Emerging-economy trade policy has become more responsive to economic shocks under the WTO

Chad P Bown, Meredith Crowley 08 February 2013

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The use of temporary protection has spread like wildfire in recent years. Even if these measures – antidumping and anti-subsidy duties for example – are perfectly consistent with WTO trade rules, there are worries that this signals a shift to protectionism (Baldwin and Evenett 2012 and Aggarwal and Evenett 2012). But there is an alternative view. Temporary protection may facilitate trade liberalisation – just as easy firing can encourage hiring.

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Topics:  International trade

Tags:  WTO, antidumping, protectionism, temporary trade barriers

How much global trade governance should there be?

Simon Lester 20 January 2013

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Trade agreements seem to be getting deeper, intruding on policy areas that were traditionally viewed as matters of purely national concern (WTO 2011, 2012). This differs considerably from the WTO’s original focus on protectionism (Lester 2013).

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Topics:  International trade

Tags:  WTO, RTAs, BITs, global supply chain

China’s pure exporter subsidies: Protectionism by exporting

Fabrice Defever, Alejandro Riaño 04 January 2013

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On 17 September last year, the US requested consultations with China concerning a wide range of export-contingent measures – grants, tax preferences and interest-rate subsidies, totalling at least $1 billion – in apparent violation of the WTO’s Agreement on Subsidies and Countervailing Measures, China’s accession protocol and article XVI of the GATT. The EU joined the consultations shortly after on 28 September.

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Topics:  International trade

Tags:  China, WTO, trade, welfare

WTO 2.0: Global governance of supply-chain trade

Richard Baldwin,

Date Published

Sat, 12/22/2012

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http://www.cepr.org/pubs/PolicyInsights/CEPR_Policy_Insight_064.asp

CEPR Policy Insight No. 64 is available to download free of charge here.

Tags
WTO, global value chains, WTO 2.0, supply-chain trade

Global imbalances: What role for the WTO?

Juan A. Marchetti, Michele Ruta, Robert Teh 02 January 2013

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The world witnessed a large build-up of current account and merchandise trade imbalances, both in absolute and relative terms, prior to the global financial and economic crisis (see Table 1 and Figure 1). Current account/merchandise trade surpluses were most pronounced among the East Asian economies (e.g. China), oil exporters (e.g. Saudi Arabia) and the ‘core’ Eurozone countries (e.g. Germany). The US and the Eurozone periphery countries had large and persistent deficits. While imbalances contracted after the crisis, they remained large both in absolute terms and in relation to GDP.

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Topics:  International trade

Tags:  WTO, trade, liberalisation, current account imbalances

WTO 2.0: Thinking ahead on global trade governance

Richard Baldwin 22 December 2012

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The cross-border flows of goods, investment, services, know-how and people associated with international production networks – call it ‘supply-chain trade’ for short – has transformed the world (Gereffi and Lee 2012). The WTO has not kept pace. It is time to change that, as I argue in CEPR Policy Insight No 64, posted today (Baldwin 2012). Before turning to the governance issue, consider the changes.

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Topics:  International trade

Tags:  WTO, global value chains, WTO 2.0, supply-chain trade

The surprise end game in global trade

Kati Suominen 20 December 2012

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With President Obama looking on, China orchestrated the launch of negotiations for a tripartite free trade deal with Korea and Japan during the recent East Asia Summit. But as much as China is assumed to be the new powerbroker in global commerce, Beijing’s moves are reactionary. The end game in world trade politics is controlled by the three economies that brokered deals also in the 20th century, i.e. the US, Japan, and the EU.

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Topics:  Global governance International trade

Tags:  WTO, free trade agreements, Trans-Pacific Partnership

Global trade in services: Fear, facts, and offshoring

J. Bradford Jensen 19 November 2012

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Should the US, or indeed the EU, Japan, Canada, or Australia, fear increased trade in services? As the ‘Really Good Friends of Services’ discussions gain momentum in Geneva, it seems an important time to ask1.

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Topics:  International trade

Tags:  global imbalances, WTO, international trade, protectionism

Non-tariff measures and the WTO

Marc Bacchetta, Cosimo Beverelli 31 July 2012

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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).

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Topics:  International trade

Tags:  WTO, barriers to trade, GATT, protectionism, non-tariff measures

Rising protectionism and the subordination of trade policy

Simon J Evenett interviewed by Viv Davies,

Date Published

Fri, 07/20/2012

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See Also

See also:

Débâcle: The 11th GTA report on protectionism (Simon Evenett, 14 June 2012)

Mounting tensions pose a test for world trade (Vox Talk with Simon Evenett, 25 November 2011)

Transcript

View Transcript

Viv Davies: Hello and welcome to Vox Talks, a series of audio interviews with leading economists from around the world. I’m Viv Davies from the Centre for Economic Policy Research, it’s 17 July 2012 and I’m speaking with Professor Simon Evenett of the University of St Gallen about the recent rise of protectionist measures in the world trading system. We also discuss the implications of the rise in regional trade agreements, the potential effect of Russia joining the WTO, and the impact of slow growth and recession in Europe on the region’s trade with the rest of the world.

I began by asking Simon what the recent rise in protectionism means for world trade. 

Simon Evenett: It means that the world economy is facing a greater risk of more closed markets and a stalled recovery because of protectionism. The recent uptick in protectionism has been mentioned not just by the WTO but by the European Commission, the International Chamber of Commerce and the so-called B20 group of business leaders. The findings of the Global Trade Alert report were discussed by some of the participants at Los Cabos, the G20 summit, and I think the profile of this issue has been raised appropriately by a large range of individuals and organisations.

Viv: What sort of protectionist measures are we seeing most commonly used now?

Simon: Measures being used at the moment are a combination of traditional antidumping, the so-called trade defence measures, some resort to subsidies by countries, especially those who have engaged in industrial policymaking initiatives, and also a number of export restrictions which are limiting the supply of commodities and other items to the world economy.

Viv: And what does this mean for the efficacy of WTO rules? Are they not working?

Simon: WTO rules have been negotiated over time and are still fairly incomplete. Where they are tough they’re very valuable and have probably done a good job in deterring some protectionism, but I would put a greater emphasis on the rules being incomplete and this inducing a switch in the form of protectionism. Overall I think the WTO rules have altered the composition of protectionism more than its level.

Viv: So who’s the biggest offender in terms of implementing protectionist measures? And who’s suffering the most as a consequence of protectionism?

Simon: Global Trade Alert cuts the data up in a number of different ways, and depending on different metrics you come out with different lead offenders. But amongst the top offending countries are Japan, the European Union countries taken together, Brazil, India, and China. Those are perhaps the worst five. Argentina also recurs heavily in the list of offenders.

In terms of the countries which have been hit the most these are the biggest exporters in the world, so obviously China, the United States, the major European nations, have been hit many, many times. We've seen over 500 hits for some of those countries since November 2008.

Viv: We’re also seeing quite a rise in the number of regional trade agreements being made. In 2010, for example, the China-ASEAN Free Trade Area was established; the European Union, too, is making deals with Colombia and Peru, with possible deals in the pipeline with India, Japan and the US. Is the rise of regional trade agreements a good thing for world trade?

Simon: The rise of regional trade agreements is probably mixed for the world trading system. There’s a long-standing concern amongst economists that regional trading agreements divert trade away from more competitive firms towards those which have tariff breaks.

But the other offsetting feature is that regional trading agreements have been fairly effective in introducing rules on behind-the-border policies, regulatory policies which affect domestic and foreign businesses as well. So any balance sheet of the costs and benefits is going to have to weigh up these two factors.

As tariffs come down over time, the trade diversion costs are probably getting smaller and smaller. They’ll probably be concentrated more in agriculture than in manufacturing, whereas the behind-the-border issues just seem to get more and more important over time. So on net I’m cautiously positive about regional trading agreements being a good force in the world economy, but I don’t believe you can argue that they’ve delivered a lot of economic benefits in most cases.

Viv: Okay. So Russia is, at last, just about to join the WTO. What do you think are the likely implications and consequences of that?

Simon: There are few people rejoicing that Russia is joining the WTO. This is partly because the Russian position on negotiations is not likely to be one which is open to further liberalisation. If anything the recent policy moves in Russia have been towards more protectionism and the substitution of imports. Overall, people are concerned about what the impact of Russia’s accession will be on negotiations and on the balance of those negotiations.

Furthermore, Russia will soon be subject to WTO dispute settlement and could well be the target of a number of enforcement actions by other countries, and this could make for some fractious times in Geneva as well. On net this is not the happiest development but, still, it’s better to have Russia inside the World Trade Organisation’s tent and hopefully over time its policy priorities will evolve.

Viv: What impact is the slow growth and recessionary environment having on Europe’s trade with the rest of the world? And what are the likely implications?

Simon: There’s a big knock-on effect of western European slow growth on trade with both eastern Europe and with China, and this is where we’ve seen the most immediate impact. This in turn I think is inducing, in the case of China, further government measures, including indirect subsidisation through their banking system as well as other measures to stimulate domestic demand.

The transatlantic effect of that has been rather limited but that’s because, again, the American and Canadian trade exposure is, while numerically rather large, proportionately not so big as a share of their exports. Not every region is particularly affected.
When it comes to the impact within Europe, again you would expect to see something of a downtick in imports in the periphery countries, which I think we are seeing, whereas Germany and some of the northern countries appear to be exporting plenty to the rest of the world. They seem to have substituted away some of their export dependency on the periphery for other, faster-growing, parts of the world. That realignment I think you’ll see continue.

Viv: Finally, Simon, what sort of future do you see for world trade? Are you optimistic?

Simon: I think world trade has been not a key priority of governments, or at least promoting world trade hasn’t been. I think trade policy has been subordinated below other policy objectives throughout this crisis. For as long as that is the case, one has to be a bit wary and cautious about where the world trading system is heading. I don’t think the current situation is anything to feel happy about. It’s certainly not excessively gloomy or anything like the 1930s, but I do think we need to be cautious and defenders of the world trading system need to be making a case for trade policy and openness as a government priority, instead of being outmanoeuvred by the other key players in the macroeconomic policy debates and debates about financial stabilisation.

 

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Topics

International trade
Tags
Russia, WTO, protectionism, Global Trade Alert, free trade agreements

Related Article(s)

Antidumping as cooperation The shifting geography of global value chains: Implications for developing countries and trade policy The UK economy in a global world
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