9 - The impact of EC enlargement on the WTO

Summary

Introduction

The enlargement of the existing European Community (EC15) will lead to the largest-ever consolidation of preferential trade agreements (PTAs) since the creation of the GATT in 1947. It will involve ten Central European countries (CECs), and almost half of the 141 PTAs notified to the World Trade Organization (WTO, the GATT successor) and in force will disappear. This large-scale consolidation of European PTAs will restore WTO supremacy in a very significant way. It is important to note that this evolution is fair in the end for WTO and GATT because successive GATT Rounds have profoundly contributed to intra-EC liberalization by inducing the EC to lower its MFN tariffs as well as its internal tariffs – hence reducing the risks and the magnitude of PTA-related inefficiency costs for EC member states.

However, this large-scale consolidation requires three words of caution. First, all the above EC-related PTAs will not disappear all of a sudden. The timing of CECs' accession to EC15 is not clear yet, and the Doha Round may be concluded well before most accessions. Almost all CECs' accessions will be a lengthy progressive process because of the unusually large (by EC15 standards) differences in levels of development between the EC15 and the various CECs. (This was the case, but to a smaller extent both in terms of development differentials and relative population sizes, with Greece, Portugal, and Spain which benefited from long transition periods, particularly in agriculture.