The recent “Asian Economic Integration Monitor” (November 2014) published by the Asian Development Bank (ADB) calls for “unilateral multilateralization” of various trade preferences from preexisting FTAs. Obviously, this will be a nirvana to most global businesses traversing global value chains, if it ever transpires. Then, they could avoid enormous transaction costs borne by the spaghetti bowl of multiple, diverse rules of origin. Although the proposal might sound too idealistic, the ADB report offers quite plausible reasons for it, as follows:
Among TPP members, for instance, two-thirds of their imports—80% if the US is excluded—are already covered or about to be covered by FTAs. Within RCEP, more than one-third of imports are already covered with another one-third about to be through ongoing negotiations. Therefore, expanding preferences to remaining economies would not encounter much resistance from FTA partners—not just because trade volumes are small, but also because existing preferences have already been significantly eroded.
Here is a question. Might the WTO have a role to play in this process of “unilateral multilateralization” of trade preferences? Could the recent APEC-WTO collaboration model, as seen in the liberalization of environmental goods, apply to this proposal?
