Category Archives: WTO

Multilateralizing Regionalism (with a z)

A behemoth of a book was released by the WTO today – Multilateralizing Regionalism: Challenges for the Global Trading System, edited by Richard Baldwin and Patrick Low, contains the papers and comments from 2007’s WTO conference on Multilateralising Regionalism. Multilateralizing Regionalism should not be confused with Multilateralising Regionalism by Richard Baldwin and Philip Thornton.

Mattoo and Subramanian: Beyond Doha

Aaditya Mattoo and Arvind Subramanian’s push for vastly expanded global trade negotiations, seen two weeks ago in the FT, appears in a much longer form in this month’s Foreign Affairs.

Claude Barfield objects:

[T]he two economists recommend a vastly expanded negotiating remit (in some instances in conjunction with other international institutions), including food security, energy and climate change, competition policy, new currency and financial regulations, and supervision of sovereign wealth funds.

There are two huge problems with proceeding in this manner. First, WTO members are fiercely protective of their rights, and many would rebel against a wholesale revision of the 2001 Doha ministerial decisions regarding the substantive agenda. Second, the issues championed by Mattoo and Subramanian are exceedingly complex could take years to sort out. Further, a move to short-circuit the negotiating process would be taken as a direct, coercive attack on the policy space of the developing world – this is particularly true of the larger countries such as China, India, Brazil, and South Africa. Attempting to move directly to a “more ambitious agenda” thus would likely backfire and deepen the already deep divisions in Geneva.

Mattoo and Subramanian laid out their ideas in full in a 30-page PIIE working paper last October, though I haven’t had a chance to read it yet.

Strengthening the WTO by stretching it much farther?

Aaditya Mattoo and Arvind Subramanian want to double-down on the world trading system:

[T]he current Doha agenda cannot adequately deal with all the challenges facing the trading system…

Is it realistic for the trading system to aim for a broad agenda that includes exchange rates, environment, state aid, and oil and agricultural markets? Ironically, a bigger agenda that addresses the new concerns would improve the prospects of success because there would be greater scope for give-and-take between the major trading countries. China will have to recognize that its exchange rate policies can provoke a protectionist reaction; the United States and the European Union will have to refrain from excessive recourse to contingent and environmental protectionism and to subsidies; and emerging-market countries such as India will have to appreciate that keeping markets open will require an effort on their part to lower their significant trade barriers…

[T]he importance of issues that Doha does not address is becoming glaringly evident. It is in this sense that the world must now look beyond Doha.

An ITA for the 21st century

During the summer, the “long-simmering dispute over tariffs on IT products” heated up when the US lodged a formal complaint with the WTO against the EU’s tariffs. As I explained, the trouble stems from the fact that the 1996 Information Technology Agreement did not link its zero-tariff commitments to the harmonized product classification schedule. Moreover, technological progress inevitably renders old categorizations obsolete.

In a new ECIPE working paper, Iana Dreyer and Brian Hindley take an in-depth look at the agreement’s shortcomings that led to the current dispute over multifunction IT products and suggest how governments might bring the ITA up to speed. They say that new negotiations are necessary, though they want the current dispute to play itself out before the settlement panel (in contrast, the EU has perhaps seen negotiations as an alternative to litigation). The panel’s ruling regarding product classification might provide a basis for new negotaitions, which Dreyer and Hindley say should ambitiously cover all consumer electronics. I think it is going to be a while before any such negotiations get off the ground, given the current political and economic environment.

Are we avoiding a protectionist outburst?

Joseph Francois attributes “deafening sounds of silence along Smoot-Hawley lines” during the present crisis to the success of the GATT/WTO as a “systemic safeguard.”

While I agree that there has been a noticeable absence of protectionist responses (and a number of academics have called for a liberalising response), it is difficult to disentangle the institutional backstop from the intellectual consensus. Does the particular construction of WTO policies and mechanisms matter, or is it merely the underlying sentiments telling policymakers not to repeat the 1930s disaster?

The relevance of going alone

Simon Lester inquires about unilateral trade liberalization:

Where exactly would be today in terms of free trade, without international agreements or organizations? My best guess is that trade barriers would be much higher, but is there some small chance that if we had spent the last 50 years talking about tariff cuts as something other than “concessions,” we would actually have made more progress?

“Much higher” may be too strong a statement. Remember that it’s surprisingly difficult to find evidence that WTO membership liberalizes trade using a naive indicator like formal membership.

For developing countries, a World Bank number I’ve often seen attributes two-thirds of their liberalization in recent decades to unilateral actions.

It’s also worth noting that most of the tariffs cuts being discussed at the WTO’s Doha Round of negotiations concerned bound rates that were significantly above the current applied rates.

If unilateral trade liberalization resulted in respectable outcomes while multilateral fora captured the attention of most policymakers, then perhaps fifty years of thinking differently would have paid significant dividends.

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