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WTO Working Papers

WTO working papers usually represent research in progress. Such research may be conducted in the preparation of WTO Secretariat reports, studies or other material for WTO members. The papers are circulated for comment because the WTO considers critical review of professional research to be extremely important.

English

Revisiting Trade and Development Nexus

What Global Fragmentation Means for the WTO: Article XXIV, Behind-the-Border Concessions, and A New Case for WTO Limits on Investment Incentives

The rapid rise in global fragmentation — foreign investment, global supply chains, and ‘production sharing — is fundamentally reshaping the multilateral trading system. This paper uses a simple economic modeling framework to understand how the global fragmentation phenomenon may reshape the WTO, and particularly its developing country members that are most affected by the rise in global production sharing and foreign direct investment. The paper argues that the surge in global production sharing, supply chain agreements, and investment has not only recast the role of existing GATT/WTO rules, but that these same forces also create a strong rationale for new multilateral disciplines pertaining to investment incentives and other ‘behind-the-border’ policies.

English

Keywords: GATT WTO, Multilateral Investment Agreements, Production Fragmentation, International Investment, Global Supply Chains
JEL: F23: International Economics / International Factor Movements and International Business / Multinational Firms; International Business; F13: International Economics / Trade / Trade Policy; International Trade Organizations; F21: International Economics / International Factor Movements and International Business / International Investment; Long-term Capital Movements; F15: International Economics / Trade / Economic Integration
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