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Why do Trade Finance Gaps Persist
Trade finance shortfalls now appear regularly. Does this matter for trade expansion and economic development in developing countries? Global trade finance has resumed following the 2009 global financial crisis. However the pattern of recovery has been uneven across countries and categories of firms. The recovery has been robust for the main routes of trade and for large trading companies. By contrast access to trade finance remains costly and scarce in countries which have the strongest potential for trade expansion. We introduce new data from a global survey of firms to argue that real shortfalls are exacerbated by perception gaps in a way that has enabled market failures to persist. This has troubling implications most directly through its effect on the ability for small firms to benefit from the reallocation of production and investment within global supply chains.
Use of the WTO Trade Dispute Settlement Mechanism by the Latin American Countries
The WTO's Dispute Settlement Mechanism (DSM) has been hailed as a fundamental aspect of the Multilateral Trading System for developing countries. At the same time developing countries face many challenges to ensure their effective participation in the mechanism. This paper presents statistical evidence of how Latin-American countries have been very active in their use of the DSM especially when their use of the mechanism is compared to their participation in world trade. This paper also analyses why to a large extent Latin American countries have overcome the challenges of participating in the DSM; and have done so by coming up with innovative and creative solutions without deviating from the guidelines established by WTO rules.
Developing Countries in the WTO Services Negotiations
The aim of this paper is to analyse developing countries’ participation so far in the current round of services negotiations under the Doha Development Agenda. The paper analyses developing countries’ negotiating positions as evidenced by their multilateral negotiating proposals; their initial offers; and to the extent allowed by the incomplete and sketchy information available their participation in bilateral market access negotiations. A number of basic themes are raised: the essential role of services for economic development; the high costs imposed by trade protection; the benefits of liberalization; the need to make use of the WTO forum to enhance credibility and sustain domestic regulatory reform programmes; the challenges of regulatory reform and the importance of appropriate sequencing; and the benefits arising from seeking further market access overseas in those areas where developing countries have a comparative advantage.
Trade and Fisheries
In this report we first give a brief overview of trade in seafood and seafood production. We then review the basic bioeconomic theory of the fishery and pinpoint why fisheries are different from most other industries. We next review the theoretical literature on trade and renewable resources that shows how unconventional outcomes from trade liberalization can emerge. Given this background we discuss the most important policy issues in relation to seafood and trade including sections on managing the global commons and domestic trends in management. In the final section we discuss specific issues that are germane to the WTO and its rules.
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.
Infrastructure and Trade
This paper explores the role that quality of infrastructure has on a country's trade performance estimating a gravity model that incorporates bilateral tariffs and a number of indicators for the quality of infrastructure. The paper looks at the impact of the quality of infrastructure (road airport port and telecommunication and the time required for customs clearance) on total bilateral trade and on trade in the automotive clothing and textile sectors. In order to obtain unbiased estimators multilateral resistances for tariffs and remoteness are introduced in the gravity equation. Moreover the robustness of the results is tested by estimating a fixed-effect model where bilateral indexes of the quality of infrastructure are included. The results can be summarised in four main findings: (i) bilateral tariffs generally neglected in gravity regression of bilateral flows have a significant negative impact on trade; (ii) quality of infrastructure is an important determinant of trade performance; (iii) port efficiency appears to have the largest impact on trade among all indicators of infrastructure; (iv) timeliness and access to telecommunication are relatively more important for export competitiveness in the clothing and automotive sector respectively.
Intellectual Property Provisions in Regional Trade Agreements
This is a revision and update of "Intellectual Property Provisions in Regional Trade Agreements" by Valdés and Runyowa (2012). This paper adjusts the methodology applied to assess the intellectual property (IP) provisions contained in regional trade agreements (RTAs) and the aggregation of such provisions into groups; it also updates the RTAs surveyed from 194 in November 2010 to 245 in February 2014. New information contained in this revision relates to three IP-related investment and non-violation provisions in RTAs. The methodological revisions and new information result in changes to the assessment of the IP content of certain RTAs while the update reveals a growing and increasingly complex network of RTAs with IP content. This revision also provides new insights into possible improvements to the methodological toolkit for analysing IP in RTAs. The paper assembles detailed information about the IP provisions contained in active RTAs notified to the WTO. The goal was to expand beyond the more commonly studied RTAs to review the full array of agreements notified to the WTO and thus to enable consideration of the implications of this diverse range of norm-setting activity for the multilateral system. Mapping of the IP content in RTAs involving parties from all regions and levels of development is necessary to better understand crosscutting trends in RTAs and how all the parts of the international IP framework influence each other. The methodology followed involved surveying each RTA in the sample to determine whether it made reference to any of 32 different IP-related provisions. Two of the three IP-related provisions new to this revision and update are investment-related IP provisions while the other concerns dispute settlement for non-violation claims. The relevant provisions are discussed in detail and summary statistics used to identify patterns over time and by continent level of economic development and selected traders. The number of IP provisions in each RTA is then used to classify agreements according to their level of IP content. The first significant identified trend is the acceleration in the conclusion of RTAs with IP provisions after the creation of the WTO and the entry into force of the WTO TRIPS Agreement. A significant proportion of those RTAs contain some type of IP provision but the number and type of those provisions vary widely across agreements. A majority of the RTAs surveyed include general IP provisions while a smaller proportion contains explicit provisions on specific fields of IP law such as geographical indications patents trademarks and copyright. The inclusion of even more detailed provisions elaborating on specific areas of IP law is less common. As a result the actual IP content of RTAs differs greatly across the sample with slightly less than half of these agreements found to havesubstantive IP standards that can be classified as moderate or high. The RTAs containing a high level of IP provisions are characterized by a hub-and-spoke architecture in which the wording and structure of IP provisions converged around the RTAs of specific countries or blocs. The largest systems are grouped around the EFTA the European Union and the United States. The hub-and-spoke architecture seems to have encouraged the convergence of domestic IP regimes among the respective RTA signatories. The mechanics of this potentially crucial process and its economic implications require further investigation.
Regional Integration in Africa
This paper examines the history of regional integration in Africa what has motivated it the different initiatives that African governments have pursued the nature of the integration process and the current challenges. Regional integration is seen as a rational response to the difficulties faced by a continent with many small national markets and landlocked countries. As a result African governments have concluded a very large number of regional integration arrangements several of which have significant membership overlap. While characterized by ambitious targets they have a dismally poor implementation record. Part of the problem may lie in the paradigm of linear market integration marked by stepwise integration of goods labour and capital markets and eventually monetary and fiscal integration. This tends to focus on border measures such as the import tariff. However supply-side constraints may be more important. A deeper integration agenda that includes services investment competition policy and other behind-the-border issues can address the national-level supply-side constraints far more effectively than an agenda which focuses almost exclusively on border measures.
Does Trade Openness Contribute to Driving Financing Flows for Development?
Trade has been recognized in the 2030 development Agenda as well as in the Addis Ababa Agenda for Action as an important means for the implementation of the Sustainable Development Goals (SDGs).
Trade Policies Supporting Women’s Economic Empowerment
This paper looks at the various trade policies WTO Members have put into place to foster women’s economic empowerment. The analysis below is based on the information provided by WTO Members as part of their Trade Policy Review (TPRs) process from 2014 to 2018. Reports from the WTO Secretariat governments as well as the question and answer sessions were examined for the purpose of this paper.
Deep Integration and Production Networks
In this paper the two way relationship between deep integration and production networks trade is investigated. Deep integration is captured by a set of indices constructed in terms of policy areas covered in preferential trade agreements. An augmented gravity equation is estimated to investigate the impact of deep integration on production networks. The results show that on average signing deeper agreements increases production networks trade between member countries by almost 35 percentage points. In addition the impact of deep integration is higher for trade in automobile parts and information and technology products compared with textiles products. To analyse whether higher levels of network trade increase the likelihood of signing deeper agreements the literature on the determinants of preferential trade agreements is followed. The estimation results show that after taking into account other PTAs determinants a ten per cent increase in the share of production network trade over total trade increases the depth of an agreement by approximately 6 percentage points. In addition the probability of signing deeper agreements is higher for country pairs involved in North-South production sharing and for countries belonging to the Asia region.
How do natural disasters affect services trade?
This paper is the first in the literature to examine the impact of natural disasters on trade in services. We measure the magnitude of natural disasters using two distinct sets of variables and quantify the effect of natural disasters on trade in services using a structural gravity model.
Endowments, Power, and Democracy
In spite of their growing importance in international trade as well as in bilateral and multilateral trade negotiations services have only attracted limited attention from researchers interested in determinants of trade policies and trade cooperation. This paper seeks to account for countries' varying levels of market access commitments under the multilateral General Agreement on Trade in Services (GATS). I develop an argument suggesting how levels of democracy and factor endowments are associated with more commitments. The empirical analysis supports these propositions and also suggests that relative size as well as regulatory capacity are positively linked to GATS commitments.
The “China Shock” Revisited
We exploit a decomposition of gross trade flows into their value added components to reassess the relationship between increased imports from China and manufacturing jobs in US local labour markets following the seminal paper of Autor Dorn and Hanson (2013 ADH).
The Relationship Between Exchange Rates and International Trade
This paper surveys a wide body of economic literature on the relationship between currencies and trade. Two main issues are investigated: the impact on international trade of exchange rate volatility and of currency misalignments. On average exchange rate volatility has a negative (even if not large) impact on trade flows. The extent of this effect depends on a number of factors including the existence of hedging instruments the structure of production and the degree of economic integration across countries. Exchange rate misalignments are predicted to have short-run effects in models with price rigidities but the exact impact depends on a number of features such as the pricing strategy of firms engaging in international trade and the importance of global production networks. This effect is predicted to disappear in the long-run unless some other distortion characterizes the economy. Empirical results confirm that short-run effects can exist but their size and persistence over time are not consistent across different studies.
Liberalizing Financial Services Trade in Africa
This paper analyses the possible gains from regional and multilateral liberalization of financial services trade for African countries taking into account the implications of such liberalization for financial regulation and capital account liberalization. It also describes existing efforts to integrate financial markets within four African regions (WAEMU CEMAC SADC and COMESA) and discusses the existing GATS commitments of the relevant countries with respect to financial services. Although the regions differ significantly there is scope for further regional integration in all of them. Significant scope also exists for further multilateral liberalization of financial services in particular with respect to Mode 3.
Least-Developed Countries, Transfer of Technology and the Trips Agreement
This paper examines the background of Article 66.2 of the TRIPS Agreement the nature of this obligation on developed country Members that pertains to the promotion of technology transfer to LDC Members and how it is being implemented and how such implementation is being monitored in the TRIPS Council.
Footloose Global Value Chains
The geography of global value chains (GVCs) depends crucially on trade costs between countries hosting various stages of production. Some stages might be more sensitive to trade costs than others. In this paper we exploit a value-added decomposition of bilateral trade flows to distinguish low value-added GVC trade typically associated with production stages such as assembly from high value-added GVC trade associated with stages such as R&D and design. We test the hypothesis that low value-added stages will more easily reroute given changes in trade costs between importing and exporting countries than high value-added stages.
Preferential and Non-Preferential Trade Flows in World Trade
This paper quantifies the extent of preferential trade as a share of total world trade in different regions of the world and for two periods. Results show that: i) preferential trade represented 40% of world trade in the period 1988-1992 and it slightly increased to 42% during the period 1993-1997; ii) during the second period agricultural products generally benefited more from the existence of preferential trade agreements than industrial products (maybe due to GATT-exemption); iii) the regional distribution of preferential trade is relatively uneven with a significant share of preferential trade in Western Europe (around 70 per cent) relatively low values in the Western Hemisphere (around 25 per cent) very low shares in Asia and Oceania (around 4 per cent) and average values in the rest-of-the-world (Eastern Europe and Africa); iv) the largest increase in shares of preferential trade between the two periods has occurred in the Western Hemisphere and in Eastern-Europe and Africa; v) at the country level there is an inverted-u-shape relationship between the share of preferential trade and the size and GDP per capita of individual countries; vi) countries which are highly open to trade tend to have a larger share of preferential trade on total trade in the period 1993-1997 suggesting that preferential and non-preferential trade can be seen as complements.
Mapping the Tariff Waters
Tariff water –the difference between bound and applied duties– provides relevant information on domestic trade policy and WTO trade negotiations. This paper examines the general and sectoral tariff structure of 120 economies using exploratory data analysis.