Category Archives: WTO Negotiations

Russian WTO accession update

Russian recently struck a deal with the EU that makes the former’s accession to the WTO likely to occur in 2011. Russia is hoping to do so before July. Robert Amsterdam describes what may lie ahead:

The benefits of Russian entry, on one hand, are very positive. Moscow has agreed to phase out most of its export tariffs, including timber, which will certainly benefit the European community as a whole. Russia has also agreed to waive flyover royalties that it has imposed on international airlines for passing through Siberia en route to East Asia. Although this is a minor concession, it will still put an additional $400 million back in the hands of European carriers instead of the archaic Russian national airline Aeroflot.

On the other hand, Russia will eventually have to face other WTO members’ geopolitical concerns before accession. First off, Georgia will demand Russian withdrawal and cessation of support for breakaway provinces South Ossetia and Abkhazia. The 2008 War and Russia’s ongoing occupation of the territories in question will inevitably be a major topic of debate.

Another concern, in addition to Russia’s forceful reassertion over its traditional sphere of influence in Eastern Europe and Central Asia, is Russia’s ability or willingness to counter corruption in its government and business community. If China’s integration into the WTO since 2001 has been of any guidance, Russia’s entry should build anti-corruption measures and promote the international system’s benefits and openness to the Russian people. WTO membership is surely opposed by the more nefarious economic powers within Russia – admission to the organization will lead to more oversight and honest competition for services and products.

Here’s a 2006 post mentioning “Russia’s long-sought entry into the World Trade Organization”. Could we see both the Doha round and Russia’s membership finally conclude in 2011?

[HT: LWS]

What tariff lines do US PTAs liberalize?

Marco Fugazza & Frédéric Robert-Nicoud look at the swiftness of US PTA tariff cuts:

This paper investigates the empirical relationship between cuts in MFN bound rates negotiated during the Uruguay Round of the GATT (1986-1994) and the depth and breadth of Preferential Trade Agreements signed in the aftermath of its completion. Our empirical investigation focuses on the United States using official tariff line level data. To the best of our knowledge, our paper is unique in looking at the causal relationship from multilateralism to regionalism. The existing empirical literature is exclusively looking at the relationship running the other way…

[T]he imports of goods that the US liberalises swiftly the most frequently on a preferential basis are also the goods for which it granted the boldest tariff cuts during the Uruguay Round…

In the US, resistance to preferential trade liberalisation (conditional on it taking place) cannot take the form of positive preferential tariffs for institutional reasons, as we explain in the data section of the paper. It can only take the form of delayed liberalisation. Therefore, our measure of the intensity of post-Uruguay Round preferential trade liberalisation (or ‘PTL’) for each good is the frequency at which the US grants immediate duty-free access to its market to its FTA trading partners…

We find that an increase in the tariff CUT of one percentage point is associated with an increase in the probability of the US granting immediate duty-free access to its market to all trade partners by about twenty-five percent at the sample mean. Given that the standard error for CUT in the sample is 4.34 percentage points, this is a large effect…

[W]e introduce the Uruguay Round MFN tariff rate as a control in all our regressions. The estimated coefficient is negative, implying that the US disproportionately grants duty free access to its market on a preferential basis for goods that have a low MFN tariff rate already.

The authors interpret their findings as showing a complementarity between multilateral and preferential trade negotiations.

Hufbauer and Lawrence: “Let’s Make a Deal”

In Foreign Affairs, Gary Hufbauer and Robert Lawrence posit a deal that they think would make concluding Doha feasible:

Many observers blame the complexity involved in getting 153 WTO members to reach consensus on an agenda with dozens of issues, but in fact the matter is far simpler. If China and the United States produced the sort of new offers described below, the momentum for a speedy agreement would be unstoppable.

Yet it appears that political considerations will prevent this from happening. US President Barack Obama pushed trade policy to the back burner while he concentrated on health care and financial reform. He needed nearly unanimous support from Democrats in Congress to enact his domestic agenda; trade agreements, meanwhile, are risky for Democratic politicians because many depend on unions, which wrongly believe that free trade means lost jobs. To counter such arguments, the Obama administration must demonstrate that trade agreements would boost US employment by doubling exports. The White House also needs strong support from Republicans, who tend to be allied with business. So far, US firms are lukewarm about the Doha Round because it seems to offer little from the large emerging economies, especially China…

These proposals could make the Doha Round a political winner: Major concessions by China and a few other emerging countries would be seen in the United States as evidence of greater access in markets that count. And China would advance its status as a full participant in the world trading system, while also positioning itself as the leader that delivered the benefits of the Doha agenda to all developing countries. The world would recover that much faster from the hangover of the Great Recession.

They want China to join the Government Procurement Agreement and liberalize services in exchange for the US recognizing China as a market economy and ending its annual compliance reviews. They also suggest that the US should end its cotton subsidies and ethanol tariffs. I doubt we’ll see these suggestions implemented any time soon.

"Figuring Out the Doha Round"

Gary Hufbauer, Jeff Schott, and Woan Foong Wong launched a book titled Figuring Out the Doha Round yesterday. They argue that the US, EU, and China should accelerate and expand (“top up”) their Doha offers, particularly in services liberalization, because the current offers on the table are insufficient to garner support from the major players.

Here are their slides. The authors argue that the WTO’s credibility as a negotiating forum is important to the credibility of its dispute settlement mechanism, but the logic of that argument isn’t immediately clear to me.

“Figuring Out the Doha Round”

Gary Hufbauer, Jeff Schott, and Woan Foong Wong launched a book titled Figuring Out the Doha Round yesterday. They argue that the US, EU, and China should accelerate and expand (“top up”) their Doha offers, particularly in services liberalization, because the current offers on the table are insufficient to garner support from the major players.

Here are their slides. The authors argue that the WTO’s credibility as a negotiating forum is important to the credibility of its dispute settlement mechanism, but the logic of that argument isn’t immediately clear to me.

Whither US trade policy?

Bernard Gordon:

From a US government perspective, the Trans Pacific Partnership is the only game in town. Three main reasons explain why: the state of the WTO’s Doha Round; China’s role in Asia; and America’s self-image of its place in the Pacific. A possible fourth reason is that Washington regards the TPP is the only doable multilateral trade initiative…

For a United States that almost singlehandedly launched both the global GATT and then the WTO, a ‘Trans-Pacific Partnership’ is quite a comedown. All the more so when, if the WTO’s Doha Round were completed, its ‘most favoured nation’ clause would render moot most of the preferential trade agreements now cluttering world trade, and simultaneously kick-start global trade growth. And yet only the unlikely goal of a TPP, so 20th century, will be pressed by the US because that’s all the President is prepared to undertake at this point.

Read the whole thing. (HT: Larry.)