4 - ‘Spread Like the Plague’

Summary

Although regional trade agreements were permitted under GATT s Article XXIV, such agreements contradicted GATT rules, were symptomatic of a loss of faith in liberal trade, and created rival trade blocs. This chapter examines the proliferation of regional trade agreements, including the expansion of the EEC, EFTA, the Yaound greement, and CUSFTA, and their impact on GATT. While many scholars have identified American participation in regional trade agreements in the 1980s as the moment when regional trade became a serious challenge to GATT, this chapter argues that the regional challenge began in the 1960s with agreements among smaller countries. GATT working parties reviewed all regional trade agreements, but almost never gave a verdict on whether or not they complied with Article XXIV. In effect, members denied that GATT had authority over regional trade agreements, confirming their commitment to national economic interests first and foremost. But the story is not one of complete defeat for GATT. By submitting agreements to GATT, members upheld the ideal of multilateralism and entrenched the practice and legitimacy of international accountability.