Innovation in trade agreements

In a speech yesterday in Singapore, Australia’s new Trade Minister (Simon Crean) pledged that future Australian bilateral agreements will ‘embody’ MFN commitments.

“As I said earlier, we do see a role for bilateral trade agreements but they must be consistent with our multilateral aims.
For example they ought to embody the most favoured nation principle.”(Simon Crean)

The Minister says he will pursue this approach in negotiations with Chile and Indonesia.  I’ll be keen to see how it works.

There seems to be little benefit in negotiating a bilateral agreement whose benefits are offered on an MFN basis unless the agreement reciprocally liberalizes only products for which each party is the other’s principal supplier. In other words, an agreement that could be bound in WTO.

But this would cut the breadth of most bilateral agreements to a point where they would fail the GATT Article XXIV test of covering ‘substantially all trade’.

Perhaps he means he’ll try to negotiate a few MFN commitments in each bilateral deal.

Tags for this entry: trade multilateralism fta crean bilateral