Blog Post

The future of world trade negotiations

Much will depend on the credible threat of ‘economically meaningful discriminatory outcome’ that the new mega-regionals can actually create.

By: Date: September 5, 2013 Topic: Global Economics & Governance

The 2013 World Trade Report (henceforth WTR 2013), published in the third week of July by the World Trade Organisation, identifies as key trends the greater incidence of non-tariff measures beyond WTO disciplines, the rise of new forms of regionalism and rise of emerging markets (EMs). The report argues that these developments will pose new challenges for the WTO, especially as a significant amount of trade opening is likely taking place outside the WTO, which also calls for maintaining coherence between WTO rules and non-trade regulations in other multilateral fora. The report also stresses that the emergence of new players will surely affect global governance in ways that are not yet understood.

However, the report seems to have fallen short in identifying new and viable means of addressing these challenges, though it rightly notes that the challenges are best tackled multilaterally and in an open-economy mode, given the externalities generated by the high degree of integration among world economies across the development spectrum thanks to the emergence of global production and supply chains. This article outlines some of the inconsistencies of the WTR 2013 proposals.

To increase the WTO’s relevance, the WTR 2013 calls for further expansion of the WTO agenda, in particular by adding new issues reflecting present realities, so that major participants in the multilateral trade negotiations have sufficient reasons to engage meaningfully in the dialogue. It also hopes that the recent proliferation of the mega-regionals such as the transpacific and transatlantic trade agreements will help to bring challengers to the WTO system back into the fold. This builds on the Uruguay Round’s achievements in extending the range of issues to provide for (1) multi-issue trade-offs for key trade partners, and (2) encouragement for many of the hold-out countries to sign up to the multilateral system.  

This strategy could be frustrated, however. The experience of the Doha Round negotiations clearly indicates that the Uruguay Round principle of simultaneously negotiating a large number of issues by promoting trade-offs across subjects in a single undertaking mode may have run out of steam, if only because the new issues of interest require complex regulatory coordination and the establishing of coherent standard between economically powerful nations. Bundling such topics by expanding the WTO’s remit may thus actually impede progress in future multilateral negotiations, similar to what is feared in the ongoing transatlantic trade negotiations (Transatlantic Trade and Investment Partnership, TTIP). It is not at all obvious that an expansion of the WTO agenda, with or without a safe landing of the Doha Round, will work its magic like the previous GATT-WTO rounds. The counterfactuals are rather more convincing.

It is also not clear if the mega-regional agreements under negotiation will have any definitive influence on expanding the multilateral trade agenda. Taking the example of the transatlantic trade negotiations, even if the EU and US manage to create a ‘transatlantic (regulatory) fortress’ as a defence against competition from the rising Asian emerging markets, especially China, it is uncertain that they will be able to entice large EMs such as China and India into adopting those rules simply out of fear of exclusion. In a recent development, both China and India have ruled out joining negotiations on a US- and EU-backed proposal to expand the 1996 Information Technology Agreement (ITA), though both have benefited from the ITA in different ways.

A more likely medium-term outcome is the possibility of creation of a dual regulatory regime in EMs in key areas such as product standards and intellectual property (IP), with the export-oriented firms in these economies adopting the higher standards, while a large part of the remaining producers servicing the domestic market continue to use the old, less rigorous standards and IP regimes. If the latter group is significantly large, as is likely, the incentive for national EM governments to sign up to more rigorous multilateral regulatory standards will diminish. Even the most pro-TTIP analysts do not seem to expect that a truly ‘deep’ agreement outlining ‘gold standard regulatory cooperation’ will be operational in the medium term. Much therefore will depend on the credible threat of ‘economically meaningful discriminatory outcome’ that the new mega-regionals can actually create.


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.


Warning: Invalid argument supplied for foreach() in /home/bruegelo/public_html/wp-content/themes/bruegel/content.php on line 449
View comments
Read article More on this topic More by this author

Opinion

How could Europe benefit from the US-China trade war?

Under pressure from the US, Beijing is set to be more open to making new allies.

By: Guntram B. Wolff Topic: Global Economics & Governance Date: October 18, 2018
Read about event More on this topic

Past Event

Past Event

Asia-Europe Economic Forum 2018 - Public

This year's Asia-Europe Economic Forum (AEEF) will be held in Brussels on 17-18 October

Speakers: Chung Chul, Xie Fuzhan, Matthias Helble, Jyrki Katainen, Jin Keyu, Jae-Seung Lee, Erik van der Marel, Yoichi Otabe, Jean Pisani-Ferry, Rintaro Tamaki, Amb. Karsten Warnecke and Guntram B. Wolff Topic: Global Economics & Governance Location: Solvay Library, Rue Belliard 137, 1000 Bruxelles Date: October 18, 2018
Read article More on this topic More by this author

Podcast

Podcast

Backstage: The new balance of Asia-EU-US trade relations

Amid the Asia-Europe Economic Forum on the fringes of the 12th ASEM Summit, Bruegel senior fellow hosts a conversation on developing global trade relations, with guests Moonsung Kang, professor as Korea University, and Michael G. Plummer, director at SAIS Europe – Johns Hopkins University, for an episode of the Bruegel Backstage series on ‘The Sound of Economics’.

By: The Sound of Economics Topic: Global Economics & Governance Date: October 17, 2018
Read article More on this topic More by this author

Opinion

Can Eurozone Reform Help Contain Trump?

The Trump administration knows that a key source of US economic leverage is the dollar’s role as the world’s dominant reserve currency. Countering America’s disproportionate power to destabilize the global economy thus requires reducing the share of international trade conducted in dollars.

By: Jochen Andritzky Topic: Global Economics & Governance Date: October 17, 2018
Read about event More on this topic

Past Event

Past Event

Asia-Europe Economic Forum 2018 - Closed-door

This year's Asia-Europe Economic Forum (AEEF) will be held in Brussels on 17-18 October

Speakers: William Becker, Franco Bruni, Zsolt Darvas, Andreas Esche, He Fan, Michael G. Plummer, Thomas Grjebine, Gao Haihong, Kiyoto Ido, Sébastien Jean, MA Jun, Moonsung Kang, Stefan Mair, Yung Chul Park, Choonsung Park, Sayuri Shirai, Guntram B. Wolff and Naoyuki Yoshino Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 17, 2018
Read about event

Upcoming Event

Nov
7-9
09:30

Global Think Tank Summit 2018

The 2018 Global Think Tank Summit is organised by Bruegel and he Think Tanks and Civil Societies Program (TTCSP) of the University of Pennsylvania. It will be held in Brussels on 7-9 November.

Topic: Energy & Climate, Global Economics & Governance Location: Bozar, Rue Ravenstein 23, 1000 Bruxelles
Read article More on this topic More by this author

Opinion

Global markets’ tepid reaction to China’s new opening

China’s accession to the World Trade Organisation in 2001 was greeted with great fanfare. But near silence has greeted the recent removal by the China Banking and Insurance Regulatory Commission of caps on foreign ownership of Chinese financial institutions. For Beijing, the apparent lack of interest might be an issue of too little, too late.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 11, 2018
Read article Download PDF More on this topic

External Publication

The EU response to US trade tariffs

The authors contributed to the new issue of 'Intereconomics - Review of European Economic Policy' with a paper on the EU's strategy for managing the trade war. The authors argue that to minimise the economic costs of the trade war and protect multilateralism, the EU's best and only response is to retaliate.

By: Maria Demertzis and Gustav Fredriksson Topic: Global Economics & Governance Date: October 11, 2018
Read article More on this topic More by this author

Blog Post

Are economic and political freedoms interrelated?

Democracy has not always accompanied market economy. But in modern societies, economic and political freedoms are increasingly interconnected. Democracy and market economy can support each other. This is particularly true in post-communist economies of Central and Eastern Europe and the former Soviet Union. Thus, authoritarian tendencies observed in these and other regions can negatively affect quality of economic policy and governance.

By: Marek Dabrowski Topic: Global Economics & Governance Date: October 10, 2018
Read article More on this topic More by this author

Opinion

Ten years after the crisis: The West’s failure pushing China towards state capitalism

When considering China’s renewed state capitalism, we should be mindful of the damage done by the 2008 financial crisis to the world's perception of Western capitalism.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 10, 2018
Read article More by this author

Blog Post

Financial panic and the Great Recession

A debate on the roles of financial panic in the Great Recession has been pitting Ben Bernanke against Paul Krugman in what has been characterised as “the battle of the beards”. Other economists have joined the discussion on the new American Economic Association’s discussion forum.

By: Silvia Merler Topic: Finance & Financial Regulation, Global Economics & Governance Date: October 8, 2018
Read article More on this topic More by this author

Podcast

Podcast

Backstage: Implications of the new EU-Japan trade deal

Bruegel senior fellow André Sapir welcomes Tamotsu Nakamura, dean of Kobe University’s Graduate School of Economics, and Maria Åsenius, head of cabinet to European trade commissioner Cecilia Malmström, for a discussion of the EU-Japan economic partnership in the context of heightening global trade tensions.

By: The Sound of Economics Topic: Global Economics & Governance Date: October 4, 2018
Load more posts