Response to Coverage and Inflation in EU and US Preferential Trade Agreements
Preferential Trade Agreements, or PTA, are very important in today’s world of trading goods globally. As reflected with the past few weeks of financial hardships across the world, it is seen that trade is vital to not just an American economy, but the worldwide income at large. The article “Beyond the WTO? Coverage and the Legal Inflation in EU and US Preferential Trade Agreements” discusses some intricate involvement of what the trade agreements do to not just the US, but many other countries that want to be involved in the trading process to bring in income and specific goods to the individual countries.
The introduction to the article discusses the concern that has arisen from the Preferential Trade Agreements to the rest of the world. In 1995, the GATT (General Agreement on Tariffs and Trade was in place. It was at this time that the WTO (World Trade Organisation) was conceived. Upon the conception, it was noted that since Then, there have been over 250 new agreements that include the European Union or the US as a major or managing trade partner (Horn) Having the EU or the US as a trade partner does not appear to be a bad thing, until you sift through the bottom lines of the trade agreements. From the reading it can be clearly seen that some of the trade practices with the PTA, although legal, do manage to hurt smaller countries. It also illustrates or discusses the issue that the US and EU have specific trade agreements with specific countries that are future tense in bases. Some of the countries involved in these kinds of trade agreements are Bahrain, Singapore, South Korea and South Africa. The trade agreements with these countries have overlapping agreements with the EC and the US. If negotiations go well, these companies will not just have the present trade agreements, but future trade agreements as well.
This may appear to be good on one hand. However, for countries who plan or would like to become a part of the major trade market, the PTAs that are in existence now may pose to be a handicapping condition. Some countries use what is written in the GATT Articles as a means to frame the trade agreements that are now brought about. Defining the trade agreements under these articles is not a bad thing, yet if the country that is being solicited for a trade agreement is not careful, the terms that the agreement falls under may not benefit the country that is looking to sell its goods for the going price on the market. One may say that this is just business. However, the country that is selling its goods do not want to lose money because the Buyer is playing hardball or is finding a way to keep from paying full price.
The author is suggesting that countries that enter into the trade agreements with the US and the EU must read the fine print. In examining the agreement with Chile, the US and EC have legally binding language that allows the US if the environmental laws are broken, what can happen not only to the country, but to its trade with the US in the present and future. The EC trade contracts as currently as 2007 reflect the same type of language.
While holding these trade agreements with countries, the parties that are involved In the trade agreements with the US and EC can be forced to concur with the enforcement of the laws or rules placed within the trade agreement. This can be good if the countries involved in the treaty or agreement are not holding up to their end of the bargain. If the country is upholding its end of the bargain, then the US or EC could use this type of clause to get more than hat it paid for. Doing this can make for some strange bedfellows.
The author’s main thrust of the article is that now the WTO, which has followed the PTA can and has left some countries in a compromising situation, which at times, leaves the smaller countries at risk of not making the money it could have made in the market. At times, some countries were forced out of the trading market altogether because of the agreements made with the EC and US, which are seen as the two biggest trade partners in the world (Horn). It is up to the country to make a good effort to find what is available for its products and find good ways to market those products not just to one population, but to the world.