Jagdish Bhagwati (loc. cit.) reports that proponents of multilateralism and non-discrimination were willing to accept the exemption for free trade agreements and customs unions because they believed that the conditions contained in Article XXIV would make such agreements relatively rare. The objective of these conditions was to direct these agreements towards maximizing the creation of trade between the parties and minimizing the diversion of trade at the expense of foreigners. The main conditions are that “virtually all trade” be covered and that liberalization takes place over a relatively short period of time. As regards customs unions, the new common external tariffs applicable to third parties should not be `globally` more restrictive than those introduced by the parties before the customs union. 7 Art. XXIV also allows “interim agreements” as long as they lead to a customs union or free trade agreement within a “reasonable time”. With regard to customs unions, the WTO Secretariat has been tasked with assessing the possible impact of the Common External Tariff on foreigners. It is important to take the measure in the calculation, Members agreed that tariffs applied instead of tied tariffs should be used in the calculation, which would give a more realistic picture of the potential impact in the case of developing country Parties that have bound tariffs at a level well above the level normally applicable to them. The agreement also clarified the procedures that countries should follow when negotiating compensation for third parties whose exports face increased tariffs due to the new customs union. And it reaffirms that members can resort to dispute settlement procedures in cases that cannot be resolved through negotiation. A kind of plurilateral weakening of the unconditional MFN norm. During the first three decades, GATT negotiations focused on tariff reduction and took place mainly between quads: Canada, the European Economic Community (EEC), Japan and the United States.

Less developed countries offered few or no concessions, but were able to benefit from the Quad`s tariff reductions via the (unconditional) most-favoured-nation principle. While some developing countries became major players in international trade in the 1960s and 1970s and GATT members turned to non-tariff barriers, US negotiators (in particular) became increasingly frustrated with what they perceived as parasitism. They were looking for a way to limit the benefits of certain agreements to countries that were willing to accept the obligations under those agreements. Following the notification of the Japan-Mongolia Free Trade Agreement in 2016, the WTO says that each member is now a party to at least one regional or bilateral trade agreement. 13 The EU is the most active RTA negotiator with almost 100 agreements in force, followed by East Asia with RTA 80. Other regions, with the exception of South America (57), are all less than 50 in terms of the number of ART in force (Figure 3.2). If particular interests are strong enough to influence negotiations to protect themselves, for example with restrictive rules of origin, they have a strong incentive to avoid multilateral liberalization that could undermine this advantage. In North-South RAs, developing countries often negotiate to access key markets in developed countries. .