Mega-regional trade agreements and non-participating developing countries: Differential impacts,challenges and policy options

Abstract

Mega-regional trade agreements imply several challenges for developing countries. Some are due to the impacts of economic growth within areas of new discriminatory preferential access, while others are produced by the long-term implications of mega-regional trade agreements on global trade governance. These challenges are likely to increase as more mega-regional trade agreements with large economic size, regulatory ambition and geo-strategic significance are negotiated and signed. The implications of these challenges are significant for developing countries outside the mega-regional trade agreements, particularly the least-developed countries. This paper examines some of the major challenges from mega-regional trade agreements for non-participating developing countries, with attention to the drivers of these agreements, their economic impacts, the difficulties encountered by the World Trade Organization following emergence of mega-regional trade agreements, and possible strategic responses to these trade agreements. Underlining the differential impacts of mega-regional trade agreements on non-participating developing countries, the paper concludes that larger economies like China and India are likely to be less affected due to their economic size and strategic influence, compared with the least developed countries.