Article Xxiv of the General Agreement on Tariffs and Trade (Gatt)

Article XXIV of the General Agreement on Tariffs and Trade (GATT) is a crucial provision that governs the formation and operation of regional trade agreements. It allows for the formation of customs unions, free trade areas, and other regional trade agreements, which facilitate trade among member countries.

The primary purpose of Article XXIV is to promote regional trade integration while ensuring that such agreements do not undermine the principles of non-discrimination and free trade under the GATT. The article outlines the conditions that must be met for regional trade agreements to be consistent with the rules of the GATT.

The article provides for two types of regional trade agreements: customs unions and free trade areas. Customs unions involve the elimination of tariffs and other trade barriers among member countries and the adoption of a common external tariff on goods imported from non-member countries. The purpose of a customs union is to promote trade integration among member countries while protecting their external markets from competition.

On the other hand, free trade areas involve the elimination of tariffs and other trade barriers among member countries, but each member country retains its own external tariffs on goods imported from non-member countries. The purpose of a free trade area is to promote trade integration among member countries, while allowing them to maintain their own external trade policies.

Article XXIV sets out the conditions that must be met for regional trade agreements to be consistent with the rules of the GATT. The conditions include the following:

1. The agreement should cover „substantially all the trade” among member countries. This means that the agreement should eliminate tariffs and other trade barriers on a significant proportion of trade among member countries.

2. The agreement should not increase tariffs or other trade barriers on goods imported from non-member countries. This ensures that the regional trade agreement does not undermine the principles of non-discrimination.

3. The agreement should not result in the formation of an exclusive customs union or free trade area. This means that other countries should be able to join the regional trade agreement if they meet the conditions for membership.

4. The agreement should not undermine the principles of non-discrimination under the GATT. This means that member countries should not discriminate against goods imported from non-member countries.

5. The agreement should promote trade liberalization and should not be used as a means of protectionism.

In conclusion, Article XXIV of the GATT is a crucial provision that governs the formation and operation of regional trade agreements. It allows for the formation of customs unions, free trade areas, and other regional trade agreements, which facilitate trade among member countries. However, these agreements must meet the conditions set out in Article XXIV to ensure that they are consistent with the principles of non-discrimination and free trade under the GATT.