Economic research and trade policy analysis

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.