Law, Trade and Finance
Asian Commercial, Financial and Economic Law and Policy series
Edited by Ross P. Buckley, Richard Weixing Hu and Douglas W. Arner
Chapter 2: Who’s Afraid of Asian Trade Regionalism, and Why?
C.L. Lim THE MODERN HISTORY OF FREE TRADE AGREEMENTS The ‘GATT draftsmen knew whereof they spoke when they termed the regional exception a “standard clause in all commercial treaties”’.1 From the 1700s to the 1930s, trade agreements were bilateral,2 and for practical political reasons the GATT 1947 too needed to include various exceptions to cater for regional trade agreements.3 Such exceptions covered not only the general permission (under GATT Article XXIV) to form customs unions and FTAs, but also the need to accommodate British and French imperial preferences and other pre-existing arrangements such as those between the Lebanon–Syria Customs Union and Palestine and the Transjordan.4 These were limited exceptions, however, coupled with the belief on the part of the GATT’s framers that regional trade agreements (that is, FTAs and customs unions) could serve as building-blocks towards greater global trade liberalization at a time when such FTAs and customs unions were relatively few in number. Moreover, belief in the multilateral system, and in particular the underlying idea of trade liberalization through successive 1 John Jackson, World Trade and the Law of GATT (Charlottesville, VA: Michie, 1969), 576. 2 Frederick M. Abbott, ‘A New Dominant Trade Species Emerges’, in William J. Davey and John Jackson (eds), The Future of International Economic Law (Oxford: OUP, 2008), 133, 134. 3 By ‘regional trade agreements’, we mean both FTAs and customs unions. 4 Jackson, World Trade and the Law of GATT, op. cit., 264–5. These were political compromises to accommodate British...