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Political & Quasi-Adjudicative Dispute Settlement Models in European Union Free Trade Agreements
In this paper interpretation and application dispute settlement provisions of European Union (EU) Free Trade Agreements (FTAs) signed between 1963 and 2006 are analysed. This will be through the two models of Dispute Settlement in International Law: the political and adjudicative. Political elements of dispute settlement mechanisms in Public international Law and General Agreement of Tariffs and Trade (GATT) served to establish those of the EU FTAs. Adjudicative and quasi-adjudicative elements of dispute settlement mechanisms of Public International Law and World Trade Organization (WTO) Law were used as parameters to set up those of the EU FTAs. These parameters also helped to define a new and unique hybrid model. The features of this model were found in Agreements with trade issues other than FTAs. It is possible however for future FTAs to incorporate them. The hybrid model is based on an adjudicative framework and includes both political and adjudicative elements. In conclusion it was found that even though WTO Members incorporated adjudicative elements in the Dispute Settlement Understanding (DSU) the EU did not incorporate them bilaterally for a further five years. Furthermore since the creation of the DSU in 1995 the EU has established more FTAs based on a political model than on a quasi-adjudicative. Consequently the quasi-adjudicative dispute settlement model has not represented a clear trend in EU FTAs.
Competition policy, trade and the global economy: Existing WTO elements, commitments in regional trade agreements, current challenges and issues for reflection
Competition policy today is an essential element of the legal and institutional framework for the global economy. Whereas decades ago anti-competitive practices tended to be viewed mainly as a domestic phenomenon most facets of competition law enforcement now have an important international dimension. Examples include: the investigation and prosecution of price fixing and market sharing arrangements that often spill across national borders and in important instances encircle the globe; multiple recent prominent cases of abuses of a dominant position in high-tech network industries; important current cases involving transnational energy markets; and major corporate mergers that often need to be simultaneously reviewed by multiple jurisdictions.
The Role of WTO Committees through the Lens of Specific Trade Concerns Raised in the TBT Committee
In this paper we provide some evidence of the common claim that STCs improve transparency and monitoring as well as help mitigate trade conflicts.
Testing the Trade Credit and Trade Link
Trade finance has received special attention during the financial crisis as one of the potential culprits for the great trade collapse. Several researchers have used micro level data to establish the link between trade finance and trade especially so during the financial crisis and have found diverting results. This paper analyses the effect of trade credit on trade on a macro level through a whole cycle. We employ Berne Union data on export credit insurance the most extensive dataset on trade credits available at the moment for the period of 2005--2011-. Using an instrumentation strategy we can identify a significantly positive effect of insured trade credit as a proxy for trade credits on trade. The effect of insured trade credit on trade is very strong and remains stable over the cycle not varying between crisis and non-crisis periods.
Reform in Basic Telecommunications and the WTO Negotiations
This paper examines liberalization of the basic telecommunications sector in a number of Asian countries and the role of the General Agreement on Trade in Services (GATS) in this process. It begins by explaining the working of the GATS as a mechanism for multilateral liberalization efforts. It then presents a description of the reforms taking place in the telecom regimes of selected Asian countries and of the commitments these countries made in the recent GATS negotiations. The paper explores the reasons why governments have taken advantage of the GATS negotiations to make multilateral market-opening commitments even though they were not pursuing export interests. The paper also considers the limits to what was achieved by way of liberalization commitments in the negotiations. Allowing greater foreign equity participation without liberalizing the conditions of entry may raise national welfare concerns. Furthermore certain governments could have taken greater advantage of the opportunity under GATS to precommit to future liberalization.
The WTO Global Trade Costs Index and Its Determinants
This study provides a decomposition of the WTO Global Trade Costs Index into five policy-relevant components: transport and travel costs; information and transaction costs; ICT connectedness; trade policy and regulatory differences; and governance quality. The WTO Global Trade Costs Index is based on a new methodology by Egger et al. (2021) that delivers directional trade cost estimates and sector-specific elasticities which are crucial for inferring trade costs from trade flows data. The resulting measure of trade costs includes all factors that burden foreign sales more than domestic ones. In this study we run a sectoral regression analysis to determine what drives trade costs variation across partners and use the results to decompose the variation in trade costs in each sector.
Recent Trade Dynamics in Asia
This paper looks at the extent to which the shift in the lower value added production to countries in the following development "tier" is actually becoming a reality.
Supply Chain Finance and SMEs
The unbundling of trade across regions offers unique opportunities for SMEs to integrate into global trade notably through their involvement into supply-chains. With supplychains shifting and expanding into new regions of the world the challenge for SMEs to accessing financing remains an important one; in many developing and emerging market economies the capacity of the local financial sector to support new traders is limited. Moreover after the financial crisis several global banks have "retrenched" for various reasons. In this context supply-chain finance arrangements and other alternative forms of financing such as through factoring have proven increasingly popular among traders. This paper shows that factoring has a positive effect in allowing SMEs to access international trade in countries in which it is available. Factoring also appears to be employed by firms involved in global supply chains. We employ for the first time data on factoring from Factor Chain International (FCI) the most extensive dataset on factoring available at the moment for the period of 2008-2015. Using an instrumentation strategy we identify a strong stable effect of factoring on SMEs access to capital for some of the main traders in the world.
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.
Trade Finance, Gaps and the COVID-19 Pandemic
Developments in trade finance in 2020 were largely driven by the impact of the COVID-19 pandemic. Twelve years after the great financial crisis of 2008-09 the issue of trade finance re-emerged as a matter of urgency. While the current pandemic-related crisis did not have a financial cause one of its results has been that many countries are experiencing difficulties in accessing trade credit. This is occurring notably in countries – particularly developing countries – in which structural trade finance gaps were high even before the pandemic
International health worker mobility and trade in services
Despite its substantial and increasing importance to health systems and inclusive economic growth the relationship between international trade in services and health worker mobility has been largely unexplored. However international health worker mobility and trade in services have both been increasing rapidly and at a growing pace in recent years.
On the Effectsof GATT/WTO Membership on Trade
We capitalize on the latest developments in the empirical structural gravity literature to revisit the question of whether and how much does GATT/WTO membership affect international trade. We are the first to capture the non-discriminatory nature of GATT/WTO commitments by measuring the effects of GATT/WTO membership on international trade relative to domestic sales.
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.
The Impact of Mode 4 Liberalization on Bilateral Trade Flows
This paper gives insights into the possible trade creating effects of service trade liberalization via Mode 4. In particular we expect that temporary movements of persons like permanent movements have the potential to reduce transaction costs for merchandise trade between home and host country. Exploiting data on H-1B beneficiaries from different origins in the United States and using a gravity model of trade we find significantly positive effects of temporary movements of persons on bilateral merchandise trade. In addition to this the paper provides insights into the determinants of temporary movements of persons.
Does Globalization Cause a Higher Concentration of International Trade and Investment Flows?
It has sometimes been argued that "globalization" benefits only a small number of countries and that this leads to greater marginalization of excluded countries. This paper argues that globalization is not necessarily biased towards greater concentration in international trade and investment flows. Marginalization is more likely to be explained by domestic policies in relatively closed countries. The paper shows that among relatively open economies the concentration of international trade and investment flows has declined over the last two decades whereas the opposite is true among relatively closed economies. Thus marginalization is not intrinsic to globalization. Key Words: Globalization international trade and investment flows concentration.
The Economic Impact of EPAs in SADC Countries
The Cotonou Agreement introduces new fundamental principles with respect to trade between the European Union and African Caribbean and Pacific countries relative to the Lomé Convention: in particular non-reciprocal preferential market access for ACP economies will only last until 1 January 2008. After that date it will be replaced by a string of Economic Partnership Agreements meant to progressively liberalise trade in a reciprocal way. The progressive removal of barriers to trade is expected to result in the establishment of Free Trade Agreements between the EU and ACP regional groups in accordance with the relevant WTO rules and help further existing regional integration efforts among the ACP. In this paper an applied general equilibrium model (15 regions 9 sectors) is used to simulate the impact of EPAs for countries of the Southern African Development Community. The standard Global Trade Analysis Project (GTAP) model has been extended to include the elimination of textile quotas EU enlargement to 25 members as well as tax revenue sharing and a common external tariff among Southern African Customs Union countries. A number of comparisons between different scenarios are undertaken in particular: (i) the EPA scenario is compared to the multilateral liberalization scenario; (ii) SADC liberalization with the EU only is compared to a scenario with simultaneous regional integration among African economies and to the case of the EU also signing an FTA with Mercosur; and (iii) a complete reduction of import barriers is contrasted with partial liberalization (i.e. only 50 per cent tariff reductions in agriculture) and with full trade liberalization that includes the elimination of subsidies. The issue of tariff revenue loss is also addressed and the required tax replacement is calculated. Selected experiments are re-run under an unemployment closure. Simulation results show that EPAs with the EU are welfare-enhancing for SADC overall leading also to substantive increases in real GDP. For most countries further gains may arise from intra-SADC liberalization. The possibility of the EU entering an FTA with other countries such as Mercosur reduces estimated gains but they still remain largely positive. Similarly estimated gains need to be revised downwards if agriculture liberalization is not as far reaching as a reduction of import barriers for manufactures. At the sectoral level the largest expansions in SADC economies take place in the animal agriculture and processed food sectors while manufacturing becomes comparatively less attractive following EU-SADC liberalization. Interestingly multilateral liberalization would instead foster some of the manufacturing sectors (textile and clothing and light manufacturing). Results also show the need for the SACU tariff pooling formula to be adjusted to reflect new import patterns as tariffs are removed.
A Commitment Theory of Subsidy Agreements
This paper examines the rationale for the rules on domestic subsidies in international trade agreements through a framework that emphasizes commitment. We build a model where the policy-maker has a tariff and a production subsidy at its disposal taxation can be distortionary and the import-competing sector lobbies the government for favourable policies. The model shows that under political pressures the government will turn to subsidies when its ability to provide protection is curtailed by a trade agreement that binds tariffs only. We refer to this as the policy substitution problem. When factors of production are mobile in the long-run but investments are irreversible in the short-run we show that the government cannot credibly commit vis-à-vis the domestic lobby unless the trade agreement also regulates production subsidies thus addressing the policy substitution problem. Finally we employ the theory to analyze the Subsidies and Countervailing Measures (SCM) Agreement within the GATT/WTO system.
WTO Decision-Making for the Future
Decision making in the WTO has become ever more difficult as the number of members increases and the range of issues tackled broadens. This paper looks at reasons why aspects of decision-making might be changed and discusses a number of potential pitfalls that change would have to avoid such as a dilution of commitments and fragmentation of the multilateral trading system. It then takes a detailed look at the notion of ‘critical mass’ decision-making. It argues for this approach under certain conditions as it would: i) allow for the emergence of a more progressive and responsive WTO agenda; ii) blunt the diversion of trade cooperation initiatives to RTAs; iii) allow more efficient differentiation in the levels of rights and obligations among a community of highly diverse economies; and iv) promote greater efficiency in multilaterally-based negotiations on trade rules and perhaps sectoral market access agreements.
An Empirical Assessment of the Economic Effects of WTO Accession and its Commitments
Besides facilitating access to the world market WTO accession negotiations entail a process of domestic reforms that are expected to improve the supply side of acceding economies. However measuring the actual impact of accession remains an empirical debate.
A ‘New Trade’ Theory of GATT/WTO Negotiations
I develop a novel theory of GATT/WTO negotiations. This theory provides new answers to two prominent questions in the trade policy literature: first what is the purpose of trade negotiations? And second what is the role played by the fundamental GATT/WTO principles of reciprocity and nondiscrimination? Relative to the standard terms-of-trade theory of GATT/WTO negotiations my theory makes two main contributions: first it builds on a ‘new trade’ model rather than the neoclassical trade model and therefore sheds new light on GATT/WTO negotiations between similar countries. Second it relies on a production relocation externality rather than the terms-of-trade externality and therefore demonstrates that the terms-of-trade externality is not the only trade policy externality which can be internalized in GATT/WTO negotiations.