The G20 mandate on fixing trade finance for low-income nations
Marc Auboin 25 November 2010
While liquidity has returned to the main routes of international trade, at the periphery a group of developing countries, particular low income one, are still suffering from lack of affordable trade financing. This column outlines how the recent G20 meeting in Seoul has provided a mandate to multilateral institutions to address this problem.
Over the last year, a number of papers and studies have highlighted the impact of the global crisis on the availability of trade finance in global markets, and its spill-over effect on trade (Weinstein and Amiti 2009, Baldwin 2009).
Global crisis International trade
WTO, G20, Trade finance
Lessons in regionalism: What can the WTO teach the IMF?
Kati Suominen 03 November 2010
Will financial regionalism damagingly fragment the global financial architecture precisely at the time when sturdy system-wide management is needed? This column points to the world trading system’s engagement with regional trade agreements as a source of lessons for how to harmonise regional and global approaches to international finance.
The epicentre of financial regionalism is Asia. Emerging East Asian economies, scarred by the IMF’s policy conditionalities during the 1997-98 regional financial crisis, are busily building national reserves and regional financial arrangements so as to wean themselves off the Fund’s influence. During the global crisis of 2008 and 2009, East Asians expanded the regional Chiang Mai swap initiative to $120 billion and multilateralised it into a regional pool.
Global economy International finance
WTO, IMF, regionalism, global economy, international finance
Ensuring globalisation after the great crisis
Gary Clyde Hufbauer, Kati Suominen 13 October 2010
The global crisis has rocked people’s faith in globalisation. This column introduces a new book arguing that, despite taking a step back, globalisation is one of the most travelled routes the world has known for spreading growth and prosperity. It provides policy recommendations for renovating that road dealing with the WTO, social security, global imbalances, and foreign direct investment.
In statistical terms, globalisation is back. The trade rebound looks V-shaped – a drop of 12.2% in 2009 followed by a projected gain of 13.5% in 2010 (WTO 2010). Global foreign direct investment (FDI) is expected to recover to $1.2 trillion this year, after plunging from $2.0 trillion in 2007 to $1.0 trillion in 2009 (UNCTAD 2010). Financial markets have rebounded, and cross-border flows are recovering. After halving from $1.3 trillion in 2007 to $0.5 trillion in 2009, net portfolio capital flows to emerging markets will rise to an estimated $0.7 trillion this year (IIF 2010).
Global economy International trade
global imbalances, globalisation, WTO, FDI, Doha, Social security
Remake trade through a US-EU trade partnership
Susan Ariel Aaronson 01 October 2010
In response to Dr. Cernat’s call for feedback on the EU’s trade policy, this column calls on Europeans and Americans to rethink their trade policies. It argues both can meet 21st century needs only by collaborating, mostly at the WTO. Trade policy challenges are also an opportunity to make the system more coherent and meet the goals of expanding trade, enhancing human welfare and increasing employment.
Americans may be from Venus, and Europeans from Mars; we clearly have different views about the role of government in the domestic and global economy. But Americans and Europeans have long collaborated to expand trade, enhance human welfare, and encourage employment. The US and European post-war planners wrote these objectives into the preambles of the ITO and the GATT, and they were repeated in the WTO.
EU policies International trade
trade policy, EU, WTO
A future agenda for EU trade policy as if the real world really mattered
Simon J Evenett 25 September 2010
EU trade policy has accomplished little of substance during the past decade. This column, a contribution to the ongoing VoxEU debate on The Future of EU Trade Policy, identifies five reality checks that should be taken on board as the European Commission and the Member States reformulate their approach to commercial relations.
The 27 member states of the European Union pool their sovereignty on commercial policy matters, with the European Commission negotiating on their behalf. This institutional arrangement – representing over 10 trillion US dollars of spending power per annum and several trillion dollars of overseas investments – should confer upon EU negotiators substantial clout. Yet, the EU has closed few trade deals over the past 10 years. This clout could not bring the Doha Round to conclusion. Nor have many regional trade agreement (RTA) negotiations been completed.
EU policies International trade
trade policy, EU, WTO
Tilting the playing field: FTAs and the changing pattern of protection
Thomas Prusa, Robert Teh 15 September 2010
While countries rush to enact more and more free-trade agreements, not enough is known about their impact. This column presents evidence suggesting that free-trade agreements are more discriminatory than their preferential tariffs suggest. It finds a stark increase in contingent protection as free-trade agreements cause a 10%-30% increase in the number of antidumping disputes against non-member countries.
Two of the most popular changes in trade policy in recent years are free-trade agreements and using antidumping duties to restrict trade from low-wage countries.
WTO, antidumping, protectionism, free-trade agreements
Contagious FTAs: New evidence on the domino theory of regionalism
Dany Jaimovich, Richard Baldwin 02 September 2010
As WTO trade talks languish, what’s driving the surge in regional trade agreements? This column says that regionalism is being driven in large part by the domino effect, in which nations excluded from a trade agreement launch their own negotiations to redress trade diversion. This dynamic is more of a challenge to the WTO than a threat at the moment, but it should not be neglected.
Regionalism is sweeping the world trade system like wildfire. Multilateral WTO talks, meanwhile, proceed at a glacial pace. This correlation has led many observers to fear that regionalism’s boon is multilateralism’s bane. Jadish Bhagwati’s last book, for example, is titled Termites in the Trading System: How Preferential Agreements Undermine Free Trade (Bhagwati 2008).
WTO, regionalism, multilateralism
Resources trade and the WTO
Michele Ruta 04 August 2010
Trade in natural resources accounts for a growing share of world trade and a growing share of policymakers’ attention. Given the economic, environmental, and political implications of natural resources, this column asks how to design rules that can promote mutual gains from resources trade. It provides recommendations for export policy, conservation policy, and domestic policy.
Trade in natural resources accounts for a growing share of world trade and a growing share of policymakers’ attention.
Development Environment International trade
trade policy, WTO, natural resources
Let’s do a Doha deal
Robert Z. Lawrence, Gary Clyde Hufbauer 06 July 2010
Originally scheduled to end in 2005, Doha negotiations have dragged into their ninth year. This column argues that, while many observers assign blame to the complexity of 153 members reaching a consensus, the heart of the matter is far simpler. It says that if the US and China come up with new offers, the momentum for a speedy agreement will be unstoppable.
When it comes to the WTO’s Doha Round of trade negotiations, the resolution that came out of the G20 meeting in Toronto can be characterised as vapid. The best the G20 could do was to reiterate their support for achieving an agreement and direct their negotiators to “report on progress at our next meeting in Seoul where we will discuss the way forward”. In other words, nothing is expected to happen.
US, China, WTO, Doha
Doha and development: Market access, trade costs and aid for trade
Bernard Hoekman 19 June 2010
A key objective of the WTO Doha Round was to address the concerns of developing countries. This column argues that, despite the lack of progress on the core market access agenda, much has been achieved in terms of market access and trade facilitation since 2001.
The General Agreement on Tariffs and Trade, the precursor to the WTO, was a club that allowed for membership à la carte. Developing countries1 did not need to sign on to new disciplines and were not expected to participate fully in the reciprocal exchange of concessions in negotiations, although they benefitted from generally applicable national treatment and most-favoured-nation disciplines. With the creation of the WTO this changed.
Global governance International trade
WTO, Doha Round, international trade