Will Preferential Agreements Undermine the Multilateral Trading System?

In this paper, we ask, will preferential agreement undermine a multilateral trading system that is built on the pillars of reciprocity and non-discrimination? A remaining question is then, how do preferential agreements affect the enforcement provisions of the GATT? To lay the foundation for an answer to the first question, we describe a framework within which the pillar of reciprocity and non-discrimination can themselves be interpreted and understood. From this perspective we then offer support for the view that preferential agreements pose a threat to the multilateral system. An answer to the second question requires an understanding of how GATT agreements are enforced. Observing that these agreement must be self-enforcing, we describe circumstances under which preferential agreements can either enhance or detract from the performance of the GATT system through their impacts on enforcement at the multilateral level.