Economic research and trade policy analysis
Domestic regulation: What are the costs and benefits for international trade in services?
Services have been considered non-tradable and therefore outside the scope of trade policy-making until quite recently. A logical consequence is that explicit policy barriers to cross-border trade in services are rare. What segments markets for tradable services is therefore largely in the realm of domestic regulation. Both the General Agreement on Trade in Services (GATS) and a number of regional trade agreements (RTAs) aim at developing disciplines on domestic regulation. GATS Article VI states that disciplines on qualification requirements and procedures technical standards and licensing requirements shall be established to ensure that regulation is not more burdensome than necessary to ensure the quality of the service. Such disciplines are however yet to be established but a reference paper on pro-competitive domestic regulation in telecommunications has been included in a number of World Trade Organization (WTO) members’ GATS schedules of commitments and some RTAs have quite detailed disciplines on domestic regulation in this sector.
Operating integrated logistics services in a fragmented regulatory environment: What is the cost?
Estimated at US$36 billion and employing over four million people the Indian health care sector is one of the largest service sectors in the economy today. With a compound annual growth rate (CAGR) of 15 per cent the Indian health care sector is expected to reach US$280 billion by 2020. A 2003 report titled India’s New Opportunity: 2020 prepared jointly by the All India Management Association Boston Consulting Group and the Confederation of Indian Industries predicts that over 40 million new jobs and US$200 billion increased revenues are expected to be generated by the Indian services sector by 2020 and the health care sector will play an important role in generating these jobs and revenues (AIMA/BCG 2003). Hence this sector is predicted to grow rapidly and is seen to have considerable potential due to the growing demand for health care services in India. The reasons are many including rising incomes a growing propensity to spend on health care an emergence of lifestyle-related diseases and demographics.
Domestic regulation of retail food distribution services in Israel: The missing link between food prices and social protest
This chapter provides a case study tracing the impact of domestic regulation on market structure in the retail distribution services sector and its ultimate effects on consumer food prices. Taking Israel a small and relatively liberalized Organisation for Economic Co-operation and Development (OECD) economy as an example our research investigates whether market concentration and the absence of international competition can be attributed to domestic regulation. We place this discussion in the context of recent consumer-led social protest against the rising cost of food in Israel.
Telecommunications reform in China: Fostering competition through state intervention
As in many developing countries the telecommunications services sector in China has for a long time been monopolized by the state through the Ministry of Post and Telecommunication (MPT). Established in 1949 the MPT is not only the regulator of telecommunications services but also the sole owner and operator. Not surprisingly such monopoly has resulted in the slow growth of the sector. However such slow growth did not cause major problems in the first thirty years following the founding of the People’s Republic of China because there was little mobility among the population thus little need for long-distance communication. During this period the telephone was an exclusive luxury available mostly to the government and the military.
Regulatory impact analysis: Addressing the trade and regulatory nexus
The potential for productivity growth to generate higher incomes makes it a natural and important consideration for decision-makers. Productivity is the only driver of income growth that is unlimited as opposed to resource exploitation or increases in population and labour force participation each of which faces natural limits. The continuing need to stimulate productivity growth rightly remains at the forefront of government policy and is a key priority of the Australian government.
Domestic regulations and India’s trade in health services: A study of hospital and telemedicine services
Estimated at US$36 billion and employing over four million people the Indian health care sector is one of the largest service sectors in the economy today. With a compound annual growth rate (CAGR) of 15 per cent the Indian health care sector is expected to reach US$280 billion by 2020. A 2003 report titled India’s New Opportunity: 2020 prepared jointly by the All India Management Association Boston Consulting Group and the Confederation of Indian Industries predicts that over 40 million new jobs and US$200 billion increased revenues are expected to be generated by the Indian services sector by 2020 and the health care sector will play an important role in generating these jobs and revenues (AIMA/BCG 2003). Hence this sector is predicted to grow rapidly and is seen to have considerable potential due to the growing demand for health care services in India. The reasons are many including rising incomes a growing propensity to spend on health care an emergence of lifestyle-related diseases and demographics.
Reasonableness, impartiality and objectivity
Similar to the General Agreement on Tariffs and Trade (GATT) the General Agreement on Trade in Services (GATS) imposes requirements of reasonableness and impartiality on World Trade Organization (WTO) members with respect to their administration of certain measures. This general obligation of procedural fairness offers a potentially powerful mechanism for ensuring equitable treatment for traded services and service suppliers beyond the substantive disciplines of WTO law such as those related to discrimination. Yet the provision has been subject to relatively little extended commentary or jurisprudence perhaps because of an underlying concern about the sovereignty implications of WTO dispute settlement organs assessing the reasonableness of WTO members’ administration.
Regulation of postal services in a changing market environment: Lessons from Australia and elsewhere
The digital revolution and the exponential growth of the Internet have led to radical changes in the ways in which countries conduct their commerce communicate and store information. Coupled with the digital revolution the last several decades have also seen a fundamental rethink of the role of the state in the economy. Broadly the past reliance in many countries on state control and regulation has given way to a greater emphasis on competition trade openness and market forces.
Wto Domestic Regulation and Services Trade
Domestic regulation of services sectors has a significant impact on services trade liberalization which is why General Agreement on Trade in Services (GATS) disciplines are negotiated in the WTO. With the help of analyses and case studies from academics regulators and trade experts this book explores the scope and limits of WTO legal principles to promote domestic regulatory reform. Case studies discuss country specific challenges and experiences of regulating important service sectors such as finance telecommunications distribution legal education health postal and logistics services as well as the role of regulatory impact assessments. The findings will interest trade officials policy makers regulators think tanks and businesses concerned with the implications of domestic regulation on access to services markets and with the opportunities for formulating trade disciplines in this area. It is also a useful resource for academics and students researching regulatory approaches and practices in services sectors.
Introduction to Part III
In Part III of this book a number of case studies on domestic regulation in services sectors are presented. These case studies concern the following sectors: legal services telecommunications information and communications technology mobile banking financial services higher education logistical services postal services and retail food distribution.
Mutual recognition of services regulation at the WTO
Mutual recognition is a useful tool for international liberalization in particular contexts. However it has two types of limit and to the extent that it may exceed these limits it poses two important types of risk.
Domestic regulations in Malaysia’s higher education sector
The growth of private higher education institutions (PHEIs) in Malaysia is politically and economically motivated. Excess demand and the use of ethnic quotas in a limited number of public universities with the implementation of the New Economic Policy in 1970 had raised the potential for inter-ethnic conflicts in multi-ethnic Malaysia. The government therefore utilized private provision to supplement public supply thereby increasing access and reducing the possibility of inter-ethnic conflicts due to limited access. Over time the perennial deficit in services trade since independence in 1957 contributed to the idea of using private higher education to reduce student outflows and its negative impact on services trade and instead to increase export revenues through inflows of international students. This led to the aspiration to be a regional hub for higher education based on Malaysia’s comparative advantage in terms of costs and language via the use of English in transnational programmes offered in PHEIs with degrees awarded by parent institutions in developed countries such as Australia and the United Kingdom.
Why regulate? An overview of the rationale and purpose behind regulation
The starting point for any economist is the superiority of the market mechanism of free exchange in efficiently allocating resources and thereby maximizing social welfare. However in order for that ‘invisible hand’ to perform its winning act the market needs to display certain characteristics
Mobile money services provision in East Africa: The Ugandan experience
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.
Information communications technology: The Mauritian experience of regulation and reform
This chapter presents the evolution of the information and communications technology (ICT) sector in Mauritius and the advances made in defining clear institutional policy legal and regulatory frameworks which have positively influenced trade in the ICT services. The case study analyses the pre-existing conditions that facilitated competition in telecommunications thus paving the way to making ICT a key pillar for the development of the Mauritian economy through its Cyber Island Strategy. The study also reviews the prominent role played by the sector ministry and the ICT regulator in fostering widespread application of modern technologies and reporting on the ensuing economic benefits for the country.
Services liberalization, negotiations and regulation: Some lessons from the GATS experience
The services economy has been undergoing a major transformation over the last three decades moving away from the old model where services were more often than not government functions provided by public utility entities towards a new paradigm of private sector-led competitive markets where services are exchanged on a commercial basis. Accordingly the role of governments has fundamentally changed in many activities from being the provider of the service into that of the supervisor or regulator in pursuit of public interests. Increasingly services markets continue to be liberalized motivated by the usual gains from competition (better quality lower prices wider choices expanding markets and more job creation).
Balancing legal certainty with regulatory flexibility
The concept of legal certainty is a central element of most legal systems in the world (Maxeiner 2008: 28). It can be associated with the rule of law but variations exist concerning its exact contours and its relative importance vis-à-vis other fundamental legal principles. In particular legal certainty is often contrasted with principles of justice or rightfulness (von Arnauld 2006: 638). Indeed a formal understanding of legal certainty which focuses on issues of stability and consistency does not guarantee a fair and just outcome. More fundamentally even though legal certainty is one of the most effective safeguards against governmental and administrative arbitrariness it offers no protection against unjust or unfair laws. How can the potential for conflict between legal certainty and justice be solved?
WTO Domestic Regulation and Services Trade
Domestic regulation of services sectors has a significant impact on services trade liberalization which is why General Agreement on Trade in Services (GATS) disciplines are negotiated in the WTO. With the help of analyses and case-studies from academics regulators and trade experts this book explores the scope and limits of WTO legal principles to promote domestic regulatory reform. Case-studies discuss country-specific challenges and experiences of regulating important service sectors such as finance telecommunications distribution legal education health postal and logistics services as well as the role of regulatory impact assessments. The findings will interest trade officials policy-makers regulators think tanks and businesses concerned with the implications of domestic regulation on access to services markets and with the opportunities for formulating trade disciplines in this area. It is also a useful resource for academics and students researching regulatory approaches and practices in services sectors.
An introduction to domestic regulation and GATS
International trade in services is governed principally by regulatory measures. Unlike trade in goods border measures in the form of tariffs and quotas are not the main barriers to trade. This peculiarity of services trade is due to the manner by which services are produced and consumed. Due to the intangible and non-storable nature of services suppliers and consumers often have to be in physical proximity to each other for the transaction to be completed. For this reason economists have traditionally considered services to be non-tradable across borders and have paid little attention to it in trade theory.
Services provisions in regional trade agreements: Stumbling blocks or building blocks for multilateral liberalization?
A remarkable feature of the recent wave of regional trade agreements (RTAs) is the inclusion of a trade in services component in many agreements. At the end of 2006 the WTO counted fifty-four such service accords of which only five predate the conclusion of the Uruguay Round.2 The rising interest in service trade agreements reflects a number of developments. First as tariffs have come down policymakers have turned their attention to other barriers restricting international commerce. Second the growth of world trade in goods and the emergence of international production networks have highlighted the importance of an efficient services infrastructure – whether in telecommunications finance logistics or legal advice. Market openings in services offer the prospect of performance improvements in services and allow goods producers to draw on multinational service networks in organizing their business.
A historical perspective on regionalism
This chapter explores the development of regionalism from a historical perspective with a view to understanding how the world ended up with some 350 regional trade agreements (RTAs) (so far) of varying degrees of coverage complexity and efficacy. Understanding the history of regionalism may shed light on how to multilateralize it; and an understanding of the factors that led nations to conclude trade agreements outside the multilateral trading system may help to identify some lessons for dealing with the increasing proliferation of RTAs.
Introduction
The last two decades have seen an explosion of regional trade agreements some of them involving several countries many of them bilateral. Some have been local within regions others have stretched across regions. Some have involved deep integration going beyond the WTO while others have been quite light and superficial. All in all some 350 of these agreements exist.
The landscape of regional trade agreements and WTO surveillance
Regional trade agreements (RTAs) have become so prominent in recent years that they permeate much of the discourse on international trade. The current scale of RTA proliferation is unprecedented both in quantitative and qualitative terms. A bewildering range of geographical configurations and varying policy content characterize the new agreements. This trend is likely to continue. The embrace of RTAs by virtually every trading nation carries systemic implications for the multilateral trading system most notably through increased discrimination and complexity in trade relations and by undermining the transparency and predictability of trade relations.
Legal avenues to ‘multilateralizing regionalism’: Beyond Article XXIV
A core feature of regional trade agreements (RTAs) is that they offer or are supposed to offer WTO-plus liberalization. The question that this book examines is how these WTO-plus elements could be ‘multilateralized’. To give teeth to WTO-plus benefits in RTAs most RTAs include regional dispute settlement. This chapter analyses how these regional dispute settlement systems and the legal disciplines they enforce interact with multilateral dispute settlement at the WTO. Failure to give effect to regional dispute settlement may endanger WTO-plus liberalization; finding a legal balance and mutual support between RTAs and the WTO can be one of the ways to ‘multilateralize regionalism’.
Multilateralizing regionalism: Lessons from the EU experience in relaxing rules of origin
Over the last fifteen years or so the world trading system has witnessed the dramatic emergence and rise of regional or preferential trading agreements (RTAs/PTAs). This appears to be a significant shift away from the principle of multilateralism that the world trading system has been built around since the Second World War. There are a number of posited reasons for this emergence of regionalism which between them suggest that liberalizing trade regionally rather than multilaterally may be easier to achieve and that regional agreements may be able to ‘reach the parts that multilateralism cannot reach’ – i.e. that they might be able to go significantly further in key policy areas.
Multilateralizing Regionalism
Regional trade agreements (RTAs) have proliferated around the world in the past two decades and now virtually all the members of the WTO are party to at least one. Besides tariffs and rules of origin regulating trade in goods many RTAs now include provisions on services investment technical barriers to trade and competition rules as well as a host of issues not directly related to trade. The geograph-ical reach of RTAs is expanding with transcontinental agreements spreading forcefully alongside intraregional agreements.
Multilateralizing regional trade arrangements in Asia
East Asian economies have grown rapidly over the last four decades driven by the expansion of international trade and foreign direct investment (FDI). They have now moved toward formal economic integration through bilateral and plurilateral free trade agreements (FTAs). The Association of Southeast Asian Nations (ASEAN) is emerging as the integration hub for FTAs in East Asia while the People’s Republic of China Japan and the Republic of Korea also have formal economic ties with ASEAN and India Australia and New Zealand are joining the bandwagon. How can East Asia ensure that the region’s noodle bowl of FTAs can be consolidated into a single East Asian FTA – a stepping stone toward global integration?
The Information Technology Agreement: Sui generis or model stepping stone?
The Information Technology Agreement (ITA) negotiated in 1996 is a remarkably successful sectoral agreement. Broad coverage of products was achieved ex ante rather than by building up coverage over “rounds” of negotiations tariff line by tariff line. A schedule for staged reductions of tariffs to zero was achieved ex ante rather than tariff-reduction formulas becoming subjects for negotiation in themselves in subsequent rounds. Multilateral country coverage was achieved nearly ex ante in that the initial set of countries agreed on the rules many additional countries joined bandwagon-style in the initial months following inception of the agreement and nearly half of all WTO member countries have joined as of 2007.
Harmonizing preferential rules of origin regimes around the world
The proliferation of regional trade agreements (RTAs) around the world has focused policy attention to preferential rules of origin (ROOs). The concerns voiced over ROOs are two-fold: restrictiveness and divergence. Restrictive ROOs can introduce undue barriers to trade between RTA members and non-members thus dampening RTAs’ trade-creating potential. Divergences in ROOs across regimes can increase the transaction costs for countries and companies dealing on two or more RTA fronts simultaneously especially when they are unable to cumulate production and inputs across agreements. These two issues are intricately linked: divergence matters more when ROOs are binding – i.e. when restrictiveness is consequential for economic decisions and affects firms’ production. Non-binding ROOs around the world would obliterate the importance of divergence.
Multilateralizing regionalism: Case study of African regionalism
Regionalism emerged as a global policy concern during the Uruguay Round of multilateral trade negotiations towards the end of the 1980s. Before then it had comfortably co-existed alongside the multilateral trading system. The stability of the system hinged strongly on the leadership that the US had provided since the early days of the GATT until the late 1980s. It was only when the US turned to regionalism that the edifice of the multilateral system began to experience tremors and regionalism started becoming a threat to the functioning and credibility of the multilateral trading system. The stumbling block/building block metaphor widely credited to the Columbia University scholar Jagdish Bhagwati reflected the anxiety that the rapid spread of regionalism caused.
Multilateralizing preferential trade agreements: A developing country perspective
Preferential trade agreements (PTAs) continue to proliferate. Always a central element of the trade policy strategy of European countries ‘regionalism’ has now become the dominant form of international cooperation on trade policy for virtually all the members of the WTO developed and developing. The proliferation of PTAs has been accompanied by steadily declining barriers to trade generally and high growth rates in world trade. The uniform tariff equivalent of all applied most favoured nation tariffs of high-income OECD countries in 2005 was 4.8 per cent. Excluding agricultural products the figure drops to 2.7 per cent (Kee Nicita and Olarreaga 2008). For the developing countries the focus of this chapter applied MFN tariffs have also fallen substantially; Kee et al. estimate that the median average overall trade restrictiveness index was 7.5 per cent for the fifty-seven countries for which data are available in 2005 compared with 12.3 per cent ten years earlier. This reduction in external MFN protection reflects mostly unilateral autonomous actions by governments (Martin and Messerlin 2007). While PTAs can be building blocks or stumbling blocks for multilateral liberalization it is incontrovertible that the level of MFN trade barriers has been falling.
Multilateralizing Regionalism
Regional trade agreements (RTAs) have proliferated around the world in the past two decades and now nearly all members of the WTO are party to at least one. Besides tariffs and rules of origin regulating trade in goods many RTAs now include provisions on services investments technical barriers to trade and competition rules as well as a host of issues not directly related to trade. The geographic reach of RTAs is expanding with transcontinental agreements spreading forcefully alongside intra-regional agreements. ‘Multilateralizing Regionalism’ was the title of a major conference held from 10–12 September 2007 at the WTO in Geneva. Brought together in this publication the conference papers achieve two things. First they marshall detailed new empirical work on the nature of the ‘Spaghetti Bowl’ and the problems it poses for the multilateral trade system. Second they contribute fresh and creative thinking on how to ‘tame the tangle’ of regional trade agreements.
Social Interactions of Migrants and Trade Outcomes
This paper investigates the social interactions performed by immigrants in France. A framework for immigrant’s choice of location is based on recent studies on non-market interactions which explains how migrants concentrate. Applying data on the distribution of immigrants in 95 French provinces the social interactions are subsequently estimated. This “social component” of migration is then tested on international trade providing a direct measure of the impact of social networks on the economy.
Exposure to External Country Specific Shocks and Income Volatility
Using a dataset of 138 countries over a period from 1966 to 2004 this paper analyses the relevance of country specific shocks for income volatility in open economies. We show that exposure to country specific shocks has a positive and significant impact on GDP volatility. In particular we find that the degree to which the cycles of different trading partners are correlated is more important in explaining exporters’ GDP volatility than the volatility of demand in individual export market. We also show that geographical diversification is a significant determinant of countries' exposure to country specific shocks. Keywords: income volatility geographical export diversification external shocks.
Risk Assessment in the International Food Safety Policy Arena
Two institutions provide multilateral venues for countries to discuss food safety measures at the international level: the Codex Alimentarius Commission (Codex) and the World Trade Organization. Both institutions encourage their members to base food safety standards on scientific evidence. In this paper we provide a description of how food safety related scientific evidence is generated and how it is used in the context of risk assessment for international standard-setting at CODEX and in WTO trade disputes. In particular we discuss the processes leading to policy conclusions on the basis of scientific evidence with a focus on the interactions involved between private and public sector actors and those between “scientific experts” and others. We identify weaknesses in the current institutional set-up and provide suggestions on how to improve the interaction between different players at the national and international level so as to strengthen the existing system and increase its cost efficiency.
Liberalization of Air Transport Services and Passenger Traffic
Using a gravity-type model to explain bilateral passenger traffic this paper estimates the impact of liberalizing air transport services on air passenger flows for a sample of 184 countries. We find evidence of a positive and significant relationship between the volumes of traffic and the degree of liberalization of the aviation market. An increase in the degree of liberalization from the 25th percentile to the 75th percentile increases traffic volumes between countries linked by a direct air service by approximately 30 per cent. In particular the removal of restrictions on the determination of prices and capacity cabotage rights and the possibility for airlines other than the flag carrier of the foreign country to operate a service are found to be the most traffic-enhancing provisions of air service agreements. The results are robust to the use of different measures of the degree of liberalization as well as the use of different estimation techniques.
R&D in the Network of International Trade
Recent empirical evidence has shown that trade liberalization promotes innovation and productivity growth in individual firms. This paper argues that different types of trade liberalization – multilateral versus regional – may lead to different R&D and productivity levels of firms. Trade agreements between countries are modelled with a network: nodes represent countries and a link between the nodes indicates the existence of a trade agreement. In this framework the multilateral trade agreement is represented by the complete network while the overlap of regional trade agreements is represented by the hub-and-spoke trade system. Trade liberalization which increases the network of trade agreements reinforces the incentives for firms to invest in R&D through the creation of new markets (scale effect) but it may also dampen these incentives through the emergence of new competitors (competition effect). The joint action of these two effects within the multilateral and the regional trade systems gives rise to the result that for the same number of direct trade partners the R&D effort of a country in the multilateral agreement is lower than the R&D effort of a hub but higher than the R&D effort of a spoke. This suggests that a ”core” country within the regional trade system has higher R&D and productivity level than a country with the same number of trade agreements within the multilateral system whereas the opposite is true for a ”periphery” country. Additionally the paper finds that while multilateral trade liberalization boosts productivity of all countries regional trade liberalization increases productivity of core economies but may decrease productivity of periphery economies if the level of competition in the new trade partner countries of the periphery economy is ”too high”. Furthermore the aggregate level of R&D activities within the multilateral trade agreement exceeds that in the star – the simplest representative of the hub-and-spoke trade system.
Measuring GATS Mode 4 Trade Flows
The paper discusses the research work which has taken place over recent years with respect to the measurement of GATS mode 4 – presence of natural persons in the context of the revision of the Manual on Statistics of International Trade in Services. Realistic estimates of mode 4 trade are virtually non-existent. Based on the GATS legal definition the paper introduces the statistical conceptualization of mode 4. While showing that balance of payments labour related flows indicators such as worker's remittances and compensation of employees cannot be used as substitutes the paper discusses relevant balance of payments transactions in individual services sectors for estimating the value of this trade. Given the complexity of many services contracts (one service contract may involve the use of more than one mode to supply services to consumers) it provides simplifying assumptions that help build these measures of mode 4 trade in services. The paper recognizes that the proposed simplified statistical approach to modes of supply does not strictly adhere to GATS provisions and explains that it has been designed as a first guidance to provide relevant information for GATS while ensuring feasibility and consistency with statistical frameworks. Examples are given showing the interest of some economies to estimate the size of mode 4 trade. The paper also presents how existing migration and tourism statistics could be used to assess the physical mode 4 movement (flows) and presence (stocks) in terms of number of persons. It introduces necessary extensions (separate identification of relevant mode 4 categories of persons breakdowns by origin/destination occupations length of stay etc.) of these statistical frameworks in order to conduct a proper assessment of mode 4.
The Economics of Permissible WTO Retaliation
WTO arbitrators rely on economics to establish the permissible retaliation limits authorized by the Dispute Settlement Understanding (DSU) which arguably serves to enforce the overall agreement. We examine how theoretical and quantitative economic analysis has and can be used in this stage of the DSU process. First we identify characterize and categorize the major classes of disputes – e.g. those affecting import protection versus export promotion – and use the Bagwell and Staiger interpretation of the WTO principle of reciprocity to provide a theoretical framework that arbitrators can use to identify the maximum level of retaliatory countermeasures. Second we allocate each of the ten DSU arbitrations that have taken place thus far into one of these categories and compare the arbitrators’ actual approach with the theory. Third we use this framework to identify three crucial elements to the arbitrators' decisionmaking process for each case: i) the formula that they decide to adopt for identifying appropriate countermeasures ii) their political-legal-economic decision on a WTOconsistent counterfactual to use to implement the formula and iii) the quantitative methods they use to necessarily construct the (unobserved) WTO-consistent counterfactual. We examine not only the arbitrations that have taken place thus far but our approach also illustrates a template for many additional types of arbitrations likely to take place under the DSU. Finally in the disputes in which this reciprocity approach has not been used we identify procedural difficulties that arbitrators confront thus highlighting the constraints that hinder their use of economic analysis in practice.
LDC Poverty Alleviation and the Doha Development Agenda
Despite being a leading export sector and source of foreign exchange for most (non-oil exporting) LDCs tourism never makes the headlines of the WTO's Doha Development Agenda negotiations. When tourism's impressive potential for poverty alleviation is considered the lack of attention is even more striking. Reasons for the apparent neglect are complex and include a lack of awareness of tourism as an export sector the fragmented nature of the industry and low political influence exaggerated concerns over "leakages" misunderstandings about poverty alleviation and tourism and the "poker playing" characteristic of trade negotiations. The evident results are missed opportunities to address services infrastructure constraints (one of the greatest impediments to increasing LDC tourism revenues and value-added) as well as a failure to address sufficiently tourism's agricultural industrial and Aid for Trade linkages. Existing national-level investment promotion objectives as well as DTIS and TPR reports can be helpful for identifying priorities for both GATS negotiations and Aid for Trade. The focus should not necessarily be on making GATS commitments but rather on ensuring that the importance of tourism for LDCs is acknowledged and acted upon. Indeed governments can always further liberalize on a unilateral basis; in the context of the DDA however they can request greater access to trading partners' markets in exchange as well as gain valuable international attention and publicity.