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Journal of International Economic Law Advance Access published online on April 14, 2008
Journal of International Economic Law, doi:10.1093/jiel/jgn013
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© Oxford University Press 2008, all rights reserved

Bilateralism in Services Trade: is There Fire Behind the (Bit-)Smoke?

Rudolf Adlung and Martín Molinuevo*

* The authors work, respectively, at the WTO Secretariat in Geneva (rudolf.adlung{at}wto.org) and at the World Trade Institute in Berne (martin.molinuevo{at}wti.org).


  Abstract

‘What has been termed the "spaghetti bowl" of customs unions, common markets regional and bilateral free trade areas, preferences and an endless assortment of miscellaneous trade deals has almost reached the point where MFN treatment is exceptional treatment. Certainly the term might now be better defined as LFN, Least-Favoured-Nation treatment. Does it matter? We believe it matters profoundly to the future of the WTO.’

    Report by the Consultative Board, chaired by Peter Sutherland to the WTO Director-General, ‘Sutherland Report’ (2004).

In most of the current literature, the spread of regionalism in international trade relations is discussed in terms of a rapidly rising number of preferential trade agreements (PTAs). Far less attention is given to the even more rapid proliferation of bilateral investment treaties (BITs) and their overlap with obligations assumed by WTO Members under the General Agreement on Trade in Services (GATS). BITs generally apply across a much wider range of service sectors, in particular in the case of least-developed countries (LDCs) and developing countries, than those scheduled under the GATS. Furthermore, a number of relevant disciplines, including on fair and equitable treatment, expropriation and dispute settlement, may go beyond potential counterparts under the GATS. At the same time, pursuant to GATS Article II, these disciplines are to be applied on a most-favoured-nation (MFN) basis. Based on a comparative analysis of relevant provisions, this article discusses options on how WTO Members could proceed.


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