Economic research and trade policy analysis

Accessions to the World Trade Organization (WTO) have profound implications for the private sector. The market liberalization required by accession commitments must be accompanied by deep structural reforms. Even though least-developed countries (LDCs) and developing countries usually benefit from special and differential treatment, the liberalization process can still lead to market adjustments that can test the status quo and require actions that will impact the private sector. This chapter discusses how the private and public sectors have cooperated to make the most of accession, while mitigating its risks. The chapter concludes that the business community values predictability. Therefore, acceding governments should find a way to integrate the private sector in the negotiating process. Gaining a thorough understanding of the objectives and implications of accession, in particular for small and medium-sized enterprises (SMEs), is a good starting point for building a partnership between the acceding government and its private sector. The acceding government should also seek consensus with the private sector on key accession commitments, on the direction of reform desired by stakeholders at the local level, and allow sufficient time to prepare the private sector to adjust to the expected changes in the business environment. The experience of recently acceded governments has shown that regular engagement with the private sector before, during and after accession enables new WTO members to make deeper liberalization commitments. When these commitments are the result of a consultative process between policy-makers and business, the likelihood of their successful implementation is greater.

El Informe sobre el Comercio Mundial 2005 sigue las pautas establecidas en años anteriores y aborda, para su análisis y examen, una serie de cuestiones cruciales de política comercial que afectan al sistema de comercio internacional. El objetivo subyacente del Informe es contribuir a una comprensión más profunda de las cuestiones de política comercial a las que los gobiernos han de hacer frente. El tema central del Informe del presente año es la normalización y el comercio internacional. Se han preparado ensayos más cortos sobre otros tres temas: la utilización de análisis económicos cuantitativos en la solución de diferencias en la OMC, el comercio internacional de servicios de transporte aéreo y los servicios de relocalización.

The World Trade Report 2009 was prepared under the general direction of Deputy Director-General Alejandro Jara and supervised by Patrick Low, Director of the Economic Research and Statistics Division, The principal authors of the Report were Marc Bacchetta, K. Michael Finger, Marion Jansen, Alexander Keck, Coleman Nee, Roberta Piermartini, Michele Ruta and Robert Teh. Trade statistics information was provided by the Statistics Group of the Economic Research and Statistics Division, coordinated by Hubert Escaith, Julia de Verteuil, Andreas Maurer and Jürgen Richtering. Other written contributions were provided by Rudolf Adlung, Lee-Ann Jackson, Jesse Kreier and Hiromi Yano.

Low- and middle-income countries face supply-side constraints such as technical capacities, adequate hard infrastructure capacities, human capital (above all knowhow), access to adequate credit, and access to environmental goods and services that affect their capacity to address climate change and other environmental issues. This chapter discusses how the existing framework of international economic law may constrain the ability of low- or middle-income countries to overcome such supply-side constraints in order to address their, or their trading partners’, environmental concerns regarding climate change and be included in global value chains. We will consider what should be done from a legal perspective, what might be achieved, and the likely implications of international economic law for acquiring and implementing environmentally friendly technologies and financing climate change mitigation and adaptation.

This book is the outcome of joint work by the Secretariats of UNCTAD and the WTO. Its six chapters were written collaboratively by academics and staff of the two organizations. The volume aims to help researchers and policy-makers expand their knowledge of quantitative economic methods and data sources for trade policy analysis. The need for the book is based on the belief that good policy needs to be backed by good analysis. By bringing together the most widely used approaches for trade policy analysis in a single volume, the book allows the reader to compare methodologies and to select the best-suited to address the issues of today.

This section looks at the empirical evidence on the effect of trade on wages and employment and addresses the following key questions: what is the evidence of the impact of import competition and offshoring on the level of wages and employment? What is the impact of increased market access for exports and the availability of cheaper imported inputs on employment? How can varied empirical evidence across countries be reconciled? How does the functioning of the labour market affect outcomes? How large are trade-induced adjustment costs? This section focuses particularly on wages and employment because research on other dimensions of labour markets, such as employment stability and security, is much less developed due to lack of cross-country data and thus does not allow for a comparison of how trade and technology play out on these other variables.

Services are often largely overlooked in discussions on global trade, yet they account for the majority of trade in many developed economies and are growing rapidly in many developing economies as well. This is perhaps because services are less tangible and the issues surrounding services trade are often more complex. This report therefore sets out to demystify trade in services. It aims to shed new light on this essential part of global trade, provide a detailed picture of trade in services today and consider how it might evolve in the coming years, particularly as new technologies make some services increasingly tradeable.

Trade multilateralism, i.e. global trade based on negotiated and agreed rules by the World Trade Organization (WTO) membership, faces various challenges. Slow economic growth, changes in the balance of global economic power and inequitable distribution of growth benefits have called into question the benefits of globalization and the rules-based global order. Trade has been the target of a barrage of criticism from many quarters and has become a lightning rod for policy failures, weaknesses in international cooperation and the adverse effects of rapid technological advances on jobs and incomes. In this tortuous and uncertain environment, concerted policy actions along several strategic axes are needed to put trade back on track and make trade multilateralism work for all once again. First, trade multilateralism must be used as a tool to restart global economic growth and job creation, while managing uncertainty and risks. Second, a global trading system anchored in the WTO – with strong, well-enforced rules that continue to adjust to promote competition and a level playing field – remains critical. Third, the new realities of the twenty-first century compel an upgrade of the multilateral trading system by the building of its upper floors1 on the foundation of the existing trade rules and accumulated acquis and expertise. Such a system would preserve the fundamental set of rules at the core of the multilateral system, abolish or revise obsolete rules, which have not stood the test of time, and adopt new rules that would reflect new realities. Fourth, accessions to the WTO are arguably the most vibrant component of the multilateral trading system and have already made important contributions to each of these policy directions. The objective of this book is to draw on recent accession experiences to distil the impact of accessions on the constantly evolving architecture of the multilateral trading system.

At the origins of the GATT , little attention was given to the trade impact of subsidies. However, contracting parties soon appreciated the need to deal with subsidies in order to secure the value of their agreed tariff concessions. A country can undermine its market access commitments by providing subsidies to import-competing industries. In addition, subsidies given to competing exporters in third countries can divert trade away from a country that had relied on negotiated market access to another market. These concerns led to the development of more stringent disciplines on subsidies than those initially provided for under the GATT (1947). A major step was the negotiation of the plurilateral “Subsidies Code” during the Tokyo Round and, thereafter, of the WTO Agreement on Subsidies and Countervailing Measures (SCM) and the Agreement on Agriculture (AoA).

Many developing and least-developed countries (LDCs) remain on the margins of global trade, attract limited foreign or domestic investment, and have achieved only very limited success in the diversification of their supply of goods and services. Within the framework of Aid for Trade (AFT), attempts are being made to explore strategies to connect firms in developing countries and LDCs to international value chains. The World Trade Organization (WTO) has defined AFT as projects and programmes that have been identified as trade development priorities in the recipient country’s national development strategies. The AFT Task Force established in 2006 underlined that clear and agreed benchmarks are necessary for the global monitoring of AFT efforts. The following categories of AFT were identified: trade policy and regulations (including trade facilitation); trade development; trade-related infrastructure; building productive capacity; trade-related adjustment; and other trade-related needs. According to the United Nations Development Programme (UNDP), developing countries that have participated in international trade – including trade with other emerging economies – make rapid progress in poverty reduction and job creation (UNDP, 2013).

Unprecedented economic growth over the last quarter of a century has necessarily been accompanied by unprecedented economic change.

The Information Technology Agreement (ITA) was a landmark trade deal signed by 14 WTO members and states or separate customs territories in the process of acceding to the WTO in December 1996. Not only was it the first sectoral agreement to be successfully negotiated among developed and developing countries, but it was also the first one to fully liberalize trade in a specific sector (with an estimated worth of US$ 500 billion a year) after the Uruguay Round.

This Section provides an overview of the use of subsidies both at the global level and at different levels of geographical and sectoral disaggregation. Given the quantity and quality of the available data it is not possible to provide a comprehensive and systematic picture of the incidence of subsidies.

It is almost axiomatic that trade policies of a country affect in one way or another many sectors of that country and those of its trading partners. In other words, the impact of trade policy quite often goes beyond the participating countries or the direct beneficiaries, be they producers or consumers. One would have thought, therefore, that in line with the principle that the governed must have a voice on matters that affect them, there would be no decision, agreement, treaty, convention or protocol on trade signed without the input of the governed. This, however, is often not the case. Thus, despite the increasing and widening of democratic space in most African countries, trade policy-making in many of these countries is still shrouded in mystery, secrecy and mainly the preserve of the executive branch of government. This situation persists even though most African governments have over the last fifteen years or so tended to embrace participatory planning, which should enlist non-state actors (NSAs) policy-making. Thus, in trade policy-making, NSAs often remain at the periphery of decision-making. One reason for this situation could be that consultation forums, where these exist, are perhaps deliberately limited in numbers and scope of action and, therefore, do not carry much weight.

The negotiations on the accession of Kazakhstan to the World Trade Organization (WTO), concluded in 2015, were unique in the history of the General Agreement on Tariffs and Trade (GATT) and the WTO. This uniqueness was reflected in: (i) the complexity of the accession due to its technical substance and geopolitical aspects; (ii) the significant expansion of market access achieved in the process, which is unusual in multilateral negotiations; (iii) the resultant update of the rules in line with GATT Article XXIV related to customs unions and free trade areas; and (iv) the unprecedented involvement and dedication of Kazakhstan’s officials, guided by President Nazarbayev, of WTO members and the WTO Secretariat, and personally of WTO Director-General Roberto Azevêdo. The negotiations were essentially a moving target, as they took place at the same time as the Customs Union between Belarus, Kazakhstan and the Russian Federation was evolving into the Eurasian Economic Union (EAEU). The critical elements of the accession were Kazakhstan’s commitments on technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS) and on market access for goods – essentially, the behind-the-border issues. Notwithstanding the complexities and the bilateral and regional mechanics of the negotiations, the Kazakh case demonstrates that the WTO accession process has had practical utility even in a geopolitically challenging and technically complex environment. Accessions continue to contribute to the strategic objective of a universal membership by updating trade rules, encouraging market access expansion and strengthening the rule of law. The accession of Kazakhstan thus confirms the WTO’s relevance in an ever more complex global economic and trade policy environment.

Services constitute a major and growing sector of Uganda’s economy in terms of its contribution to gross domestic product (GDP), exports and employment. Uganda’s Service Sector Export Strategy of 2005 has also identified information and communications technology (ICT) services as a priority. Similar to the situation in many least developed countries (LDCs), Uganda’s services sector is liberal. Specific General Agreement on Trade in Services (GATS) commitments have been undertaken on both telecommunications and financial services. There is a high degree of foreign ownership in Uganda’s financial and telecommunications sectors. In the financial sector, eighteen of the twenty-five commercial banks licensed in 2012 were foreign owned. In the telecommunications subsector, six of the seven operational mobile operators are foreign owned. In addition, this subsector has expanded rapidly in recent years with respect to domestic and foreign-owned mobile service providers (MSPs), the number of mobile subscriptions, and the emergence of non-voice services such as mobile money. Once established in Uganda, foreign and local suppliers of financial or telecommunications services are subject to the same regulatory and supervisory procedures.

Cette section examine comment les gouvernements tiennent compte des caractéristiques particulières des ressources naturelles. Elle examine notamment comment la répartition inégale des ressources incite les pays importateurs et des pays exportateurs à recourir à des mesures commerciales restrictives et à des mesures intérieures pour «capter» la rente monopolistique. Elle analyse la façon dont les gouvernements peuvent utiliser des restrictions au commerce et des mesures intérieures pour renforcer les droits de propriété ou limiter l’exploitation de la ressource. Elle examine aussi les mesures que les gouvernements peuvent prendre pour amener producteurs et consommateurs à tenir compte du coût social de leurs activités lorsque la consommation ou l’extraction d’une ressource naturelle affecte l’environnement. Toutefois, le recours à des mesures commerciales et à des mesures intérieures a des conséquences pour les partenaires commerciaux à travers la modification des termes de l’échange. Dans certains cas, l’importance de la rente tirée des ressources fait que le gouvernement peut être pris en otage par des groupes d’intérêts impliqués dans l’extraction et le commerce des ressources naturelles. Enfin, cette section examine comment la coopération commerciale régionale peut aider à atténuer ou surmonter les risques de friction liés aux ressources naturelles.

World GDP growth turned sharply negative in 2009 for the first time since the 1930s, dropping to - 2.3 per cent from 1.6 per cent in 2008. Both years were well below the 2000-08 average of 3.0 per cent. Although the contraction in output started in the developed economies in the fourth quarter of 2008, it accelerated in the first half of 2009 and eventually affected all countries and regions to varying degrees. However, many developing countries only experienced slower GDP growth rather than absolute declines in output.