Preferential rules of origin as an EC trade policy instrument with particular reference to Malta

Abstract

The post-war trading system, supposedly based on the twin principles of non-discrimination and liberalisation embodied in the use of Most-Favoured-Nation treatment (as set out in Articles I and II of the GATT), has become increasingly subject to exceptions. A proliferation of bilateral trade agreements have delivered quite a few blows to the principle of non-discrimination. The EC itself has entered into a proliferation of preferential agreements thus availing itself widely of the exception for customs unions and free trade areas ( or interim agreements leading to the formation thereof) found in Art XXIV of the GA TT. In fact, nowadays, the EC's MFN tariff applies to few countries. Why is the EC pursuing the establishment of special trade links with countries as different as Norway and Algeria so enthusiastically? Leaving aside the question of geographic proximity, which has a major influence in the negotiation and conclusion of agreements establishing Free Trade Areas, the EC's main reason for entering into so many preferential arrangements appears to be political. However, the instruments available in practice to the EC as a policy-making body are economic. T-tade preferences are one of the few tools, available to the EC for forging special relations with third countries. The EC utilised them particularly enthusiastically with regards to its Mediterranean neighbours. In fact, the overall policy of the Community towards to Mediterranean countries (if such an overall policy existed in the seventies) constitutes an important element in Malta-EU relations. The Malta-EC/EU Association Agreement should be viewed against this context. It can also be seen as containing elements of development policy. The three policy aspects - political, trade/economic and development have all contributed to the resulting Agreements and amendments thereto which have taken place over the years. [excerpt]