Multilateralizing Regionalism: Challenges for the Global Trading System

MULTILATERALIZING REGIONALISM......Page 2
Title......Page 4
CONTENTS......Page 6
CONTRIBUTORS......Page 9
FOREWORD......Page 12
ACKNOWLEDGEMENTS......Page 15
Introduction......Page 16
References......Page 25
Part I: Background to Regionalism......Page 26
1 What is regionalism?......Page 28
2 Discriminatory trade policy and Article XXIV......Page 31
 Early European regionalism......Page 32
 Early regionalism among developing countries......Page 33
 Developments in the early 1980s......Page 34
4 The second wave of regionalism......Page 35
 Australia–US agreement......Page 37
6 Other factors explaining the growth in regionalism......Page 38
7 Lessons from history......Page 41
References......Page 42
1 Introductory remarks1......Page 43
 The main trends and characteristics of RTAs......Page 44
 Quantifying the proliferation of RTAs......Page 45
 Qualifying the proliferation of RTAs......Page 51
 The global landscape of RTAs: state of play and future developments......Page 59
 Europe......Page 60
 The Americas......Page 62
 Asia-Pacific......Page 64
 Central Asia......Page 67
 Sub-Saharan Africa......Page 68
3 RTAs and the WTO: an ill-defined relationship......Page 69
 GATT/WTO surveillance of RTAs: some history......Page 70
 DDA negotiations on WTO rules on RTAs......Page 71
 The Transparency Mechanism for RTAs......Page 74
 Experience of the Transparency Mechanism thus far......Page 78
Part II: Multilateralization: Prospects and Past Experience......Page 92
1 Introduction......Page 94
2 How preferential arrangements can be multilateralized......Page 95
3 Multilateralization of tariff preferences......Page 96
 The preference spaghetti bowl and its multilateralization......Page 97
 What is wrong with the spaghetti bowl?......Page 98
 Two real world examples......Page 99
 Political economy forces that created the spaghetti bowl......Page 100
 Political economy logic of the Pan-European Cumulation System (PECS)......Page 101
\'Us\' becomes \'them\'......Page 102
 Lessons: spaghetti bowls as building blocks......Page 103
 Barriers to trade in services......Page 104
\'Third party\' MFN......Page 105
 ROOs......Page 106
 Multilateralization......Page 107
 Government procurement......Page 108
 Liberalization initiatives: the GPA and RTAs......Page 109
 Third-party MFN......Page 110
 Multilateralization......Page 111
 Domino effects......Page 113
 Competition policy......Page 114
 Competition policy in RTAs......Page 115
 Multilateralization......Page 119
 Political economy drivers......Page 120
 Investment performance requirements......Page 121
 Preferential provisions......Page 122
 Multilateralization......Page 127
 Technical barriers to trade......Page 128
 Complexity and the \'trust issue\'......Page 129
 TBT commitments in FTAs......Page 130
 No rules of origin......Page 131
 Modalities......Page 132
 Trade remedies......Page 134
 Trade remedy provision in RTAs......Page 135
 Multilateralization......Page 138
5 Lessons from the case studies......Page 139
6 Concluding remarks......Page 144
 Intentional versus incidental protection......Page 145
 The level of self-balancing......Page 146
 Why in RTAs but not in a multilateral setting?......Page 148
 Tariff multilateralization......Page 149
 Procurement......Page 150
 Investment......Page 151
 Remedies......Page 152
References......Page 153
Comment......Page 157
References......Page 160
1 Introduction......Page 161
2 Why do we need ROOs?......Page 162
 The impact of rules of origin on patterns of trade......Page 164
 ROOs for protection......Page 168
 When are ROOs likely to matter more?......Page 169
3 Cumulation and rules of origin in a multilateral world......Page 170
 Why diagonal cumulation matters......Page 171
 Spoke–spoke trade (e.g. between countries B and C)......Page 174
 Spoke–ROW trade......Page 175
 Evidence on the constraining impact of ROOs......Page 176
 The impact of the PECS system of diagonal cumulation......Page 177
4 Minimizing the negative impact of ROOs......Page 182
 Tariff classification rule......Page 184
 Specific production processes rule......Page 185
 Proposition 1: Flexing those PECS – applying the \'preferential partner\' principle......Page 187
 Proposition 2: Full cumulation with value-added tariffs......Page 189
 Proposition 3: Applying ROOs only when necessary......Page 191
5 Conclusions......Page 194
References......Page 195
1 Introduction......Page 197
 Economics of IT products: implications for trade liberalization......Page 198
 Globalized production and trade in IT products in the run-up to ITA......Page 199
 Technology hype and trade skirmishes in the run-up to the ITA......Page 201
 ITA negotiations vs. multilateral negotiations......Page 203
 Fitting the ITA in the WTO......Page 206
 Overview of sectoral agreements......Page 207
 Sectoral agreements as stepping stones......Page 209
 IT in bilateral agreements: towards making BTAs stepping stones?......Page 213
 Did the ITA cut tariffs?......Page 215
 Did the ITA promote trade in IT products?......Page 216
 A systematic assessment: Bora and Liu (2006)......Page 217
 Implications for ITA as a stepping stone......Page 225
 Progress on ITA II......Page 226
 Conclusion – sui generis or model stepping stone?......Page 228
References......Page 229
Comment......Page 232
Part III: Multilateralization: Sectors and Themes......Page 234
1 Introduction......Page 236
2 What is unique about the trade in services?......Page 237
 Four modes of trade in services......Page 238
 Services regulation at the domestic and international level......Page 239
 Expected effects......Page 243
 Rules of origin and the level of discrimination introduced by services RTAs......Page 245
 Additional considerations......Page 246
 Measuring the economic effects of RTAs......Page 247
3 Ongoing liberalization in the context of preferential trade agreements......Page 248
 How much explicit liberalization has taken place?......Page 249
 Removing implicit regulatory barriers......Page 258
 Non-party most favoured nation treatment......Page 261
4 Are service RTAs building blocks or stumbling blocks in multilateral services liberalization?......Page 263
 GATS rules on regional integration agreements......Page 268
 GATs rules on domestic regulation......Page 270
 The WTO and pro-active regulatory cooperation......Page 271
6 Conclusion......Page 273
References......Page 274
1 Introduction......Page 277
 Product-specific ROOs......Page 279
 Regime-wide ROOs......Page 281
 Why are ROOs used? Protectionist content – and intent?......Page 282
 Europe: the Paneuro system......Page 285
 The Americas: ROO poles......Page 287
 Asia: multiple influences......Page 288
 Africa and the Middle East......Page 289
 Non-preferential ROOs......Page 290
 Depicting product-specific ROOs around the world......Page 291
 Cumulation......Page 295
 Certification......Page 298
4 Restrictiveness and divergence: the scorecard......Page 299
 Restrictiveness and complexity......Page 300
 Measuring restrictiveness......Page 301
 Complexity of regimes......Page 303
 Observed vs. effective restrictiveness......Page 307
 Complexity of rules and of trade......Page 309
 Restrictiveness and complexity: the key policy issues......Page 311
 Divergence......Page 312
 Measuring divergence......Page 315
 Comparing US, EU and non-preferential ROOs......Page 319
 Beyond geographical families?......Page 323
 Restrictiveness and divergence in sum......Page 325
5 Multilateralization and convergence: where, when and how?......Page 326
 Multilateralizing preferential rules of origin......Page 327
 Convergence......Page 331
 Multilateralism-cum-convergence: a \'cap-con\' strategy......Page 335
 Where are we headed?......Page 338
6 Conclusion......Page 340
References......Page 341
Comment......Page 379
References......Page 382
1 Introduction......Page 383
 Overlaps between WTO and regional agreements versus overlaps amongst different regional agreements......Page 386
 Overlaps where the rules are complementary versus equivalent versus contradictory......Page 387
 Rule 1: All treaties are, in principle, of equal value......Page 388
 Rule 2: A treaty can only affect those countries that agreed to it......Page 389
 Rule 4: One treaty can provide that it is subject to, or prevails over, another treaty......Page 390
 Rule 5: A treaty is valid and legal unless it is declared otherwise......Page 391
 Rule 7: A specific treaty provision normally prevails over a more general treaty provision......Page 392
 Rule 8: Dispute panels can only find violations under their respective treaties, but that does not mean that other treaties are irrelevant......Page 394
 The TRIPS Agreement versus TRIPS-plus FTAs......Page 397
 WTO dispute settlement versus dispute settlement under FTAs......Page 399
 Oblige the complainant to submit the dispute to the WTO......Page 401
 Oblige the complainant to submit the dispute under the FTA......Page 403
 WTO safeguards versus regional safeguards......Page 405
 Subsequent changes to the WTO and how they affect pre-existing regional agreements......Page 406
 How do new regional agreements interact with pre-existing regional agreements?......Page 407
 Would trade sanctions authorized by the WTO violate an FTA and vice versa?......Page 409
5 Policy conclusions......Page 410
References......Page 412
Part IV: Multilateralization: Regional Perspectives......Page 416
1 Introduction......Page 418
2 Reflections on \'multilateralizing\' regionalism......Page 420
3 Political economy realities of sub-Saharan Africa......Page 426
4 Can the multilateralizing regionalism agenda work for Africa?......Page 438
5 Concluding remarks......Page 439
References......Page 440
1 Introduction......Page 442
 RTA pathways in the Americas: from intra-regionalism to trans-continentalism......Page 444
 State of integration in the Americas in a comparative perspective......Page 450
 Empirical survey: tariff liberalization regime models......Page 451
 Tariff liberalization statistics......Page 452
 Laggards and leaders in liberalization......Page 463
 Trade-weighted tariff liberalization......Page 472
 TRQs and exceptions......Page 474
 Multilateral tariffs in the Americas......Page 485
 Rules of origin......Page 486
 Economic effects of RTAs in the Americas: trade creation or trade diversion?......Page 489
4 Beyond market access: services and investment......Page 490
 Services......Page 491
 Investment......Page 494
5 Furthering multilateralization in the Americas......Page 497
6 Conclusion......Page 500
References......Page 501
Comment......Page 507
1 Introduction: key issues......Page 510
 Economic integration through trade and FDI......Page 511
 Factors behind trade and FDI integration......Page 514
 Proliferation of FTAs in East Asia......Page 515
 Factors underlying FTA initiatives......Page 519
 ASEAN......Page 520
 ASEAN+......Page 522
 East Asia Summit (ASEAN+6)......Page 523
 APEC and ASEM as trans-regional forums......Page 524
 The role of larger, richer economies......Page 525
 FTA coverage of trade......Page 526
 Configuration: bilateral versus plurilateral FTAs......Page 527
 WTO notification......Page 529
 Scope: \'\'WTO-plus\'\' elements......Page 530
 Multiple rules of origin......Page 538
 Results of firm surveys......Page 545
 Maximizing the benefits and minimizing the costs of FTAs......Page 546
 Benefits and costs of FTA......Page 547
 WTO consistency, breadth, and depth......Page 548
 Consolidation into an ASEAN+3 or ASEAN+6 FTA?......Page 549
 Providing complementary support......Page 551
5 Conclusion: challenges ahead......Page 552
 Which country will lead economic integration in East Asia?......Page 565
 ASEAN+3 versus ASEAN+6......Page 566
1 Introduction and overview......Page 569
 The US hub......Page 572
 The China hub......Page 576
 The Japan hub......Page 577
 The ASEAN hub......Page 578
 The Republic of Korea hub......Page 579
 The India hub......Page 580
 Regionalism scenarios......Page 581
 APEC initiatives......Page 582
 Model mechanics......Page 586
 Dataset......Page 587
 Results for bilateral trade......Page 588
 Trade diversion estimates......Page 608
 Regression coefficients for bilateral trade......Page 619
 The impact of FTAs on FDI......Page 623
 Asian versus American regionalism......Page 627
 Enhancing WTO requirements for RTAs......Page 629
 APEC guidelines for bilateral arrangements......Page 632
 Rules of origin......Page 634
 Asia-Pacific regionalism: prospects going forward......Page 636
4 Conclusions......Page 638
References......Page 648
1 Introduction......Page 651
2 Cooperation in PTAs: how much more and how discriminatory?......Page 656
 Tariffs......Page 658
 Standards and technical regulations......Page 660
 Services policies......Page 663
 Investment policies......Page 666
 Competition policies......Page 668
 Intellectual property rights......Page 669
 Implementation, enforcement and dispute settlement......Page 670
3 Interpreting experience: stocktaking and assessment......Page 672
4 Liberalizing the temporary movement of labour – mode 4 of the GATS......Page 678
 The objective......Page 683
 The means......Page 685
6 Concluding remarks......Page 689
References......Page 692
 Multilateralization......Page 696
 Political economy......Page 697
 Constrained optimization......Page 698
1 Introduction......Page 699
2 What can be done to relieve human resource constraints and reduce potential costs?......Page 702
 Interest......Page 704
 What role might the international community play ex ante in preparing parties for RTA negotiations?......Page 705
 Private versus public provision......Page 706
4 A proposal for an Advisory Centre on Regional Trading Agreements (ACORTA)......Page 707
5 Conclusions......Page 709
 The Sussex Framework: can RTAs be analysed in a practical, reliable and economical manner?9......Page 710
 Shallow integration......Page 712
 Deep integration......Page 714
 Practicalities......Page 716
 Conclusions from research leading to, and application of, the Sussex Framework......Page 718
References......Page 719
Comment......Page 720
Index......Page 723