ST. PETERSBURG, RUSSIA - For the past few years, annual trade has been growing by 3-4% every year, showing noticeable decline compared to previous long-term trends. It is quite possible that a slowdown of growth rates is connected with inadequate efficiency of the WTO and a trend towards regionalization of international trade that has started to manifest itself in the past few years. That issue was discussed at a panel session “International trade: globalization or regionalization” at the St. Petersburg International Economic Forum.

How serious are the risks that the WTO, global trade and Russian exporters are facing from emerging integration associations? They were analyzed by Vladimir Salamatov, General Director, World Trade Center Moscow, in his presentation. Today, the World Trade Organization is the biggest regulator of trade relations of its member nations. At the same time, 160 countries out of 161 participating in the WTO, with the exception of Mongolia, are taking part in various integration processes. In the past few years, those 160 members concluded 407 WTO-notified trade arrangements, including those on free trade zones (FTZ), Vladimir Salamatov noted.

A simple analysis of all those integration associations shows that 31% of them are based on service agreements, 4% on customs unions and 57% are free trade zones. However, not all of those free trade zones are similar in kind. Many of them might be called “FTZ+” or “FTZ++,” with the agreement that is currently being negotiated between Canada and the EU presenting the most interesting example. In addition to free trade, it expressly tackles matters related to protection of investments, dispute settlement, technical regulation and some other issues that will ensure a higher integration level than a simple free trade zone.

Approx. 2% of integration associations are interaction mechanisms between two such associations. Take, for instance, EU-EFTA (European Free Trade Association). At the same time, 31% are agreements between free trade zones and individual nations, for instance, the one between the EU and Honduras. But the bulk (67%) is comprised of bilateral (two nation) agreements. It is a form of interaction that helps achieve one’s goals in a simple way, and it is used very effectively, explained Vladimir Salamatov. It is also remarkable that we can name multinational corporations among drivers of international economic integration.

 According to WTC’s data, they account for approx. 33% of all international trade, and alongside affiliated businesses working for them to a bigger or smaller extent, that figure might be as high as 47%. Therefore 80% of all international trade involves multinational companies.

TAFTA agreement might become a global challenge for international trade, according to Mr. Salamatov. The population living in the area covered by the agreement equals 0.8 bln, and, moreover, it’s the most demanding population of all. The association would account for 45% of the global GDP, and 42% of the global exports.

“I believe that free trade zone might create serious threats for our exporters,” concluded the WTC Moscow’s General Director.

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