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COVID-19 and Global Value Chains
Since the outbreak of the COVID-19 pandemic there has been a discussion among researchers and policy makers about changes to global value chains both about expected changes and changes that should be promoted by government policies. In this paper we conduct an in-depth analysis of the reasons for changes in global value chains as a result of COVID-19 both from a positive angle analysing expected changes in the behaviour of firms and from a normative angle assessing the different arguments for policy interventions by governments. After this analysis international cooperation of trade policies and the role of WTO in crises like the COVID-19 pandemic is explored.
International Trade in Travel and Tourism Services
In this paper we investigate tourism-related policy approaches that WTO member countries adopted in the early weeks of the COVID-19 crisis. We highlight the need for stakeholders to coordinate their responses in order to mitigate the negative crisis effects and better prepare the sector for the future. In doing so we explore the economic impact of potential tourism scenarios underlining both the demand and supply side effects of the crisis.
EU Import Measures and the Developing Countries
The EU's import policies towards developing countries are complex stemming from important sectoral and country variations in policy. Average tariffs are modest and while there are tariff peaks and escalation in some areas of interest to developing countries these are being reduced as a result of the implementation of the results of the Uruguay Round. The use of non-tariff measures has fallen particularly as a result of agricultural tariffication and is being further reduced in textiles and clothing. The elimination of VERs has not led to an increase in the use of alternative measures. Contingency protection falls more heavily in chemicals iron and steel certain textile items and certain electrical consumer goods and on Asian Central and Eastern European and former Soviet Union countries. The operation of various factors appears to be working to mitigate the use of trade defence measures in recent years helping to counter pressures that seem likely to arise as liberalization proceeds.
How WTO Commitments Tame Uncertainty
Guided by a cost benefit analysis model and using a unique database of tariff bindings for all WTO countries over the 1996-2011 period we show that WTO commitments affect members’ trade policy. More stringent bindings reduce the likelihood of responding to import shocks by raising tariffs and increase the likelihood of contingent measures. We argue that this reduces overall trade policy uncertainty. In a counterfactual scenario where WTO members can arbitrarily increase tariffs they are 4.5 times more likely to do so than under current bindings.
The Relationship between Services Trade and Government Procurement Commitments
To date government procurement has been effectively carved out of the main multilateral rules of the WTO system. This paper examines the systemic and other ramifications of this exclusion from both an economic and a legal point of view. In addition to relevant elements of the WTO Agreements particularly the Agreement on Government Procurement (GPA) and the General Agreement on Trade in Services (GATS) it derives insights from a large number of Regional Trade Agreements (RTAs) that embody substantive provisions on both government procurement and services trade. An important finding is that from an economic perspective general market access commitments with respect to services trade and commitments regarding government procurement of services are complementary and mutually reinforcing. In contrast from a legal point of view and at the multilateral level disciplines in the two areas have been "divided up" into two Agreements with different (but complementary) spheres of application: the key provisions regarding the scope of application of the GATS and the GPA make clear that each serves purposes that the other does not. Analysis of corresponding provisions of RTAs broadly supports and extends this finding. In light of the foregoing a question arises as to possible ways of deepening disciplines in this area. Part 5 sets out for reflection several related options: (i) the built-in mandate in the GATS for negotiations on services procurement (Article XIII:2); (ii) "multilateralization" of the GPA; (iii) the eactivation of work in the (currently inactive) WTO Working Group on Transparency in Government Procurement; and (iv) the taking up of relevant issues in the context of bilateral or regional negotiations. Overall we find that each of these possibilities has potential merits though none is without related challenges.
Trade Remedy Provisions in Regional Trade Agreements
This paper maps and examines the provisions on anti-dumping countervailing duties and safeguards in seventy-four regional trade agreements (RTAs). The RTAs vary in size degree of integration geographic region and the level of economic development of their members. The key policy concern of the paper is that the elastic and selective nature of trade remedies may lead to more discrimination with reduced trade remedy actions against RTA partners but a greater frequency of trade remedy actions against non-members. The adoption of RTAspecific trade remedy rules increases this risk of discrimination with trade remedies against RTA members being abolished outright or being subjected to greater discipline. The templates used for mapping the trade remedy provisions reflect this central concern. The results of the mappings suggest the need to be vigilant about increased discrimination arising from trade remedy rules in RTAs. A number of RTAs have succeeded in abolishing trade remedies. Probit and multinomial logit model estimations suggest that these RTAs are characterized by a higher share of intra-RTA trade and deeper forms of integration that go well beyond the dismantling of border measures. A fairly large number of RTAs have adopted RTA-specific rules that tighten discipline on the application of trade remedies on RTA members. In the case of anti-dumping for example some provisions increase de minimis volume and dumping margin requirements and shorten the duration for applying anti-dumping duties relative to the WTO Anti-dumping Agreement. In similar fashion many of the provisions on bilateral safeguards lead to tightened discipline or reduce the incentives to take safeguard actions. Safeguard measures can be imposed only during the transition period have shorter duration periods and require compensation if put in place. Further retaliation is allowed if there is no agreement on compensation. RTA provisions on global safeguards require that under certain conditions RTA partners be exempted from multilateral safeguard actions. This conflicts with multilateral rules which require that safeguard measures be applied to all sources of imports and highlights the problem of trade diversion. A small number of RTAs give a role to regional institutions to conduct anti-dumping and countervailing duty investigations and to review final determinations of national authorities. There is a theoretical presumption and some empirical evidence to suggest that this reduces the frequency of anti-dumping initiations and final determinations against RTA members. In the case of CVDs we are unable to find major innovations in CVD rules and practice by past and present RTAs. A major reason for this may be the absence of commitments in the RTA on meaningful or significant curbs on subsidies or state aid.
Antidumping Regional Regimes and the Multilateral Trading System
As of November 2010 more than 300 regional trade agreements (RTAs) were in force. Approximately two-thirds of them had been notified to the WTO. Each of these RTAs had implicitly or explicitly established a regional legal framework for the application of intra-regional and sometimes extra-regional antidumping actions. This study focuses on intra-regional antidumping regimes and has been built around the analysis of antidumping provisions in 192 RTAs. This Working Paper first recalls the main constitutive elements of the multilateral and regional legal frameworks a pre-requisite to consider if these rules and disciplines are competing with or are complementary to multilateral disciplines. Based on an analysis of these 192 RTAs the Paper identifies two Categories of regional antidumping regimes and assesses their relationships with the multilateral rules. Particular attention is paid to antidumping regimes in RTAs which appear to "diverge" from the WTO disciplines. The Paper concludes that most regional antidumping regimes do not fundamentally change the Parties' rights to take antidumping measures as compared with the multilateral regime. There appears to be no evidence that regional antidumping regimes increase RTA partners' rights to take antidumping actions at the intra-RTA level and only a minority of regimes contains disciplines which diverge from multilateral rules though most of those do not result in fundamental changes in the antidumping patterns of the RTA Parties. The Paper notes however that deep integration among a few RTAs has been decisive in bringing about a substantial change in the antidumping patterns of the RTA Parties concerned. It finds that legal consolidation at the regional level of a current practice of not using antidumping as a trade policy tool is restricted to a limited number of Parties. A few others seem to have used RTAs to restrict the possibility of using anti-dumping between RTA partners as compared to multilateral rules. The Paper finally suggests that the proliferation of regional transparency mechanisms related to antidumping may potentially undermine the oversight role of the multilateral trading system if "information diversion" materializes.
Regulatory Autonomy and Multilateral Disciplines
A major challenge for the multilateral trading system is to secure the benefits of trade liberalization without infringing on the freedom of governments to pursue legitimate domestic objectives. The difficulty lies in distinguishing between two types of situations. In one a non-protectionist government cannot prevent certain domestic policies from incidentally discriminating against foreign competitors. In the other a protectionist government uses a legitimate objective as an excuse to design domestic policies which inhibit foreign competition. The challenge is to devise rules which are sensitive to the difference between these two situations exonerating the former while preventing the latter. The approach suggested in this paper is to create a presumption in favour of the economically efficient policy measure with departures inviting justification.
Services Liberalization in the New Generation of Preferential Trade Agreements (PTAs)
This paper attempts to fill a gap in the trade literature by providing a comprehensive overview of services liberalization commitments in the new generation of preferential trade agreements (PTAs) as compared to prevailing GATS commitments and Doha Round offers. By developing a new database the paper reviews the commitments undertaken by 29 WTO Members (counting the EC as one) under mode 1 (cross-border supply) and mode 3 (commercial presence) in 28 PTAs negotiated since 2000. The paper presents a general analysis from both a cross-country and cross-sector perspectives and also examines in more detail the GATS+ commitments undertaken in a number of key sectors (audiovisual distribution education financial professional and telecommunication services). The paper also discusses the potential economic costs arising from these preferential agreements as well as the potential implications for the multilateral trading system and for the Doha round of negotiations in particular. The paper concludes by discussing possible approaches to overcome the potential downsides of PTAs including proposals for a more pro-active role for the WTO in the surveillance of these agreements.
The Layers of the IT Agreement's Trade Impact
The WTO’s plurilateral Information Technology Agreement (ITA) reduced tariffs to zero on many IT products. This paper presents a comprehensive study of its trade impacts by incorporating recent insights from both the global value chain (GVC) and time in trade literatures. Inserting tariffs directly into the gravity equation breaks the ITAs impact down into four layers. Import demand elasticities are found to be non-linear: Tariff reduction (layer 1) has relatively small impacts while complete tariff elimination (layer 2) has high impacts especially for intermediate goods. Beyond that ITA accession has positive non-tariff effects on both imports (layer 3) and exports (layer 4). These commitment effects suggest that higher trade policy certainty affects investment and sourcing decisions in favour of signatories: Their ITA exports performed better relative to other ICT and machinery exports unlike non-members. But “passive signatories” – which joined mainly as a by-product of a larger policy objective – reaped the most benefits. Featuring a smaller ITA sector upon accession their final good exports increased also in absolute terms due to downstream GVC integration. However such impacts are strongly heterogeneous with respect to countries’ geographical remoteness education levels business environment and institutions. China stands out with especially strong post-accession export increases also extending to intermediate goods.
“Agricultural Products” and “Fishery Products” in the GATT and WTO
The WTO Agreement on Agriculture applies to those “agricultural products” as defined in its Annex 1. This definition expressly excludes “fish and fish products” from the scope of application of the Agreement. In light of this exclusion the paper is intended to provide a historical account of the relationship between agricultural products and fishery products in the context of the negotiations leading to and during the GATT period up to the conclusion of the Uruguay Round and some of its implications for WTO negotiations.
The Case for Creating a Working Party on the Functioning of the WTO
Since the conclusion of the Uruguay Round in 1994 and the creation of the WTO in 1995 the functioning of the multilateral trading system has been the focus of a considerable number of articles proposals and debates. With the exception of a few important initiatives on transparency and decisionmaking most contributions on the functioning of the WTO have been made by external observers of the WTO. However over the past two years an increasing number of Members have showed interest in systemic and institutional issues. This interest has to a large extent been generated by a concern about the role of the multilateral trading system in the overall international economic environment particularly in light of the current global financial crisis. At the same time the WTO as an institution is under considerable pressure following more than a decade of efforts to conclude the Doha Round of trade negotiations. This paper explores the possibility of establishing a Working Party on the Functioning of the WTO as a separate deliberative process in the WTO. It seeks to outline the advantages of creating an informal forum or space for discussion among WTO Members and argues that many WTO Members appear to be ready for a broad discussion of institutional and systemic challenges facing the multilateral trading system.
Trade and Environment
In order to ensure transparency and to keep abreast of trade policies in support of sustainability the WTO Committee on Trade and Environment (CTE) mandated the WTO Secretariat to compile and collate all environment-related measures notified to WTO. The database also includes environment-related entries found in Trade Policy Reviews (TPRs).
Provisions on Electronic Commerce in Regional Trade Agreements
This paper reviews the different types of provisions explicitly addressing electronic commerce (e-commerce) in regional trade agreements (RTAs). The analysis covers the 275 RTAs currently in force and notified to the WTO as of May 2017.
A Simple Trade Policy Perspective on Capital Controls
This note discusses capital controls using insights from the trade policy literature. It highlights some key issues that have been neglected in the current international debate on capital controls. Capital is tradable in the same way as many goods and services are. As a result much of the analysis pertaining to trade and trade policy in goods and services applies with equal force to capital movements. Free trade is typically the best trade policy no matter whether it is trade in goods services or capital. But if investor behaviour and the prevailing policy environment are not conducive to immediate free trade the choice of instrument for controlling capital flows becomes important. Tariffs and other price-related restrictions are preferable to quantitative restrictions or prohibitions because: (i) they cause less rent seeking and (ii) they do not insulate the domestic market from price changes and innovations in international markets.
Transition Economies, Business and the WTO
Transition economies are going through a process of changing the role of the state allowing a greater role for the private sector. This is consistent with the market-oriented approach of the WTO. Remaining state agencies and enterprises will need to adapt their ways of doing business including in their approach to procurement of goods and services for economic and legal reasons. There is some hesitation about privatization as for foreign direct investment and where accepted about the precise timing. Where privatization of basic service monopolies occurs the role of the state shifts towards a regulatory function. In some private sector activities a non-interventionist approach to competition may be justified by market considerations while in others a pro-active policy may be necessary to ensure the benefits of economic liberalization.
The WTO
We consider the purpose and design of the World Trade Organization (WTO) and its predecessor GATT. We review recent developments in the relevant theoretical and empirical literature. And we describe the GATT/WTO architecture and briefly trace its historical antecedents. We suggest that the existing literature provides a useful framework for understanding and interpreting central features of the design and practice of the GATT/WTO and we identify key unresolved issues.
International Trade and the Position of European Low-Skilled Labour
This paper presents a discussion of the potential channels through which international trade affects the position of low skilled workers in the European Union. After an analysis of the European Union's trade flows showing the predominant role of intra-industry trade with other industrialised countries the discussion focuses on the potential effects of intra-industry trade on low skilled labour. Particular attention is paid to possible interactions between trade and technological change and to the possible effects of trade on the price elasticity of labour. The paper also discusses how trade may affect incentives to invest in skills and thus a country's potential to alter the skill structure of its working force.
Services Trade Policy, WTO Commitments, and their Role in Economic Development and Trade Integration
Services have long been perceived as playing a secondary role in world trade. In particular the role of services trade policies and multilateral services commitments often tends to be downplayed. However in value added terms services account for about 50% of world trade and are significant in exports of countries of all levels of development.
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.