1 / 26

Notes, ECON 4415, lecture 1: International trade institutions

Notes, ECON 4415, lecture 1: International trade institutions. Focus: Theory + institutions Reference: Hoekman and Kostecki (2001) Some parts ”should be known” Other parts: For your own interest Several internet sources www.nupi.no : Some relevant working papers. Important institutions.

Download Presentation

Notes, ECON 4415, lecture 1: International trade institutions

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Notes, ECON 4415, lecture 1: International trade institutions • Focus: Theory + institutions • Reference: Hoekman and Kostecki (2001) • Some parts ”should be known” • Other parts: For your own interest • Several internet sources • www.nupi.no: Some relevant working papers

  2. Important institutions • The World Trade Organisation (WTO) • Regional and bilateral trade agreements • The OECD: For trade in services • IMF and the World Bank: Developing countries, adjustment programmes • UNCTAD: Opinion-shaping • Aid agencies: Trade-related aid

  3. Focus of lectures, institutional issues • This lecture: Aspects of WTO • Lecture 12: TRIPS • Lecture 13: Regional trade blocs • Lecture 14: Trade in services/GATS • Lectures 10-11: Trade and growth, relevant for trade policy issues • Various lectures: Welfare aspects

  4. Is free trade good for development? • Correlation between openness and growth • Correlation between trade and growth • But: Causality is complex • Support for the ”free trade story”, but not yet fully conclusive • Example: Growth in Europe and South East Asia

  5. Should developing countries liberalise? • New trade theory: More arguments for protection • Market access abroad is always good • Import protection may limit technology imports • Scope for autonomous industrialisation limited under ”globalisation” • Good reasons for gradual approach

  6. Trade liberalisation is linked to other policies • Institutions, macroeconomic policies • Technological capacity, education • Considerable evidence on ”threshold effects” • Hence trade liberalisation is no simple cure • Tariff revenues matter for poor countries • But: Trade seems to be good…

  7. WTO • Result of ”Uruguay Round” 1986-1994 • From 1.1.1995 • ”Umbrella” for three components: • GATT – General Agreement on Tariffs and Trade • GATS – General Agreement on Trade in Services • TRIPS – Trade-Related Aspects of Intellectual Property Rights • Common system for Dispute Settlement • Trade policy review mechanism • ”Single undertaking”: Most agreements binding

  8. GATT (1947..) • ITO (International Trade Organization) 1948 – never came about (US opposition) • GATT 1947 – provisional agreement • Tariff reduction + parts of ITO • Broader aspects (”UNCTAD-like” not included • 1947: 23 members, one half developing

  9. Negotiation rounds • 5 rounds 1947-61 • Kennedy Round 1964-67: Part IV on development • Tokyo Round 1973-79 (new agreements, development issues: ”enabling clause”) • Uruguay Round 1986-94 (WTO, services, agriculture, TRIPS, disciplines) • WTO (1995) = GATT + GATS + TRIPS • ”Doha development agenda” 2001-? • Seattle (1999), Doha (2001), Cancun (2003)

  10. WTO: 148 members (Melchior 2003)

  11. Implications of size • Global organisation (ex. Russia etc.) • Mainly based on consensus • More complex negotiations • Different interests, issue linkages • ”Green room” vs. plenary sessions • Difficult to create ”representative” bodies • ”Give and take” vs. ”UNCTAD method”

  12. Major principles of GATT/WTO • Non-discrimination 1: The Most Favoured Nation principle • Non-discrimination 2: National Treatment • Transparency • Forum for negotiations • Reciprocity • Member-driven organisation

  13. Major exceptions to equal treatment in WTO • Free trade agreements • Article XXIV of GATT, Article V of GATS • Textile trade restrictions, MFA • Trade preferences for developing countries • National treatment: Negotiated in GATS • Non-reciprocity for developing countries in negotiations • Anti-dumping

  14. Trade in goods: Major issues • Tariff negotiations • Anti-dumping and subsidies • Technical barriers to trade • TBT: Agreement on Technical Barriers to Trade • SPS: Agreement on Sanitary and Phytosanitary Measures • Trade in textiles • Trade in agriculture • More, see Chapter 2 H&K

  15. Tariffs, non-agriculture • Gradually reduced through negotiating rounds • GATT 1947 – around 40% • Currently – 3-4% for industrial countries • Still very important for developing countries • Manufactures: More than 2/3 of DC exports

  16. Too much liberalisation: Hardly the explanation of poverty?Tariffs on trade in goods after the Uruguay Round

  17. Importing region High-income Developing Exporting region High-income 0.8 10.9 Developing 3.4 12.8 Source: Hertel and Martin (2000), see H&K p. 43. Tariffs continued…

  18. Tariffs continued.. • Developing countries have higher tariffs • But: Industrial countries have higher tariffs for developing country products • Example: Textiles • ”Doha Round”: Formula approach + sectoral tariff elimination • DCs: Reject binding sectoral liberalisation

  19. Formulas • ”Swiss formula”: t1=at0/(a+t0) where t0 is the original tariff • Used in Tokyo Round • Upper bound = a • Current round: Modified formula, ”a” function of initial tariff level • Proportional cuts in mean tariffs, higher (lower) cuts for tariffs above (below) mean

  20. Tariffs versus income levels (Melchior 2003)

  21. Implications • Only weak correlation tariff/ income levels • Great dispersion among poor countries • Large gaps old vs. New members • Bound tariffs much higher than applied • Not a consistent system of non-reciprocity • Problem: How to differentiate between developing countries

  22. Special and Differential Treatment (SDT) • Chapter 12, H&K • 1960s: ”Part IV”, non-reciprocity, non-binding language • 1960s: GSPs, colonial background • 1971: Temporary ”waiver” from GSP • Tokyo Round: Enabling clause – made waiver permanent

  23. GSP • Industrial countries: Tariff preferences for DCs • EU, US: More differentiated approach • EU: Lomé waiver expires, FTAs instead • Norway: Extensive GSP for manufactured goods • But: Tariff liberalisation eliminates effect

  24. Problems with SDT • GSP is non-binding • The benefits of GSP are modest • GSP makes DCs more protectionist? • LDCs well-defined, DCs self-nominated • Differentiation between DCs difficult Possible solution: • More differentiation between DCs? • ”GSP-like” measures in other areas? • Binding rather than voluntary measures?

  25. ”Anti-preferences”: The textile regime of the WTO • Textiles: Still high tariffs • MFA (textile quota regime): Network of bilateral quota agreements 1974-- • To be phased out by January 2005 • Slow implementation, anger from developing countries • Will quotas be replaced by other restraints? • Other quotas: Eliminated in Uruguay Round

  26. Example: Norway’s textile quotas • Extremely protective around 1980, then gradually liberalised • When quotas were lifted, the share of developing countries increased from 32 to 65% in 4 years (Melchior 1994) • Big welfare loss due to quotas • Free trade with Western Europe • Today: Fully liberalised in Norway

More Related