Preferentialism in Trade Relations: Challenges for the World Trade Organization

Patrick Low
JEL codes: 
ADBI Working Paper Series

This paper argues that preferential trade agreements (PTAs) and the World Trade
Organization (WTO) are not substitutes, and while PTAs are without doubt here to stay,
dispensing with a multilateral venue for doing business in trade matters is not a serious
option. It is therefore necessary to seek out better accommodation between PTAs and the
WTO than has been apparent to date. The law of the General Agreement on Tariffs and
Trade (GATT)/WTO has systematically fallen short in imposing discipline on discriminatory
reciprocal trade agreements, while procedural requirements, such as notifications, have
been partially observed at best, and dispute settlement findings have tended to reinforce
existing weaknesses in the disciplines. One approach to remedying this situation is to
explore a different kind of cooperation—that of soft law. A soft law approach to improving
coherence and compatibility between the WTO and PTAs may hold some promise, but the
option also has its pitfalls.