Zagreb: Regional trade pacts play an important role, Central and South Eastern European countries told a World Trade Organisation (WTO) meeting on June 12, but stressed they were committed to the multilateral system at the same time.

About 80 regional agreements exist among the 14 World Trade Organisation members from the region that attended the two-day ministerial meeting hosted by the Croatian government. Four countries also attended that are not yet members.

With 250 regional trade agreements having been notified to the WTO and its predecessor, the GATT, since 1948, the debate is fierce in all corners of the world- regionalism versus multilateralism.

"I do not accept the notion that they are contradictory," Hungary's Ambassador to the WTO, Peter Balas, said. Hungary has preferential agreements with 32 countries and 85 per cent of its exports go to markets where such accords are in place.

Regional trade agreements are "mutually reinforcing", he said. The liberalisation seen in Hungary since its move towards a market-oriented economy 10 years ago would have been unimaginable through the multilateral system alone, he said.

One of the overriding principles of the WTO's agreements is what is known as "most favoured nation", or the equal treatment of trade partners. A country cannot discriminate between partners and a special favour granted to one must be granted to all other WTO members.

But the multilateral system can be complicated and lengthy, Balas complained. The last Uruguay Round of multilateral trade negotiations began in 1986 and concluded in December 1993.

He said politicians and decision-makers want to see something that is achievable within a shorter time.

"This is a political reality," he added.

He also said that pressure from voters over issues that are not yet tackled by global trade rules, such as trade and the environment, could be dealt with regionally.

Just five of the 144 current WTO members are not involved in regional trade agreements; Hong Kong, Mongolia, China, South Korea and Macau. But three of them are presently negotiating.

WTO rules acknowledge that well-structured regional initiatives can contribute to developing global trade, although there are difficulties over the interpretation of the WTO provisions.

Regional accords are permitted under certain conditions.

However, WTO ministers agreed in Doha November 2001 that under the new Doha round of trade talks they would try to clarify and improve the rules on regional trade agreements.

The Zagreb meeting, the first of its kind for the central and South Eastern European region, provided a forum for talks among the 18 countries, WTO officials and international organisations such as the World Bank.