Economic research and trade policy analysis
Conclusion
This Report has ranged widely. The Executive Summary attached to the beginning of the Report outlines the main areas covered and observations made. A report of this nature is itself a summary of complex issues and has to rely heavily on the more detailed and analytical work of others. References have been made in the text to this work. Many of the issues addressed here are “moving targets” particularly where governments are constantly exercising policy options that exert an influence on outcomes and where WTO Members are actively engaged in a major trade negotiation.
Foreword
The World Trade Report is a new annual publication produced by the WTO Secretariat. Each year the WTR will explore trends in world trade and highlight important issues in the world trading system. In addition to monitoring and interpreting trade developments the Report seeks to deepen public understanding of pressing policy issues. The WTR does not pretend to provide comprehensive answers to complex and many-sided questions subject to continuing debate among governments and their constituencies. Rather by explaining the origin of issues and offering an analytical framework within which to address them the WTR aims to contribute to more informed discussion and a better appreciation of the options available to address policy challenges.
Acknowledgements
The World Trade Report has been written under the general direction of Patrick Low Director of the Economic Research and Statistics Division. The main authors of the Report are Bijit Bora K. Michael Finger Marion Jansen Alexander Keck Patrick Low Hildegunn Nordas Roberta Piermartini and Robert Teh. Trade statistics and tariff information were provided by the Statistics Group of the Economic Research and Statistics Division co-ordinated by Guy Karsenty Julia de Verteuil Andreas Maurer and Jürgen Richtering.
Recent trends
International trade rebounded in 2002 from its contraction in the preceding year growing at about 2.5 per cent in volume terms which was faster than the growth of global output. The rebound occurred despite the weakness of the global economic recovery greatly reduced capital flows major changes in exchange rates increased restrictions on international trade transactions to mitigate risks from terrorism and rising geopolitical tensions. Trade growth was strong in Asia and the transition economies largely reflecting better economic performance in those regions. However trade was stagnant in Western Europe and contracted in Latin America as a result of economic turmoil in a number of countries in the region. North America’s imports recovered in line with stronger domestic demand while exports continued to decrease in 2002.
Executive summary
At the Fourth World Trade Organization Ministerial Meeting held in Doha in November 2001 Ministers launched a comprehensive set of multilateral trade negotiations and a work programme. This mandate is sometimes referred to as the Doha Development Agenda reflecting a shared desire to ensure that the trading system is relevant and responsive to the needs of developing countries. Among the areas covered by the negotiations or the work programme are market access in manufactures agriculture and services certain rules (including anti-dumping subsidies and countervailing measures and regional arrangements) trade and environment trade-related intellectual property rights the relationship between trade and investment the interaction between trade and competition policy transparency in government procurement trade facilitation and dispute settlement. Developing countries were particularly instrumental in putting certain issues on the agenda including trade and technology transfer trade debt and finance small economies implementation issues (mostly pending from the Uruguay Round) and special and differential treatment. Views continue to differ on how and in some cases whether to include all the issues mentioned above in the negotiations which are due for completion at the end of 2004.
Selected issues in trade and trade policy
South-South trade has long been promoted as a means to reduce the dependence of developing countries on markets of developed countries and to enhance diversification of Southern exports beyond primary commodities. Most of the mechanisms that were created to foster co-operation among developing countries were largely subregional and regional arrangements many of them preferential in nature. During the 1950s and 1960s the promotion of South-South trade was in many instances part of a set of policy measures anchored in a strategy of import substitution behind high trade barriers. South-South trade grew in spurts as developing country economies went through stop and go cycles. Despite efforts to promote and diversify South-South trade primary products continued to dominate these flows in most regions and by 1990 South-South trade accounted for only 6.5 per cent of world trade.
The Doha Development Agenda
An underlying objective of the WTO is to promote economic development through effective participation in world trade. Three aspects of the WTO’s structure and rules are relevant to the question of how developing countries can derive greater benefits from participation in the trading system. First the rules themselves together with permitted exceptions and interpretations are the foundation of the system and play a key part in determining the conditions and opportunities of trade. Second there is the question of the coverage of the system. No examples exist of topics that the WTO has taken up and then discarded so this is about the inclusion of new areas. Third the pattern of protection facing a country’s exports also goes a long way in defining trading conditions and opportunities. In short the nature of WTO rules the reach of these rules and conditions of market access are the three major areas that determine the quality and utility of the WTO for its Members. Not surprisingly each of these three elements features prominently in the Doha Development Agenda.
World Trade Report 2003
The World Trade Report is a new annual WTO publication focused on trade trends and policy issues. The 2003 edition examines developments in South-South trade trends in commodity markets and the growth of Regional Trade Agreements.
The role of trade and trade policy in the development process
Different aspects of the development process have been emphasized by the many scholars and observers who have ventured into this field. The seminal work of Sen (1999) identifies freedom as both the primary end and principal means of development. The Brundtland Commission stressed that development must involve the care and nurturing of the environment for future generations. Others have focused particularly on poverty reduction and the empowerment of poor people. All these approaches consider economic growth a vital component of the development process while emphasizing that development is about more than growth.
Fragmented Production
This paper explores the impact of vertical specialization on world trade within the framework of the O-ring theory of production. Within such a framework there is little scope for substituting quantity for quality or for gaining market shares by undercutting established suppliers purely on cost. Furthermore quality requirements will increase as lead firms in the supply chain invest in technology that reduces inventory and speeds up the production process. It is shown that potential suppliers in low-cost countries will only have an incentive to upgrade quality if adequately efficient infrastructure logistics and customs procedures are in place. Changing trade patterns between USA and Mexico and China suggests that proximity and low trade barriers are important determinants of the extent and nature of vertical specialization. Thus a larger share of Mexico's trade with USA is driven by vertical specialization than China's trade with USA. Nevertheless China has caught up with Mexico as far as share in US total imports is concerned and the market share gap has narrowed even in electronics the sector in which vertical specialization is most prominent. It appears that vertical specialization adds to total world trade rather than replacing traditional trade flows.
Is Trade Liberalization a Window of Opportunity for Women?
This paper analyses how trade affects women's job opportunities and earnings through five case studies: Mauritius Mexico Peru the Philippines and Sri Lanka. It is found that women's share of the labour force has increased over time and the wage gap between men and women has narrowed. It is also found that there is a positive and statistically significant relation between exports and women's share of employment while there is a statistically significant and negative correlation between women's share in employment and imports. The correlation between women's share of employment and trade stems from variation between sectors rather than within sectors over time indicating that export-competing industries tend to employ women while import-competing industries tend to employ men. Trade liberalization is likely to create jobs for women and over time increase their relative wages.
ICT, Access to Services and Wage Inequality
This paper discusses how information and communication technology (ICT) affects the quality and reach of consumer services. These services need to be provided locally but consist of several components some of which can be digitised and transmitted over long distances. A general equilibrium model is developed and numerical simulations in a stylised two-factor two-region centre-periphery setting are presented. Trade in intermediate services improves the quality of consumer services enormously in the periphery but may reduce the quality at the centre. Trade in intermediate services also has a dramatic impact on skilled workers’ wages in the periphery both relative to unskilled workers in their own region and relative to skilled workers at the centre and leads to a more equal distribution of income both between the centre and the periphery and within the periphery.
Executive summary
This report deals with the relevant WTO Agreements and the way they may influence health and health policies. In undertaking this joint study the WHO and WTO Secretariats seek to examine the linkages between trade and health policies so as to enable both trade and health officials to better understand and monitor the effects of these linkages.
Foreword
As the world becomes increasingly integrated it becomes less and less possible for different policy areas to be handled independently of each other. The linkage between trade and health has been the focus of much debate: real concerns should be dealt with and any misunderstandings should be clarified based on sound evidence and rigorous analysis.
Acknowledgements
This report was jointly prepared by the World Health Organization (WHO) and the Secretariat of the World Trade Organization (WTO).