World Bank warns against regional pacts

The World Bank has cautioned against a spurt in regional trade agreements (RTAs) and said a large number of such pacts causes confusion and delays in Customs clearances.

The Global Economic Prospects 2005 report, released by the World Bank today, said countries should adopt a three-pronged strategy aimed at unilateral liberalisation, RTAs as also a multilateral approach.

According to estimates, in 66 per cent of the cases, tariff reduction was unilaterally decided by countries. While 25 per cent of the reduction was undertaken due to multilateral commitments, the rest was a result of obligations under RTAs.

It also said despite the 200-odd RTAs in place, agricultural trade continued to be restricted and the multilateral system under the World Trade Organisation could address that issue.

It said there were greater instances of success in RTAs between developed and developing countries than those involving only developing countries.

"Well-designed agreements are of limited value if they are not implemented, and many RTAs have more life on paper than in reality," the report said.