RTAs have spread exponentially around the world. Almost all countries are now participating in at least one ATR, and about 300 bilateral and multi-lateral ATRs are now in force.4 A series of events – the failure to launch a round of multilateral trade negotiations in Seattle in 1999, their ephemeral resumption after the Doha ministerial meeting in 2001 and an impulsive collapse in Cancun in 2003 – have sparked renewed enthusiasm for preferential regimes. The overall trend towards regionalism tends to penalize African countries. Regionalism has created “hub and spoke” trade relations between countries, with large economies being the “hub” and small “rays”. Persistent competitive regionalism (or “additive”) further strengthens these relationships, which tend to benefit disproportionately from the shelves (World Bank, 2004) due to different rules of origin, product exclusions, non-commercial emissions and diversion of trade and investment. Because their economies are small, African countries have always been the language expressions in their trade relations with industrialized countries, particularly in Western Europe. The same World Bank study shows that if all developing countries signed a bilateral free trade agreement (only for trade in goods) with all major platforms – the Quad (Canada, the EU, Japan and the United States) and Australia and New Zealand – sub-Saharan Africa would lose more than $3 billion in 2015 (at 2001 prices) or 0.7% of the region`s income (1.2 per cent for non-SACU countries). In fact, African countries are likely to lose even more in such a race for bilateralism. First, at this stage, not all major economies want to set up ATRs with Africa (at least not if agriculture is included and/or if anti-dumping is on the agenda). Second, while Africa can establish ATRs with all major economies, it is not the same as multilateral free trade. Rules of origin can be used to restrict market access (Krueger 1999a; Flatters 2002). Finally, small African countries would face enormous capacity constraints if they tried to negotiate and implement several ATRs.
On the other hand, hubs can essentially replicate the rules of origin every time they negotiate a new RTA and have access to all shelf markets.