Who Should Make the Rules of Trade? - The Complex Issue of Multilateral Environmental Agreements

In recent years, governments have negotiated a number of Multilateral Environmental Agreements (MEAs) that include clauses regarding trade measures that conflict with their WTO obligations. As yet, there has been no formal dispute regarding which obligations should prevail, but the threat of conflict is perceived to be sufficiently grave for the parties to the Doha Ministerial to agree to examine the issue. Those who have strong preferences for environmental amenities have put considerable effort into fostering MEAs and are lobbying hard for them to prevail over the WTO in their areas of competence. The current lack of transparency caused by conflicting rules increases the degree of risk perceived in the international commercial environment. As MEAs allow trading partners to impose trade barriers on ratifying partners when the WTO rules would not, a perverse set of incentives is created that may lead to sub-optimal levels of environmental protection as well as sub-optimal amounts of investment in trade-related activities. The use of trade measures in MEAs is examined and suggestions are provided for removing the conflicting rules of trade.Doha, MEA, negotiations, ratification, trade measures, WTO, International Relations/Trade,

International Harmonization and the Gains from Trade

International harmonization of standards and regulations is often a goal expressed in trade agreements because it is expected to yield gains from trade. Absence of progress toward harmonization is often interpreted as being motivated by protectionism, with differences in standards and regulations seen as non-tariff barriers. While protectionism may well be the source of resistance to harmonization, there may be other reasons it is not pursued. These alternative explanations have not received much attention from economists. In this article some of these alternatives are outlined - demand effects from altering standards, switching costs, proprietary technologies. The article concludes that proposals for international harmonization need to be scrutinized carefully.demand effects, harmonization, regulation, standards, switching costs, TBT, International Relations/Trade,

Vested Interests in Queuing and the Loss of the WTO's Club Good: The Long-run Costs of US Bilateralism

In recent years the United States has actively begun to engage in the negotiation of bilateral and regional trade agreements, a significant change from its long-standing commitment to the exclusive use of multilateral institutions for trade liberalization. While the "unequal economic power" effects of the strategic use of trade policy are well understood, the long-run implications of the creation of a queue for bilateral negotiations have been less fully explored. It is argued here that queuing creates vested interests that are antipathetic to multilateralism and threaten to erode the value of the WTO's "club good." As a result, the new two-track approach of the United States to trade negotiations may not be a sustainable policy.bilateralism, club good, queuing, International Relations/Trade,

The Efficacy of TRIPS: Incentives, Capacity and Threats

There is a major split between developed and developing countries over the protection of the patents in pharmaceuticals in the TRIPS. This dispute is symptomatic of the difficulties of incorporating a non-trade issue into a trade organization. Incentives and threats are examined in the context of the TRIPS. It is concluded that developing countries have no direct incentives to protect intellectual property, that the threat of trade actions is unlikely to induce compliance and that the use of indirect incentives is discredited and will fail to achieve its objective over the long run. Successful protection of intellectual property in developing countries will require a way to provide them with a direct incentive to enforce such protection.enforcement, incentives, intellectual property, knowledge economy, threats, TRIPS, International Relations/Trade,

SELECTIVE BREEDING, HERITABLE CHARACTERISTICS AND GENETIC-BASED TECHNOLOGICAL CHANGE IN THE CANADIAN BEEF CATTLE INDUSTRY

The paper presents an examination of genetic-based technological change in the Canadian beef cattle industry. A model of technological change is explicitly developed in characteristics space. Production functions with genetic characteristics as arguments are estimated and two forms of technological change identified. Shadow values for characteristics are then calculated and actual genetic improvements are compared to the improvements suggested by the shadow prices. It is concluded that market forces are sufficient to regulate the process of genetic-based technological change in the Canadian beef cattle industry.Livestock Production/Industries, Research and Development/Tech Change/Emerging Technologies,

Trade Agreements: The Important Role of Transparency

International trade can be inhibited in two ways; through the use of mechanisms that directly alter the flow of goods and poor transparency in the rules of trade. The former includes tariffs and other border measures, subsidies and non-tariff barriers. The effect on trade flows resulting from issues of transparency is indirect. When the rules of trade are unclear for firms considering investing in trade related activities, the risks associated with those investments increase and investment is inhibited. If there is less investment in trade related activities, trade flows will be reduced. Poor transparency exists in contingent protection measures such as anti-dumping – currently on the agenda of the Rules negotiations at the WTO and – customs and related procedures – on the agenda in the Trade Facilitation negotiations. Increasing transparency can have important trade liberalizing effects. Trade negotiators often focus on achieving a big result from reductions in border measures and subsidies where there may be considerable resistance from protectionist vested interests. If progress can be made in increasing the transparency of trade rules, a less ambitious result may be acceptable for the direct aspects of trade liberalization.investment, liberalization, risk, transparency, International Relations/Trade,

The Changing Nature of Protectionism: Are "Free Traders" Up to the Challenges It Presents?

In the economic model that underlies the WTO the only group that can be expected to ask for protection is producers in importing countries. The existing multilateral trade architecture reflects that assumption. Much of the recent criticism of the multilateral trade regime has arisen as a result of new groups explicitly asking domestic politicians for protection. As these groups were not expected to ask for protection, the international trade regime does not allow domestic politicians to extend protection on the basis of the new demands. Further, countries are expected to perceive benefits from trade liberalisation. These benefits must be balanced against the expected political benefits of protectionism (and their associated welfare costs) when trade negotiations are being conducted. Failed economies, however, see few benefits from liberalisation and, hence, are biased toward protectionism, particularly if trade restrictions are a source of corruption incomes. This article explains the sources of new appeals for protectionism, outlines the relationship with traditional producer protectionism and lays out the challenges the new pressures present for trade-liberalising multilateral institutions.consumers, environmentalists, failed economies, producers, protectionism, welfare, International Relations/Trade,

Do Labour Standards have a Role in International Trade?: Private Standards, Preferential Trade Agreements or the WTO

It is now common for producers (economic protectionism), consumers and social advocates (humanitarian motives) to urge for the inclusion of labour standards in international trade agreements. In spite of this, there has been little empirical work to determine whether low labour standards lead to trade distortions. This paper provides some empirical evidence pertaining to this question. Consumer groups, social advocates and traditional vested interests such as labour unions have attempted to have labour standards included in WTO disciplines. In the absence of success at the WTO, the relationship between labour standards and international trade has, however, been evolving in the areas of private standards and preferential trade agreements. Given the role that preferential trade agreements sometimes take in establishing future directions in multilateral trade agreements and the increasing dissatisfaction with the WTO’s treatment of consumer issues in general, in the future labour standards may well work their way into multilateral trade agreements. The empirical results show that low labour standards lead to trade distortions. These effects appear to be small. Further research in this area is suggested.consumers, food processing, labour standards, preferential trade agreements, trade distortion, Agricultural and Food Policy, Consumer/Household Economics, International Development, International Relations/Trade,

Revisiting Barriers to Trade: Do Foregone Health Benefits Matter?

This paper examins the question of revisiting the imposition of existing trade barriers in one case of an evolving marketplace – when a traditional food product is altered to provide, or discovered to have, human health benefits that increases their value to consumers. In other words, the food becomes a functional food. A functional food has the potential provide direct benefits to consumers as well as indirect benefits to society in the form of health care cost savings. If the trade barrier was put in place prior to these direct and indirect benefits of the food becoming apparent, then they would not have been considered when the decision to impose the trade barrier was taken. In these circumstances, policy makers may wish to revisit a decision to impose a trade barrier.trade health, Agricultural and Food Policy, Health Economics and Policy, International Relations/Trade,