The Other Side of the FTAs: China's Multilateralism and the Balkanization of the Global Trading Rules

Abstract

When a State becomes the contracting parties to multiple FTAs concurrently, the State has to face serious challenges since all these different FTAs present different rules in certain segments of the agreements. All the participants are thus forced to walk a tightrope as one government is now supposed to play by many different playbooks. It is time to understand the real impact of the FTAs on the current trade regime, so that the States can take an informed decision when they devise their respective FTAs. Given the continued failure to complete the deals in the Doha Development Agenda, it is necessary that the States purport to negotiate and conclude bilateral or regional trade agreements with like-minded countries, and apply new rules of trade through such agreements. But the consequence of such regional experiments of fragmented rules should not be forgotten, in particular, concerning the long-term impact on the multilateralism. This article argues that the real impact of FTAs, particularly multilateral ones, does not lie in mere preferential tariff concessions, but rather gradual dismantling of multilateralism through incorporation of fragmented rules of trade. In this respect, China's role is critical in devising and implementing FTAs in a way that can also help preserve the multilateralism.