Archive for the ‘WTO’ Category

Trade at VoxEU

23 December 2012

Some recent VoxEU columns:

  • In Belgian firm-level data, a smaller percentage of services-producing firms export than goods-producing firms. Exporting entry and exit rates are higher in services than goods.
  • Richard Baldwin says that vertical specialization requires global trade governance sufficiently distinct from existing WTO practices that it requires a new organization.
  • An optimistic take on the Trans-Pacific Partnership and proposed EU-US trade deal.

What the WTO’s “Made in the World” isn’t

30 May 2012

The WTO’s “Made in the World” initiative is a data exercise aimed at measuring and analyzing value-added trade flows.

Michele Nash-Hoff, a US manufacturing advocate, misrepresents this statistical exercise as a massive policy change. Her Huffington Post piece is curious because it accurately describes the statistical project and the shortcomings of measuring trade flows in gross terms while simultaneously quoting people out of context to invent the idea that rules of origin may soon be eliminated. (HT: Alex Raileanu)

How would you like to go shopping and find that everywhere you went, the label said “Made in the World” instead of “Made in China,” “Made in India,” “Made in USA” etc.?…

In 2011, Andreas Maurer, chief of the WTO’s International Trade Statistics Section, said “… in the past two or three years there has been huge momentum to get the necessary information” that would be used to rationalize elimination of country of origin labeling.

The World Trade Organization and the European Union moved one step closer to eliminating “country of origin” labeling. On April 16, 2012, the European Commission and WTO held a conference to mark the launch of the World Input-Output Database (WIOD). This new database allows trade analysts to have a better view of the global value chains created by world trade…

Director-General Pascal Lamy has said that “improved measurement and knowledge of actual trade flows will help better understand the interdependencies of today’s national economies, supporting the design of better policies and better trade regulation worldwide.”…

This Initiative could have dire consequences for America’s manufacturers and consumers. For manufacturers, it could eliminate one of the options allowed by the WTO — filing a charge for product “dumping” against another country to have countervailing duties applied against that country. For consumers, “Made in the World” labels wouldn’t allow you to protect your family from the tainted, harmful, and even life threatening products coming from China.

I’m interested in these data initiatives and I have never ever seen such a policy implication suggested. It’s clearly absurd.

If the label said “Made in the World”, one couldn’t know if the product were domestic or foreign, so no trade duties of any sort could apply. Is this what we imagine WTO member countries are headed towards? Eliminating rules of origin would render every preferential trade agreement and preference scheme obsolete by implementing perfectly non-discriminatory trade. The world has never been close to such a policy regime. I’m bemused that Ms Nash-Hoff has managed to turn an exercise in data collection and analysis into a scary free-trade conspiracy.

The WTO’s Andreas Maurer posted in the comments section of the Huffington Post to set the record straight:

Your article refers to another article which stated that “… in the past two or three years there has been huge momentum to get the necessary information” that would be used to rationalize elimination of country of origin labeling. This is not true.
That article by Mr Richard McCormack referred to the WTO’s Public Forum Session in September 2011. But that Session in no way propagated the “elimination of country of origin labelling” and the introduction of a “Made in the World” label. Rather it stated that current international trade statistics do not adequately reflect where value added is created.
Understanding where value is created is very important for business and national policy makers alike, and is the object of intense academic investigation. As your article points out, a research consortium produced a public database last month. In addition, WTO and OECD are jointly working to develop statistics on trade in value added.
But this research project does not affect whatsoever the way country of origin is reported by official statistics collected through customs. There is no intention at all to have the “Made in the World” logo actually appearing on any traded product. This logo only illustrated a statistical concept. Thus the article above misrepresents the objectives of the WTO.

Quick links

10 May 2012

My blogging has taken a back seat to my research recently. Here are some quick links that I wish I had more time to discuss:

WTO “young economist” entries due June 1

16 February 2012

Are you a young trade economist? Want Avinash Dixit, Robert Staiger, and Alberto Trejos to read your paper on trade policy and international trade co-operation? Entries for the WTO’s 2012 Essay Award for Young Economists are due by June 1.

US abandons zeroing (for now?)

7 February 2012

I’m seeing a lot of news about the US federal government dropping its practice of zeroing in calculating antidumping duties. The WTO news item is uninformative. I don’t have time this week to follow the latest developments, so I’ll just drop links:

FT:

The US has reached deals with the European Union and Japan to drop a contentious practice in its anti-dumping calculations known as “zeroing”, ending a longstanding international trade dispute in order to prevent retaliation against American products. The agreements, signed in Geneva, will close the books on a fight that began in 2003 when the EU first filed a case against the US at the World Trade Organisation.

USTR press release:

After the WTO found that the United States had not brought its antidumping methodologies into compliance, the EU and Japan requested authorization to impose hundreds of millions of dollars of trade retaliation. Had these agreements not been reached today, substantial volumes of U.S. exports could have been closed out of markets in the EU and Japan, resulting in job loss for U.S. workers and financial loss for U.S. farms and businesses…

Under the agreements signed today, the United States will complete the process – which began in December 2010 – of ending the zeroing practices found in these disputes to be inconsistent with WTO rules. In return, the EU and Japan will drop their claims for trade retaliation.

Politics-oriented coverage from The Hill includes this detail: “the Obama administration said it will try to negotiate a future deal at the WTO to permit the practice.” Here’s Scott Lincicome on the news.

WTO: WTR 2012 discussion forum

18 November 2011

The WTO’s World Trade Report 2012 will focus on non-tariff barriers. Of course, NTBs are nothing new, but they’re more relevant in a low-tariff world. Their relative opaqueness makes them more difficult to negotiate, discipline, and study. The WTO invites submissions of short articles for their discussion forum, though I have no idea about the scope for influencing the report (due out in July).

Pakistan grants India MFN status

8 November 2011

Pakistan has granted MFN status to India (with a list of excepted products). This accelerates liberalization between the two countries that had made some progress with the South Asian FTA (SAFTA). India granted Pakistan MFN status back in 1995. Here’s a State Bank of Pakistan research bulletin arguing for granting India MFN. Here’s a World Bank book on The Challenges and Potential of Pakistan-India Trade, which includes this paragraph:

In fact, the evidence on informal trade indicates that Pakistan has already granted something close to de facto MFN status to India. Traders exploit market arbitrage and the poor enforcement of antismuggling measures to import banned Indian products into Pakistan, hence with the change in the trade regime there could be additional revenues for the government for items that are likely to switch from the informal trade to formal trade.

How did Pakistan not grant India MFN status while being a WTO member since its inception in 1995? While MFN status has been relegated to “least favored nation” status in many circumstances, it seems that it still means something in this part of the world.

Does the DSM need support from ongoing negotiations?

20 October 2011

Jeff Schott worries that the WTO’s dispute settlement mechanism may be less effective if the dismal prospects for future negotiations cause dispute panels to expand their coverage:

Of course, WTO members will still be bound by existing obligations and the heralded dispute settlement system will continue to function. But past success is not a guarantee of future performance. Disputes undoubtedly will arise over “gray areas” of WTO law. Without the prospect of new negotiations to update and clarify the WTO rulebook, panelists will be tempted to bridge the gaps in their rulings. That is the danger: If the panelists attempt, or appear to be attempting, to usurp the powers of WTO members by interpreting and possibly expanding the scope of WTO obligations, it will likely trigger a political backlash against the WTO and discourage national compliance with such rulings. Members of Congress already think this is a problem with regard to the numerous WTO rulings against US antidumping practices. Over time, the frozen WTO legislative function will erode political support for compliance with the judicial function of the WTO

New WTO HQ

12 September 2011

The WTO laid the cornerstone of its new headquarters building in Geneva today.

Alan Beattie isn’t so impressed: “WTO needs a bigger headquarters to host larger stalemates in”.

How PTAs may segment regulatory systems

24 July 2011

Back in April, I wrote:

One such danger is that FTAs might be a means for the US or EU to try to lock in first-mover advantages in shaping regulatory standards (such as technical barriers to trade). While preferential tariffs can be undone relatively easy by further tariff cuts, plurilateral agreements that promulgate the adoption of a larger economy’s preferred technical standard might serve to determine which standard is later adopted multilaterally. A first mover might gain at the expense of others if its preferred standard is worse for world welfare.

A new WTO report tackles this very issue:

Director-General Pascal Lamy, in launching the World Trade Report 2011 on 20 July 2011, warned that preferential trade agreements (PTAs) “may lock in their members to a particular regulatory regime reducing the potential for trade to prosper with countries outside the arrangement”. “The new challenge posed by deep PTAs to the multilateral trading system is one of market segmentation because regulatory systems, which can become divergent, have now more importance on trade flows than tariffs,” he added…

In fact PTAs of today are less about tariff preferences and more about regulatory measures that were once considered the domain of national rather than international economic policy.  This change is occurring partly because of changes in the way production is being organized internationally with the rise of global production networks.  To prosper, these production networks require an enabling regulatory environment that provides stronger investor protection, better infrastructural services, freedom of movement of corporate personnel, protection to intellectual property rights, and facilitation of trade.   The demand for governance in these policy areas is being met by the supply of deep PTAs…

Another idea would be that we should not ignore the potential difficulties that deep PTAs can give rise to on the regulatory side.  One can observe in the sprawl of agreements what can only be called “families” of PTAs, with each family adopting a particular approach to important policy areas such as technical barriers to trade or competition policy.  The peril here is that PTAs may lock-in their members to a particular regulatory regime reducing the potential for trade to prosper with countries outside the arrangement.

In a nutshell, the new challenge posed by deep PTAs to the multilateral trading system is one of market segmentation because regulatory systems, which can become divergent, have now more importance on trade flows than tariffs. This is not a statement about the legitimacy of these regulatory systems. It is a factual assessment of their impact on economies of scale, which is what the WTO should care about.

The report, titled “The WTO and preferential trade agreements: From co-existence to coherence”, is available online.


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