The WTO and its predecessor the GATT have been remarkably successful in negotiating down tariffs over the past six decades. But trade is still a long way from free and since the global crisis, it is becoming even less so. This column reviews the facts, economics, and motives behind these new non-tariff barriers and discusses the challenges they pose for the WTO.
Data limitations make it difficult to document general trends in the use of non-tariff measures. Nevertheless, WTO internal sources of information suggest that the incidence of ‘public policy’ measures – that is, technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures – has been on the rise (on this and other protectionist measures see Evenett 2012).
The multilateral trading system of the GATT and WTO is rapidly being replaced by a system dominated by preferential trade agreements. This column argues that this new system is complex in nature and provides a novel assessment of the implications for signatory countries and third parties.
The multilateral trading system of the GATT and WTO is rapidly being replaced by a system dominated by preferential trade agreements. Since the conclusion of the Uruguay round in 1994, more than 300 new preferential trade agreements have been implemented.
Retaliating against exchange-rate manipulation under WTO rules
Michael Waibel16 April 2010
What legal basis is there for retaliating against China’s exchange-rate policy? This column says that IMF rules are likely inadequate to rule against China, while its policy does not constitute a WTO-punishable export subsidy. It argues that exchange-rate conflicts should be handled by a proposed IMF dispute settlement mechanism, not the WTO.
Exchange-rate-based trade measures have gained prominence in recent years. Commentators observe such measures not only in the People’s Republic of China, but across a broad range of countries. Competitive devaluations are very much alive as a tool of economic statecraft, especially in the wake of the financial crisis. Mattoo and Subramanian (2008) argue that a fundamentally misaligned exchange rate is the most mercantilist, protectionist policy imaginable. At first sight, one would expect WTO rules to regulate such trade-distorting measures.
The link between greater openness to trade and higher growth, once held sacred by economists, has come under contestation in recent years. The authors of DP6942 develop a growth model with a basis for trade in order to uncover the impressive impact trade has had upon growth of GDP, using data from before and after the Uruguay Round.
The link between greater openness to trade and higher growth, once held sacred by economists, has come under contestation in recent years. Lowering trade barriers was perhaps the 1990s Washington Consensus’ most controversial prescription to developing countries, and numerous empirical studies claimed the growth effects of lower tariffs to be minimal.
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The WTO’s difficulties in light of the GATT’s history
Douglas Irwin, Petros C. Mavroidis29 July 2008
The WTO's Doha Round talks failed. This column draws lessons from a new book on the history of the WTO's predecessor, the GATT, to show that building and maintaining the global trading system has never been easy. The key ingredient is political leadership, which is evidently lacking at this stage.
The recent meeting of trade officials at the World Trade Organization in Geneva failed to reach preliminary agreements that would have made considerable progress toward concluding the Doha Round of trade negotiations. As a result, the outlook for the Round is grim, at least in terms of the immediate future. Inevitably, the failure of the meeting has raised questions about the future of the WTO as a forum for trade liberalisation. Although important progress has been made on some of the technical aspects of the negotiations, the political will to conclude the round appears to be missin