How to assess regional trade agreements? Deep FTAs v. China’s trade agreements

Thu 29 July 2021

By Dr Xue BAI


Regional trade agreements are fast changing. The assessment of regional trade agreements is crucial due to the major impact they have on parties, and the spillover effects they may have on non-parties (e.g., trade diversion). More effort is needed to assess their implications within an analytical framework.

To better assess fast-changing trade agreements, Herbert Smith Freehills China International Business and Economic Law (CIBEL) Centre’s Co-Director Professor Heng Wang, in his latest paper, proposes a tripartite theoretical framework with six indicators to assess the impact of trade agreements on domestic regulation. Professor Wang argues that these proposed indicators are crucial elements of trade agreements in terms of their coverage, content and implementation. The proposed three crucial variables of trade agreements and six indicators are as follow:

  • (i) breadth (indicators: WTO-plus obligations that are stricter than WTO obligations, and WTO-beyond rules that address issues outside the WTO aegis);
  • (ii) depth (indicators: regulatory cooperation and coherence, and domestic law changes); and
  • (iii) strength (indicators: state-to-state dispute settlement (SSDS) rules, and SSDS coverage).

Professor Wang’s paper further demonstrates how to apply this proposed tripartite analytical framework in practice by using the TPP (and CPTPP) and China-Korea FTA as representative examples. In particular, the paper shows that the indicators concerning regulatory outreach strongly support the assessment of the “width” of trade agreements’ impacts on domestic regulation, and their differences from those arising from WTO rules. The indicators of regulatory density (i.e., regulatory cooperation and coherence, and domestic change) greatly help to measure the “depth” of trade agreements’ impacts on regulatory autonomy. The indicators of rule use intensity are useful in assessing how trade agreements are implemented and enforced (the “strength”).

This paper has been published by The International Lawyer. The preprint of the article is available here. Professor Heng Wang has also published a paper titled “Selective Engagement? Future Path for US-China Economic Relations and Its Implications” at Journal of World Trade, and the preprint can be found here.

Professor Wang’s research may be found at ResearchGateSSRN, Twitter @HengWANG_law, and LinkedIn.