What is the conflict between WTO and free trade arrangements like TPP?

Regional Trade Blocs (RTBs) like Trans Pacific Partnership are flourishing in the global trade order now. Trade arrangements like TPP and other Free Trade Agreements raises trade liberalization to a higher level. But the benefit of trade promotion is limited to the members of such Free Trade Arrangements. Most of the developing countries are not members of any powerful RTBs.

The rise and rise of RTBs may also make WTO less significant. WTO is a global institution that stands for global free trade. In this context, the WTO is the true multilateral institution giving equal weight to all. We can say that WTO stands for multilateralism. On the other hand, RTBs stands for regionalism.

Recent development shows that the developed countries have lost interest in WTO’s talks as trade liberalization is very slow under it. Under RTBs like TPP, there is higher level of trade libealisation like higher degree of protection for intellectual property rights. In this sense, RTBs are WTO plus arrangements.

But such higher degree of trade liberalization can’t be implemented under WTO where majority of members are developing countries. Deadlock at WTO Ministerial Conferences have also encouraged many countries including the developed pacific countries to opt for RTBs.

Hence, there is a hither tendency among developed countries to embrace RTBs.

The WTO itself sees this as a risky situation. At the Nairobi MC, the WTO has claimed that it has primacy in international trade regime. The institution has also appointed a committee to study the impact of RTB working on the multilateral trading system led by WTO.

Prominent trade economist and Columbia University Professor, Jagadish Bhagavati has illustrated RTBs as ‘Stumbling Blocks rather than Building Blocks’ towards free trade.