EU and U.S. Non-Reciprocal Preferences: Maintaining the Acquis

In the light of the disparity of bargaining leverage in FTA negotiations between the EU or the U.S. and developing countries, this article presents a legal mechanism to maintain the status quo, that is, the acquis of current trade arrangements. On the basis of the test established in the EC-Tariff Preferences case, it is argued that the Enabling Clause allows for differentiation between developing countries on the basis of their levels of intra-regional trade. A scheme is then constructed which allows the EU and the U.S. to differentiate in favor of current beneficiaries of non-reciprocal trade preference schemes in this way. This allows the EU and the U.S. to maintain the acquis without making radical changes to their trade and development policy. Where the status quo is an option, developing countries involved in FTA negotiations would have a feasible best alternative to a negotiated agreement (BATNA) to replace the current alternative of a significant reduction of market access to the EU or the U.S. While the maintenance of the status quo is up to the industrialized country in question, given that the trade preferences are unilateral in nature, the scheme constructed debunks the myth that there is a legal requirement to replace the current arrangements by reciprocal trade agreements in the absence of a waiver.