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 economy and trade

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.

Read article More by this author
 

External Publication

Global Economic Resilience: Building Forward Better

A roadmap for systemic economic reform calling for step-change in global economic governance to increase resilience and build forward better from economic shocks, prepared for the G7 Advisory Panel on Economic Resilience.

By: Thomas Wieser Topic: Global economy and trade, Macroeconomic policy Date: October 14, 2021
Read article More on this topic More by this author
 

Podcast

Podcast

Will ‘common prosperity’ address China’s inequality?

Why is China reviving this old mantra?

By: The Sound of Economics Topic: Global economy and trade Date: October 13, 2021
Read article More by this author
 

Opinion

European governance

The inconsistency in global strategic relations

All of this talk on strategic retrenchment and autonomy is the language of escalation, not of appeasement and collaboration.

By: Maria Demertzis Topic: European governance, Global economy and trade Date: October 13, 2021
Read article
 

Opinion

Xi’s pledge on financing coal plants overseas misses point

China’s domestic installation of coal-fired power plants continues at great pace.

By: Alicia García-Herrero and Simone Tagliapietra Topic: Global economy and trade, Green economy Date: October 7, 2021
Read article More by this author
 

Blog Post

European governance

Pandemic prevention: avoiding another cycle of ‘panic and neglect’

Agreement is needed at international level on mechanisms to ensure better preparedness for the next pandemic.

By: Anne Bucher Topic: European governance, Global economy and trade Date: October 7, 2021
Read article
 

Opinion

Will China use climate change as a bargaining chip?

Beijing shows signs of changing tactics ahead of the COP26 conference.

By: Alicia García-Herrero and Simone Tagliapietra Topic: Global economy and trade, Green economy Date: October 6, 2021
Read article More on this topic More by this author
 

External Publication

A world recovery fund to overcome developing countries’ post-covid debt woes?

Proposal to set up a World Recovery Fund (WRF), aimed at addressing some of the key problems with the design of the DSSI and more generally the existing international financial architecture for dealing with debt problems in the developing world.

By: Alicia García-Herrero Topic: Global economy and trade Date: October 6, 2021
Read article More on this topic More by this author
 

Opinion

The geopolitical conquest of economics

Although economics and geopolitics have never been completely separate domains, international economic relations were shaped for 70 years by their own rules. But the rise of China and its growing rivalry with the United States have brought this era to an end.

By: Jean Pisani-Ferry Topic: Global economy and trade Date: October 4, 2021
Read article More on this topic More by this author
 

Opinion

What Evergrande signals about China's economic future

Under Xi Jinping's new economic agenda 'common prosperity', China is cracking down on indebted real estate developers like Evergrande.

By: Alicia García-Herrero Topic: Global economy and trade Date: September 30, 2021
Read article More on this topic
 

Blog Post

German elections: seizing the moral and economic opportunity of global health security

The new German government should play its part in global health security and preparedness.

By: Amanda Glassman and Guntram B. Wolff Topic: Global economy and trade Date: September 24, 2021
Read article More on this topic More by this author
 

Opinion

Europe doesn’t need a ‘Mega-Fab’

Europe should defend its existing dominance in equipment manufacturing for semiconductors and invest in chip design instead of luring high-end fabrication to its shores.

By: Niclas Poitiers Topic: Global economy and trade Date: September 22, 2021
Read article More on this topic
 

External Publication

Investing in China: myths and realities

Concerns are real, but the country fares as well as peers at similar levels of development. Analysis published in fDi Intelligence.

By: Uri Dadush and Pauline Weil Topic: Global economy and trade Date: September 20, 2021
Load more posts