Conflict And Harmonization Between NAFTA And WTO Norms

The NAFTA entered into force on January 1, 1994, and took leadership immediately as the biggest free trade Area in the world beating EU and Asia Pacific, for its advantage of huge area and population, enormous GDP unto $10,600 billion, as well as top competitive and refreshable capability. When the GATT 1947 was drafted, it was recognized that some form of accommodation would be necessary for customs unions and free trade areas. The GATT incorporated in Article XXIV a mechanism for relieving the members of customs unions and free trade areas from the obligation to extend the preferential treatment granted within the CU or FTA to non-members. The Article XXIV mechanism for evaluating CU/FTAs under the GATT is much criticized. The main ground of critique is that it does not subject CU/FTAs to meaningful review even in respect to its own defined criteria since members of the CU/FTA control the outcome of the review process. The WTO Agreement adds an Understanding that clarifies elements of the GATT 1994 Article XXIV review, but none that affects the right of members to control the outcome of the mandatory review process. The economic terms of the NAFTA have been implemented substantially in accordance with its terms. On the whole, it appears reasonable to conclude that the NAFTA had a net positive economic welfare effect in its three Parties during years of operation and negative influence against the WTO members outside of NAFTA, such as the new industrial developing countries like Singapore etc. in Asia. The Mexican has also replaced Chinese as the number one textile supplier of America two years later once the effectiveness of NAFTA, and its economic outlook today is reasonably promising.The legal relationship between the NAFTA and WTO is not only conflictory but also tried to be harmonized by each side. First whether NAFTA preferential treatment granted within the CU or FTA not to non-members makes trade creation or trade diversion. The fact is NAFTA internal business volume is up to 49.1% by 2000.Secondary, whether NAFTA or WTO rules prevail in the event of inconsistency is uncertain, and the extent to which NAFTA panels may or must consider applicable WTO rules is unclear. The ambiguity in NAFTA-WTO legal relations may reflect an underlying uncertainty in the policy arena. In view of the huge trade diversion effect of NAFTA as well as the potential benefit of FTA, the proper strategy is essential for China to catch up fast at this arena (regional free trade area) so as to maximize the benefit available under current WTO systems. Customs unions and free trade areas such as the EU and NAFTA are derogations from a purely multilateral trading system. They are systems of preference, and they are political alliances. In order to handle this challenge successfully, the writer makes several proposals as well as deeply believes that the development of REDIONAL FREE TRADE AREA is one of the most effective approaches to achieve China great vision & mission under current WTO frame and unfair world economic environment.