Agriculture: Food Security and Trade Liberalization

In the WTO's Doha Round, agriculture is again at center stage, even though it accounts for no more than a small and declining share of world trade. The Agreement on Agriculture concluded in the Uruguay Round was a huge step forward in the GATT's dealings with agriculture. But more needs to be done. In recent years, agricultural support in several developing countries has increased while developed countries have reformed their farm policies and improved market orientation. One specific problem in the Doha Round negotiations on agriculture is the treatment of public stockholding for food security purposes. A possible solution could come through an amendment of the rules for measuring domestic support, by agreeing that procurement prices below prices prevailing on international markets are not considered "administered prices".

Antidumping Provisions in Preferential Trade Agreements

Using information culled from 217 PTAs we find that nearly three out of four PTAs include either additional AD rules or prohibit the use of AD against PTA members. PTA rules generally either prohibit AD protection against members or make AD protection harder to apply. As a result, PTAs may further tilt the playing field toward members by shifting contingent protection toward non-members – protection diversion. We examine AD usage patterns by NAFTA countries as a case study of PTA rules. We find evidence that NAFTA rules have discouraged the intra-North American use of AD and likely increased the incidence against non-NAFTA countries. We also discuss usage trends across a wider set of PTAs and again find evidence that PTA rules have altered the pattern of AD activity, likely lowering the incidence against members and shifting the restrictions to non-members.

Dial PTAs for Peace: The Influence of Preferential Trade Agreements on Litigation between Trading Partners

Preferential trade agreements (PTAs) are en vogue both as policy tool, as well as research subject. We do not beg to differ. In this paper, inspired by the in-going negotiations between the EU (European Union) and the US (United States) on the TTIP (Trans-Atlantic Trade and Investment Partnership), we ask whether the conclusion of the agreement will, among other things, signal fewer disputes between the two partners before the WTO. This could happen either because there will be a forum diversion (litigate before the bilateral forum with the same or different intensity), or because differences of opinion will be addressed in extra-judicial manner. Our prediction is that, judging from past behaviour, e.g. the amount of litigation between the EU and the US with their preferential partners before and after they had signed an agreement with them, it is quite likely that they will litigate less against each other before the WTO. Without assigning causal relationship to the signature of a bilateral agreement and the amount of litigation between preferential partners, we show that there is inverse correlation between the two. It remains to be seen whether the WTO will profit or suffer from the likelihood of fewer disputes between the two largest trading partners.

Transatlantic Free Trade: The Viewpoint of Germany

Negotiations towards a Transatlantic Trade and Investment Partnership (TTIP) agreement between the EU and the US have proven extremely controversial in Germany. This is puzzling, because the US has been Germany’s largest export market for years, at least when measured in value added terms. However, realized trade flows substantially fall short from the friction-free benchmark. The simulation of a quantitative trade theory model, which assumes that a TTIP would be as effective as the average existing deep trade agreement, could lead to an increase in real per capita income by about 2.5% in both the US and Germany. Gains in Germany would be largely driven by higher value added in the automotive industry, while the agricultural and the chemicals sector would lose. However, resistance against TTIP has not been shaped by classical political economy motives along sectoral lines, but by wide-spread fears of a regulatory race-to-the-bottom.

Trade, Poverty, and Inequality

This chapter discusses how trade can affect poverty through a large number of channels, based on growth, efficiency and distribution. The redistributive channels also affect inequality. Case studies of China and India show that the country with the greater rise in inequality, namely China, has grown faster and seen bigger poverty reductions. Cross-country regressions also show the possibility of a poverty reducing impact of trade reforms. And, there exists considerable evidence for specifically the growth channel. Most of the intra-country studies, both direct, reduced-form ones, as well as those based on empirical general-equilibrium analysis, also provide strong support for the poverty-reducing effects of trade. Moving to inequality, many aspects, such as wage inequality, overall income inequality and labor shares, have been studied. The chapter shows that the evidence on the impact of trade on inequality has been quite mixed.

Border Tax Equalization

The question of whether domestic taxes can be applied to imports or stripped from exports has bedeviled the international trading system for over a century. Border adjustments are meant to address political and economic concerns about a level playing field both with respect to trade and tax competitiveness. The law of the World Trade Organization lays out rules for border tax equalization for both imports and exports, but the rules are not crystal clear and the legal caselaw is sparse. This article explains these basic rules and their historical and jurisprudential derivation. The last part of the article looks at some controversial questions regarding the use of border adjustments in pursuit of environmental and international climate objectives.

The Abolition of Antidumping Measures in the EU: An Example and Inspiration for the TTIP

The European Union (EU) is one of the main users of the antidumping instrument. The EU is also a unique example of a regional trade agreement that has abolished the use of antidumping measures in force between the integrating parties. The chapter analyzes the effects on trade of imposing and abolishing antidumping measures in the EU based on empirical evidence. The imposition of antidumping measures is analyzed from the points of effectiveness, that is, if the protection is effective as regards EU producers, the exporters of allegedly dumped products and third country exporters; and efficiency, that is, the cost of protection for EU user industry and consumers. The abolition of antidumping measures is analyzed from the point of injury to EU producers when it comes to price undercutting and loss of market shares; and possible changes in the use of the antidumping instrument against third countries. The chapter also analyses the antidumping measures between the EU and the United States, as well as the experiences with abolishing antidumping measures in the EU and the European Economic Area (EEA) as an inspiration for the Transatlantic Trade and Investment Partnership (TTIP) negotiations.

The Trans-Pacific Partnership: Perspectives from China

Just as transatlantic trade networks transformed the 20th century, trade in the Pacific is poised to recast the 21st, with the US-China relationship as the most consequential node. What kind of trade relations are likely to arise, under whose terms, and at what costs? Leveraging the short-lived rise of the Trans-Pacific-Partnership (TPP), we examine the challenges faced by both the US and China as they compete in shaping the region’s future trade regime. Focusing on economic, strategic, and domestic incentives, we conclude that China will not settle for an American led regime and that rivalry is likely to spawn a broader, albeit shallower, trade network in the region.

The World Trade System Today

This chapter discusses on going trends in the world trade system. The landscape of the international trade system has undergone substantial change in recent decades. While many multilateral successes were achieved under the GATT, the failure of the WTO member countries to successfully close the Doha round of trade negotiations has now engendered a mood of pessimism regarding the future of the multilateral system. Countries have turned to preferential (and thus discriminatory, albeit GATT-legal) trade agreements and many new deals are now under negotiation, including the “mega-regional” agreements – the Trans-Pacific Partnership (TPP) between the United States and Pacific-rim countries and the Transatlantic Trade and Investment partnership (TTIP) between the United States and the European Union. At the same time, developing countries having expanded their participation in international trade, challenge the international system to accommodate their interests and aspirations. Finally, worsening global economic conditions and a populist focus on the alleged links between the inequality of incomes within countries and globalization, have generated a protectionist backlash affecting political outcomes in many countries.

The Bali Trade Facilitation Agreement and Rulemaking in the WTO: Milestone, Mistake, or Mirage?

The WTO Agreement on Trade Facilitation (TFA) embodies the first set of new multilateral rules to have been negotiated under auspices of the WTO, part of a small package of decisions centering on matters of interest to developing countries that was “harvested” from the broader Doha round. This paper analyzes the outcome of the trade facilitation talks and reflects on the lessons and possible implications of the TFA experience for the prospects for new rule-making and cooperation in the WTO. The TFA illustrates both the potential and the difficulty of negotiating generally applicable stand-alone agreements in the WTO and demonstrates the importance of issue linkage in achieving cooperation in trade policy matters.