About the WTO

The paper discusses the efforts deployed in 2008 and 2009 by various players, Governments, multilateral financial institutions, regional development banks, export credit agencies, to mobilize sufficient flows of trade finance to off-set some of the “pull-back” by commercial institutions in the period of acute crisis that has characterized the financial sector in the past two years. Given that 80 to 90% of trade transactions involve some form of credit, insurance or guarantee, one can reasonably say that supply-side driven shortages of trade finance have a potential to inflict further damages to international trade. As an institution geared towards the balanced expansion of world trade, the WTO had been concerned with occurrences of market tightening throughout this period. While a number of public-institutions mobilized financial resources for trade finance in the fall of 2008, this has not been enough to bridge the gap between supply and demand of trade finance worldwide. As the market situation continued to deteriorate in the first quarter of 2009, G-20 leaders in London (April 2009) adopted a wider package for injecting additional liquidity and bringing public guarantees in support of $250 billion of trade transactions in 2009 and 2010. Ahead of the Pittsburgh Meetings, experts reported that more than the targeted amount had been mobilized. In the meantime, through the summer and the fall of 2009, the market situation seemed to have eased – although in many countries, access to trade finance by the smaller traders had become either significantly more expensive or had simply disappeared. One can expect the trade finance market to have its up and downs for some time, because lending for trade is a function of the general lending situation of commercial banks. The paper discusses longer-term initiatives aimed at improving the resilience of the trade finance market to short-term and longer-term shocks.

Using the influence-driven approach to endogenous trade-policy determination, we show how a free-trade agreement (FTA) with rules of origin can work as a device to compensate losers from trade liberalization. The FTA constructed in this paper is characterized by external tariff structures that are negatively correlated across member countries, ensuring efficiency gains and, through reduced average protection, compatibility with the multilateral trading system's requirements. It is also politically viable, and we demonstrate that, in the countries concerned, governments are willing to include its formation in the political agenda in spite of the fact that, in equilibrium, political contributions from producer lobbies decline after the agreement.

The United Nations' post--2015- development agenda is taking shape. Like its predecessor the Millennium Development Goals, the post--2015- agenda will reshape development policy priorities for governments and non-governmental actors alike, in many cases galvanising new attention, thinking, and financing to tackle the priorities it identifies. This essay reviews the historical and ongoing role played by trade in sustained high growth and human development progress, and makes the case that the post--2015- development agenda should include considerations related to trade rules and supply-side capacity. Given the strong links between trade-led growth, economic upgrading, and poverty reduction, the paper argues that trade led economic growth must be prioritised in the post--2015- development agenda.

This paper analyses the results of the financial services negotiations under the General Agreement on Trade in Services (GATS) at the World Trade Organization (WTO). It shows that the negotiations have contributed to more stable and transparent policy regimes in many developing and transition countries. The wide range of market access and non-discrimination commitments should advance the process of progressive liberalization. The commitments do not compromise the ability of countries to pursue sound macroeconomic and regulatory policies. However, other aspects of the outcome do raise some concerns. First, there has been less emphasis on the introduction of competition through allowing new entry than on allowing (or maintaining) foreign equity participation and protecting the position of incumbents. Secondly, even where immediate introduction of competition was not deemed feasible, not much advantage has been taken of the GATS to lend credibility to liberalization programmes by precommitting to future market access.