Economic research and trade policy analysis
The WTO agreements relevant to health
The World Trade Organization (WTO) is a relatively new international organization. However it is responsible for a system that is over 50 years old. Established on 1 January 1995 the WTO replaced the General Agreement on Tariffs and Trade (GATT) which dated back to 1948. This was a consequence of a decision taken by governments after seven and a half years of negotiations (the "Uruguay Round") which ended in 1994. With the WTO's creation the rules were expanded to new areas. While the GATT dealt with trade in goods only the WTO covers trade in services and intellectual property as well. There are also some areas such as textiles agriculture and sanitary and phytosanitary measures where the WTO goes beyond the GATT by having established specific trade rules. Under the WTO the procedure for settling trade disputes has also been strengthened.
Introduction
Trade the exchange of goods services and information between individuals or groups is as old as human history. Expanding trade is a central component of the increasing connectedness among countries.
Towards health and trade policy coherence
There is common ground between health and trade and between the objectives of the WHO and the WTO. The WHO's objective is "the attainment of all peoples of the highest possible level of health" and WHO defines health as "a state of complete physical mental and social well-being and not merely the absence of disease or infirmity". Good health is one important building block for sustainable economic development. With regard to trade an underlying assumption is that a liberal international trade regime subject to reasonably stable and predictable conditions improves the climate for investment production and employment creation and therefore contributes to economic growth and development. Generally the health status of a country is affected positively by such growth. This expectation is reflected in the opening words of the agreement establishing the World Trade Organization
WTO Agreements & Public Health
This joint study by the World Health Organization and the World Trade Organization Secretariat on the relationship between trade rules and public health. The study explains how WTO Agreements relate to different aspects of health policies. It is meant to give a better insight into key issues for those who develop communicate or debate policy issues related to trade and health. The study covers areas such as drugs and intellectual property rights food safety tobacco and many other issues which have been subject to passionate debate. In this joint effort the first of its kind WHO and the WTO Secretariat endeavour to set out the facts.
Specific health issues and WTO agreements
As noted in the preceding Chapter several WTO agreements are relevant to health policy. Generally the positive growth and income effects of more open and predictable trade regimes can provide the resources as well as goods services and information for effective health systems. The WTO agreements explicitly allow governments in pursuing national health and other policy objectives to take measures to restrict trade in order to protect health. This is legitimate as a matter of principle. The emphasis in WTO rules is on how policies are pursued without questioning the underlying objective. For example is a measure applied or enforced in a way that discriminates between trading partners or between imported products and products produced domestically? Are there ways of implementing policy that would be less restrictive on trade? Thus it is the manner in which government pursue specific health policies in practice which might have trade-related implications which are examined in this Chapter.
Effects of WTO Accession on Policy-Making in Sovereign States
The purpose of the paper is to discuss the effects of WTO accession on policy-making and institutional reforms in transition countries. This is done by looking at the experience of those transition countries which are already Members of the WTO. We start by examining the effect of accession on trade policy and distinguish between the effects of accession negotiations and those of autonomous policy initiatives. We find that no precise blueprint of accession conditions can be ascertained that WTO played a role albeit not an exclusive one in the process of liberalization that the costs of WTO Membership are not negligible that the benefits of WTO Membership are also significant in terms of a better market access improved governance and a recourse to better economic policies.
Product Labeling, Quality and International Trade
This paper analyzes the reasons why countries may pursue different labeling policies in autarky and how this affects countries’ welfare in the context of international trade. In an asymmetric information environment where producers know the quality of the goods they are selling and consumers are not able to distinguish between them the quality governments choose to protect by a label depends on consumer preferences for and production costs of different qualities. Countries with different distributions of tastes and/or different production functions will thus decide to label differently. When they trade welfare effects will be different on the country as a whole and on different types of consumers within each country depending on whether countries choose to mutually recognize each others labeling policy or to harmonize their policies. In particular it will be the case that a country with weak preferences for high quality will oppose the introduction of an international harmonized label as it is better off under a regime of mutual recognition. When countries only differ in their costs of producing quality instead none of the trading partners will lose from a move towards trade under an international harmonized label.
The Impact of Transparency on Foreign Direct Investment
Non-transparency is a term given in this paper to a set of government policies that increase the risk and uncertainty faced by economic actors foreign investors. This increase in risk and uncertainty stems from the presence of bribery and corruption unstable economic policies weak and poorly enforced property rights and inefficient government institutions. Our empirical analysis shows that the degree of non-transparency is an important factor in a country's attractiveness to foreign investors. High levels of non-transparency can greatly retard the amount of foreign investment that a country might otherwise expect. The simulation exercise presented in the statistical part of this paper reveals that on average a country could expect 40 percent increase in FDI from a one point increase in their transparency ranking. Pari passu non-transparent policies translate into lower levels of FDI and hence lower levels of welfare and efficiency in the host country's economy. A nation that takes steps to increase the degree of transparency in its policies and institutions could expect significant increases in the level of foreign investment into their country. This increased investment translates into more resources which in turn increases social welfare and economic efficiency.
Can Trade Policy Help Mobilize Financial Resources for Economic Development?
The linkages between trade and resource mobilization are complex and not well defined in theory. To what extent does trade policy affect resource mobilization and what are the mechanisms? We argue that trade policy is a key factor of influencing the domestic fundamental balance between aggregate savings and investment. The main effect of trade policy on resource mobilization stems from its contribution to static and dynamic gains from trade. But the effect of trade policy on the supply of financial resources also operates through several channels including through linkages of trade policy with foreign investment government revenues income distribution foreign aid. The paper looks at direct and indirect channels and makes a distinction between short and long term effects of different trade strategies. We also briefly review trade barriers in goods and services affecting developing countries and the potential gains from further liberalization. The long term gains from trade liberalization are substantial but they may have to be set against short-term adjustments costs. The latter could and should be reduced by effective institutional and tax reforms.
Investment Policies and Telecommunications Regimes
The revolution in the telecommunication industry of recent years raises a number of interesting economic questions with significant policy implications. One of these questions is the extent to which foreign investments in the telecommunication industry is accompanied by policies that are conducive to cross–border investments. These policies can be both domestic and international. The discussion in this paper is limited to the latter by concentrating on the role of the WTO and other international agreements. The purpose of the paper is to evaluate the GATS/Telecom Agreement. This is done by looking at the guiding principles for negotiating market access for foreign investors by comparing the Agreement with the Telecom Agreement under NAFTA and by discussing the merits of the multilateral approach to negotiating foreign investment in the telecommunication sector. The WTO GATS/Telecom Agreement comes out rather well from this evaluation exercise.
Tariff Negotiations and Renegotiations under the GATT and the WTO
The procedures and practices to implement the provisions relating to tariff negotiations and renegotiations have evolved considerably since the GATT was established in 1947. The provisions themselves have undergone some changes in the last fifty-four years. Professor Hoda reviews the evolution of these provisions and of the procedures adopted and practices followed by the contracting parties to GATT 1947 and the Members of the WTO. He goes on to offer some conclusions and recommendations. This book will be of particular interest to negotiators including Geneva based delegations members of government trade ministries economists and all academics who specialise in trade policy.
International Trade and the Position of European Low-Skilled Labour
This paper presents a discussion of the potential channels through which international trade affects the position of low skilled workers in the European Union. After an analysis of the European Union's trade flows showing the predominant role of intra-industry trade with other industrialised countries the discussion focuses on the potential effects of intra-industry trade on low skilled labour. Particular attention is paid to possible interactions between trade and technological change and to the possible effects of trade on the price elasticity of labour. The paper also discusses how trade may affect incentives to invest in skills and thus a country's potential to alter the skill structure of its working force.
Whether and When to Liberalize Capital Account and Financial Services
Discussions about international capital movements raise extremely important and controversial questions. Why should countries open up their capital accounts especially considering that unrestricted international capital movement is a relatively new phenomenon? For example many OECD countries have not eliminated their foreign exchange restrictions only until the 1980's. If the answer is unequivocally affirmative does it matter how fast should countries do so? Should they wait until "all essential pieces" of the policy package are in place before they eliminate all restrictions? How are international capital movements related to domestic financial sectors? Is there a difference between opening to competition an industry such as car manufacturing as compared to the banking sector? Should the opening of the banking sector be governed by different rules? Rules about foreign exchange restrictions are already in place in the IMF Articles. Until recently the IMF Articles only called for the elimination of foreign exchange restrictions on the current account. The ongoing discussion and the controversy about globalization that calls for the capital account liberalization introduces therefore a relatively new element into the whole discussion. These questions have also implications for the World Trade Organization. It is well known that the Uruguay Round Agreements have already provided a coverage for a number of aspects that are directly related to foreign investment. Rules established elsewhere such as in the context of changes to the IMF Articles will obviously have an important bearing for the implementation of rules agreed in the Uruguay Round. This raises a variety of other questions in the mind of some observers. Who should decide about the rules on capital account liberalization? What rules? IMF? What is the role of the WTO? How does one link the two? All of the questions raised above are clearly extremely important and most of them are discussed in the following paper by John Williamson. Mr. Williamson's presentation is based on his lecture and discussion which was delivered on 17 June 1999 at the WTO. The actual text that follows is a transcript of that lecture.