ABSTRACT

Two themes have been central to recent work on international trade and investment agreements; the scope and legitimacy of the World Trade Organization (WTO), in particular with regard to the so-called ‘behind the border’ issues, and the growth of regional agreements. While much has been written on the trade-creating and trade-diverting effects of regional agreements, there has been much less work on the role of regional agreements in rule-making in trade and investment. This chapter addresses the question of how rulemaking at the multilateral and regional level interact. After outlining the two central themes in the current trade and investment debate, it then offers a framework for analysing the relatively neglected question of how developments at the regional (or bilateral) level shape the evolution of the international trade and investment regime. The chapter draws on a number of recent case studies that deal with the evolution of rules for behind the border issues, the findings of which are summarised. The chapter argues that it is necessary to view rule-making (or regime formation) in trade and investment as a multi-level process. It suggests that in this process the regional level played a broadly benign role in the period between the mid-1980s and mid1990s, but that recent developments suggest that some more malign features of regional initiatives are now creeping in.1 To overcome this, there is a need for meaningful negotiations on new rule-making within the WTO even if this may require a plurilateral approach.