The World Trade Organization (WTO) (formerly GATT) was established primarily to achieve free trade across the globe based on the principle of non-discrimination and the process of multilateral trade negotiations. The fact that most countries are members of WTO reflects the worldwide belief in the benefits of a global free trade. Despite its achievements since the first round of multilateral trade negotiations was held, the effectiveness of the process has been called into question. Most WTO members are now proposing new regional trading arrangements (RTAs), such as free trade agreements (FTAs). What implication does these RTAs have for the WTO and ASEAN countries? Should ASEAN countries give regionalism priority over the WTO-based multilateral approach? To answer this questions, this paper will first summarize the motivations behind the formation of RTAs before presenting the merits and demerits of RTAs as an approach to achieve universal free trade and maximize developing countries' welfare. It is argued that despite its inherent limitations it is important for ASEAN countries to remain primarily committed to the principles of WTO and the process of multilateral trade negotiations.
Author Biography
Jose L. Tongzon, National University of Singapore
Associate Professor of Economics at the Department of Economics, National University of Singapore.
