr-93

15-Jun-99

GATT Art.
XXIV

Free trade
agreement

REG73

Under factual
examination

…

EC — Romania

1-May -93 23-Dec -94

GATT Art.
XXIV

Free trade
agreement

REG2

Factual examination
concluded

…

EFTA — Romania

1-May -93 24-May -93

GATT Art.
XXIV

Free trade
agreement

REG16

Factual examination
concluded

…

Faroe Islands — Norway

1-Jul-93

13-Mar-96

GATT Art.
XXIV

Free trade
agreement

REG25

Factual examination
concluded

…

Faroe Islands — Iceland

1-Jul-93

23-Jan-96

GATT Art.
XXIV

Free trade
agreement

REG23

Factual examination
concluded

…

EFTA — Bulgaria

1-Jul-93

30-Jun-93

GATT Art.
XXIV

Free trade
agreement

REG12

Factual examination
concluded

…

MSG

22-Jul-93

7-Oct-99

Enabling
Clause

Other

…

Examination not
requested

…

EFTA — Hungary

1-Oct-93

23-Dec -93

GATT Art.
XXIV

Free trade
agreement

REG13

Consultations on
draft report

…

12


EFTA — Poland

15-Nov -93 20-Oct-93

GATT Art.
XXIV

Free trade
agreement

REG15

Factual examination
concluded

…

EC — Bulgaria

31-Dec -93 23-Dec -94

GATT Art.
XXIV

Free trade
agreement

REG1

Factual examination
concluded

…

EEA

1-Jan-94

10-Oct-96 GATS Art. V

Services
agreement

…

Factual examination
not started

…

NAFTA

1-Jan-94

1-Feb-93

Free trade
agreement

REG4

Consultations on
draft report

…

EC — Hungary

1-Feb-94

27-Aug-96 GATS Art. V

Services
agreement

REG50

Consultations on
draft report

…

EC — Poland

1-Feb-94

27-Aug-96 GATS Art. V

Services
agreement

REG51

Factual examination
concluded

…

BAFTA

1-Apr-94

15-Jun-99

Free trade
agreement

REG77

Factual examination
concluded

…

NAFTA

1-Apr-94

1-Mar-95 GATS Art. V

Services
agreement

REG4

Consultations on
draft report

…

GATT Art.
XXIV

GATT Art.
XXIV

Georgia — Russian

Federation

10-May -94 21-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG118

Factual examination
not started

…

COMESA

8-Dec -94

29-Jun-95

Enabling
Clause

Other

…

Examination not
requested

…

CIS

30-Dec -94

1-Oct-99

GATT Art.
XXIV

Free trade
agreement

REG82

Under factual
examination

…

Romania — Moldov a

1-Jan-95

24-Sep-97

GATT Art.
XXIV

Free trade
agreement

REG44

Factual examination
concluded

…

EC — Lithuania

1-Jan-95

26-Sep-95

GATT Art.
XXIV

Free trade
agreement

REG9

Factual examination
concluded

…

EC — Estonia

1-Jan-95

30-Jun-95

GATT Art.
XXIV

Free trade
agreement

REG8

Factual examination
concluded

…

EC — Latvia

1-Jan-95

30-Jun-95

GATT Art.
XXIV

Free trade
agreement

REG7

Factual examination
concluded

…

EC accession of Austria,
Finland and Sweden

1-Jan-95

20-Jan-95

GATT Art. Accession to
XXIV
customs
union

REG3

Consultations on
draft report

…

EC accession of Austria,

Finland and Sweden

1-Jan-95

20-Jan-95 GATS Art. V Accession to
services
agreement

REG3

Consultations on
draft report

…

EC — Bulgaria

1-Feb-95

25-Apr-97 GATS Art. V

Services
agreement

…

Factual examination
not started

…

EC — Czech Republic

1-Feb-95

9-Oct-96

GATS Art. V

Services
agreement

…

Factual examination
not started

…

EC — Romania

1-Feb-95

9-Oct-96

GATS Art. V

Services
agreement

…

Factual examination
not started

…

EC — Slovak Republic

1-Feb-95

27-Aug-96 GATS Art. V

Services
agreement

REG52

Factual examination
concluded

…

Faroe Islands —
Switzerland

1-Mar-95

8-Mar-96

GATT Art.
XXIV

Free trade
agreement

REG24

Factual examination
concluded

…

EFTA — Slovenia

1-Jul-95

18-Oct-95

GATT Art.
XXIV

Free trade
agreement

REG20

Factual examination
concluded

…

13


Kyrgyz Republic —
Armenia

27-Oct-95

4-Jan-01

GATT Art.
XXIV

Free trade
agreement

REG114

Factual examination
not started

…

Kyrgyz Republic —
Kazakhstan

11-Nov -95 29-Sep-99

GATT Art.
XXIV

Free trade
agreement

REG81

Under factual
examination

…

SAPTA

7-Dec -95

22-Sep-93

Enabling
Clause

Other

…

Examination not
requested

…

CEFTA accession of
Slovenia

1-Jan-96

8-Jan-98

GATT Art. Accession to
XXIV
free trade
agreement

REG11

Consultations on
draft report

…

EC — Turkey

1-Jan-96

22-Dec -95

GATT Art.
XXIV

Customs

union

REG22

Under factual
examination

…

Estonia — Ukraine

14-Mar-96

25-Jul-00

GATT Art.
XXIV

Free trade
agreement

REG108

Factual examination
concluded

…

EFTA — Estonia

1-Jun-96

25-Jul-96

GATT Art.
XXIV

Free trade
agreement

REG28

Factual examination
concluded

…

EFTA — Latvia

1-Jun-96

25-Jul-96

GATT Art.
XXIV

Free trade
agreement

REG29

Factual examination
concluded

…

Georgia — Ukraine

4-Jun-96

21-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG121

Factual examination
not started

…

Georgia — Azerbaijan

10-Jul-96

21-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG120

Factual examination
not started

…

Slovenia — Latvia

1-Aug-96

20-Feb-97

GATT Art.
XXIV

Free trade
agreement

REG34

Factual examination
concluded

…

EFTA — Lithuania

1-Aug-96

25-Jul-96

GATT Art.
XXIV

Free trade
agreement

REG30

Factual examination
concluded

…

Slovenia — Former
Yugoslav Republic of
Macedonia

1-Sep-96

20-Feb-97

GATT Art.
XXIV

Free trade
agreement

REG36

Factual examination
concluded

…

Kyrgyz Republic —
Moldova

21-Nov -96 15-Jun-99

GATT Art.
XXIV

Free trade
agreement

REG76

Under factual
examination

…

Slovak Republic — Israel

1-Jan-97

30-Mar-98

GATT Art.
XXIV

Free trade
agreement

REG57

Factual examination
concluded

…

Poland — Lithuania

1-Jan-97

30-Dec -97

GATT Art.
XXIV

Free trade

agreement

REG49

Factual examination
concluded

…

Slovenia — Estonia

1-Jan-97

20-Feb-97

GATT Art.
XXIV

Free trade
agreement

REG37

Factual examination
concluded

…

EC — Faroe Islands

1-Jan-97

19-Feb-97

GATT Art.
XXIV

Free trade
agreement

REG21

Under factual
examination

…

Canada — Israel

1-Jan-97

23-Jan-97

GATT Art.
XXIV

Free trade
agreement

REG31

Factual examination
concluded

…

EC — Slovenia

1-Jan-97

11-Nov -96

GATT Art.
XXIV

Free trade
agreement

REG32

Factual examination
concluded

…

Slovenia — Lithuania

1-Mar-97

20-Feb-97

GATT Art.
XXIV

Free trade
agreement

REG35

Factual examination
concluded

…

Israel — Turkey

1-May -97 18-May -98

GATT Art.
XXIV

Free trade
agreement

REG60

Factual examination
concluded

…

CEFTA accession of
Romania

1-Jul-97

GATT Art. Accession to
XXIV
free trade
agreement

REG11

Consultations on
draft report

…

8-Jan-98

14


Slovak Republic — Latvia

1-Jul-97

14-Nov -97

GATT Art.

XXIV

Free trade
agreement

REG47

Factual examination
concluded

…

Slovak Republic —
Lithuania

1-Jul-97

14-Nov -97

GATT Art.
XXIV

Free trade
agreement

REG48

Factual examination
concluded

…

Czech Republic — Latvia

1-Jul-97

13-Nov -97

GATT Art.
XXIV

Free trade
agreement

REG45

Factual examination
concluded

…

EC — Palestinian
Authority

1-Jul-97

30-Jun-97

GATT Art.
XXIV

Free trade
agreement

REG43

Factual examination
not started

…

Canada — Chile

5-Jul-97

13-Nov -97 GATS Art. V

Services
agreement

…

Factual examination
not started

…

Canada — Chile

5-Jul-97

26-Aug-97

GATT Art.
XXIV

Free trade
agreement

REG38

Factual examination
concluded

…

Czech Republic —
Lithuania

1-Sep-97

13-Nov -97

GATT Art.
XXIV

Free trade
agreement

REG46

Factual examination
concluded

…

EAEC

8-Oct-97

6-Apr-99

GATT Art.
XXIV

Customs
union

REG71

Under fac tual
examination

…

Czech Republic — Israel

1-Dec -97

30-Mar-98

GATT Art.
XXIV

Free trade
agreement

REG56

Factual examination
concluded

…

Slovenia — Croatia

1-Jan-98

25-Mar-98

GATT Art.
XXIV

Free trade
agreement

REG55

Factual examination
concluded

…

Kyrgyz Republic —
Ukraine

19-Jan-98 15-Jun-99

GATT Art.
XXIV

Free trade
agreement

REG74

Under factual
examination

…

Romania — Turkey

1-Feb-98

18-May -98

GATT Art.
XXIV

Free trade
agreement

REG59

Factual examination
concluded

…

Hungary — Israel

1-Feb-98

24-Mar-98

GATT Art.
XXIV

Free trade
agreement

REG54

Factual examination
concluded

…

Czech Republic — Estonia 12-Feb-98

3-Aug-98

GATT Art.
XXIV

Free trade
agreement

REG62

Factual examination
concluded

…

Slovak Republic —
Estonia

12-Feb-98

3-Aug-98

GATT Art.
XXIV

Free trade
agreement

REG63

Factual examination
concluded

…

EC — Tunisia

1-Mar-98

23-Mar-99

GATT Art.
XXIV

Free trade
agreement

REG69

Factual examination
concluded

…

Poland — Israel

1-Mar-98

25-Feb-99

GATT Art.
XXIV

Free trade
agreement

REG65

Factual ex amination
concluded

…

Lithuania — Turkey

1-Mar-98

8-Jun-98

GATT Art.
XXIV

Free trade
agreement

REG61

Factual examination
concluded

…

Kyrgyz Republic —
Uzbekistan

20-Mar-98 15-Jun-99

GATT Art.
XXIV

Free trade
agreement

REG75

Under factual
examination

…

Hungary — Turkey

1-Apr-98

12-May -98

GATT Art.
XXIV

Free trade
agreement

REG58

Factual examination
concluded

…

Estonia — Turkey

1-Jun-98

23-Mar-99

GATT Art.
XXIV

Free trade
agreement

REG70

Factual examination
concluded

…

Czech Republic — Turkey

1-Sep-98

24-Apr-99

GATT Art.
XXIV

Free trade
agreement

REG67

Factual examination
concluded

…

Slovak Republic — Turkey

1-Sep-98

24-Mar-99

GATT Art.
XXIV

Free trade
agreement

REG68

Factual examination
concluded

…

Slovenia — Israel

1-Sep-98

8-Mar-99

GATT Art.
XXIV

Free trade
agreement

REG66

Factual examination
concluded

…

15


Georgia — Armenia

11-Nov -98 21-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG119

Factual examination
not started

…

Estonia — Faroe Islands

1-Dec -98

26-Jan-99

GATT Art.
XXIV

Free trade
agreement

REG64

Under factual
examination

…

Bulgaria — Turkey

1-Jan-99

4-May -99

GATT Art.
XXIV

Free trade
agreement

REG72

Factual examination
concluded

…

CEFTA accession of
Bulgaria

1-Jan-99

24-Mar-99

GATT Art. Accession to
XXIV
free trade
agreement

REG11

Consultations on
draft report

…

Poland — Latvia

1-Jun-99

29-Sep-99

GATT Art.
XXIV

Free trade
agreement

REG80

Factual examination
concluded

…

Poland — Faroe Islands

1-Jun-99

18-Aug-99

GATT Art.
XXIV

Free trade
agreement

REG78

Under factual
examination

…

CEMAC

24-Jun-99 28-Sep-00

Enabling
Clause

Other

…

Examination not
requested

…

EFTA — Palestinian
Authority

1-Jul-99

21-Sep-99

GATT Art.
XXIV

Free trade
agreement

REG79

Factual examination
not started

…

Georgia — Kazakhstan

16-Jul-99

21-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG123

Factual examination
not started

…

Chile — Mexico

1-Aug-99

14-Mar-01 GATS Art. V

Services
agreement

REG125

Factual examination
not started

…

Chile — Mexico

1-Aug-99

27-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG125

Factual examination
not started

…

EFTA — Morocco

1-Dec -99

20-Feb-00

GATT Art.
XXIV

Free trade
agreement

REG91

Factual examination
concluded

…

Georgia — Turkmenistan

1-Jan-00

21-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG122

Factual examination
not started

…

EC — South Africa

1-Jan-00

14-Nov -00

GATT Art.
XXIV

Free trade
agreement

REG113

Factual examination
not started

…

WAEMU/UEMOA

1-Jan-00

3-Feb-00

Enabling
Clause

Other

…

Examination not
requested

…

Bulgaria — Former
Yugoslav Republic of
Macedonia

1-Jan-00

21-Jan-00

GATT Art.
XXIV

Free trade
agreement

REG90

Factual examination
concluded

…

Hungary — Latvia

1-Jan-00

20-Dec -99

GATT Art.
XXIV

Free trade
agreement

REG84

Factual examination
concluded

…

EC — Morocco

1-Mar-00

8-Nov-00

GATT Art.
XXIV

Free trade
agreement

REG112

Factual examination
not started

…

Hungary — Lithuania

1-Mar-00

20-Dec -99

GATT Art.
XXIV

Free trade
agreement

REG83

Factual examination
concluded

…

Poland — Turkey

1-May -00 14-May -00

GATT Art.
XXIV

Free trade
agreement

REG107

Factual examination
concluded

…

EC — Israel

1-Jun-00

7-Nov-00

GATT Art.
XXIV

Free trade
agreement

REG110

Factual examination
not started

…

Mexico — Israel

1-Jul-00

27-Feb-01

GATT Art.
XXIV

Free trade
agreement

REG124

Factual examination
not started

…

Latvia — Turkey

1-Jul-00

22-Jan-01

GATT Art.
XXIV

Free trade
agreement

REG116

Under factual
examination

…

16


EC — Mexico

1-Jul-00

1-Aug-00

GATT Art.
XXIV

Free trade
agreement

REG109

Under factual
examination

…

EAC

7-Jul-00

11-Oct-00

Enabling
Clause

Other

…

Examination not
requested

…

Turkey — Former
Yugoslav Republic of
Macedonia

1-Sep-00

22-Jan-01

GATT Art.
XXIV

Free trade

agreement

REG115

Under factual
examination

…

New Zealand - Singapore

1-Jan-01

4-Sep-01

GATT Art.
XXIV

Free trade
agreement

REG127

Factual examinati on
not started

…

New Zealand - Singapore

1-Jan-01

4-Sep-01 GATS Art. V

Services
agreement

REG127

Factual examination
not started

…

EFTA — Former Yugoslav
Republic of Macedonia

1-Jan-01

31-Jan-01

GATT Art.
XXIV

Free trade
agreement

REG117

Under factual

ex amination

…

Hungary — Estonia

1-Mar-01

4-Oct-01

GATT Art.
XXIV

Free trade
agreement

REG128

Factual examination
not started

…

EC — FYROM

1-Jun-01

21-Nov -01

GATT Art.

XXIV

Free trade
agreement

REG129

Factual examination
not started

…

EFTA - Mexico

1-Jul-01

25-Jul-01

GATT Art.
XXIV

Free trade
agreement

REG126

Factual examination
not started

…

EFTA - Mexico

1-Jul-01

25-Jul-01 GATS Art. V

Services
agreement

REG126

Factual examination
not started

…

EFTA — Jordan

1-Jan-02

22-Jan-02

GATT Art.
XXIV

Free trade
agreement

REG133

Examination not
requested

…

EFTA — Croatia

1-Jan-02

22-Jan-02

GATT Art.
XXIV

Free trade
agreement

REG132

Examination not
requested

…

Slovenia — Bosnia and
Herzegovina

1-Jan-02

21-Jan-02

GATT Art.
XXIV

Free trade
agreement

REG131

Examination not
requested

…

ECO

Not
available

22-Jul-92

Enabling
Clause

Other

…

Examination not

requested

…

GCC

Not
available

11-Oct-84

Enabling
Clause

Other

…

Examination not
requested

…

Source: Adopted from WTO (RTAs in effect as of January 31, 2002).

17