Global trade rules: Global trade rules: doing the job?doing the job?

Ana Luiza Cortez*

UN-CDP Secretariat

1st International Symposium on Development

Policies in a Global World

Fundaciόn Mujeres por Africa

Madrid, 29-30 October 2013

* The views expressed here do not necessarily reflect those of the UN or the CDP.

WTO FTA RTA PTA EPA AGOA FTA MERCOSUR

RTA FTA RTA FTA EPA PTA FTA FTA BTA FTA RTA

FTA EPA PTA FTA FTA UNCTAD PTA FTA ICA FTA BTA RTA PTA EPA WIPO RTA FTA RTA FTA EPA PTA FTA FTA BTA RTA FTA EPA

FAO FTA RTA FTA EPA PTA FTA FTA ICAFTA RTA FTA EPA PTA FTA FTA BTA EPA PTA FTA

FTA NAFTA EPA PTA FTA FTA BTA RTA RTA FTA

RTA FTA RTA FTA EPA PTA FTA FTA BTA FTA FTA

WTO

UNCTADFTA ICA WIPO RTA

NAFTA

MERCOSUR

FAO ICA

Global trade rulesGlobal trade rules

• Trade flowsTrade flows• EquityEquity• Governance Governance • CoherenceCoherence

Global trade rules: Global trade rules: Current state of affairsCurrent state of affairs

1. Trade flows1. Trade flows Predicable and growing:Predicable and growing:

MFN and national treatmentMFN and national treatment Less than full reciprocity Less than full reciprocity Dispute settlement machineryDispute settlement machinery Small hiccupsSmall hiccups

2. Contributing to higher standards of living, full 2. Contributing to higher standards of living, full employment, real income growth?employment, real income growth?

3. Developing countries securing a share in trade 3. Developing countries securing a share in trade growth compatible with development needs?growth compatible with development needs?

3. Developing countries securing a share in trade 3. Developing countries securing a share in trade growth compatible with development needs?growth compatible with development needs?

Patterns of insertion matter → Patterns of insertion matter → whatwhat you produce you produce matter: participation in dynamic marketsmatter: participation in dynamic marketsHowHow you produce matter you produce matter linkages with he linkages with he domestic economydomestic economyStrategic trade liberalization: means to promote Strategic trade liberalization: means to promote structural transformation (carrots and sticks)structural transformation (carrots and sticks)Strategic association with foreign investorStrategic association with foreign investor

Shrinking policy space (other culprits)Shrinking policy space (other culprits)

Global trade rules = enablers?Global trade rules = enablers? GATT/WTO are about trade liberalization, however, approach changed:GATT/WTO are about trade liberalization, however, approach changed:

Before the Uruguay Round:Before the Uruguay Round:• Deviations from disciplinesDeviations from disciplines Special and differential treatment: BOP Special and differential treatment: BOP

difficulties, protect/promote industriesdifficulties, protect/promote industries• Pick and choose Pick and choose • Less than full reciprocity of commitments (rules, tariffs, preferential Less than full reciprocity of commitments (rules, tariffs, preferential

access)access)• Not for free: exclusions, tariff peaks, tariff escalationNot for free: exclusions, tariff peaks, tariff escalation

→ → Shift in the development paradigm: role of the state, trade as an endShift in the development paradigm: role of the state, trade as an end→ → Rising importance in global trade (NICs)Rising importance in global trade (NICs)

With the Uruguay Round:With the Uruguay Round: Single undertaking: additional commitments; adjustment costsSingle undertaking: additional commitments; adjustment costs SDTs: SDTs: The oldThe old: preferential market access; fewer deviations with : preferential market access; fewer deviations with

stricter disciplines; stricter disciplines; The newThe new: flexibilities for implementation and : flexibilities for implementation and procedures plus technical assistance: institutional capacity gaps procedures plus technical assistance: institutional capacity gaps

WTO: Development = SDTsWTO: Development = SDTs

139 provisions; several deficiencies139 provisions; several deficiencies• Best endeavorBest endeavor• Not enforceableNot enforceable• Add-onsAdd-ons• OffsetsOffsets• Lacking coherenceLacking coherence• DelinkedDelinked• InsufficientInsufficient

Doha mandateDoha mandate • SDTs to be strengthened, more effective, precise and SDTs to be strengthened, more effective, precise and

operational (mandatory): “early harvest” status (2002) operational (mandatory): “early harvest” status (2002) • Disappearing proposals: >150 → condensed into 88 → Disappearing proposals: >150 → condensed into 88 →

38 in Cat. I (“easy”) → 28 ; Cat. II (agreement specific): 38 in Cat. I (“easy”) → 28 ; Cat. II (agreement specific): 38 → 6… 38 → 6…

We’re not in Kansas anymore…We’re not in Kansas anymore…

• Giants, dwarfs and Giants, dwarfs and the in-betweenthe in-between

• GVCs business GVCs business modelmodel

• PTAs/FTAs and BITs PTAs/FTAs and BITs

Decision making processDecision making process Nature/scope of disciplinesNature/scope of disciplines The future of SDTsThe future of SDTs

A new generation of SDTs?A new generation of SDTs?

Trend: from developing countries to individual country needs:Trend: from developing countries to individual country needs:

• Differentiation in WTO Differentiation in WTO • Differentiation by trading partners Differentiation by trading partners • Linked to individual needs: inventoryLinked to individual needs: inventory• Implementation according to capacity, technical assistanceImplementation according to capacity, technical assistance• Temporary Temporary • No deviations, no exemptionsNo deviations, no exemptions

Trend: the vanishing principle of “less than full reciprocity”Trend: the vanishing principle of “less than full reciprocity”

• Further reductions in policy space (advanced economy policy Further reductions in policy space (advanced economy policy package)package)

• Sustainable dynamic transformation requires flexible rules Sustainable dynamic transformation requires flexible rules adaptable to domestic conditionsadaptable to domestic conditions

Moving forwardEmerging approach:•Diversified developing world: SDTs based on needs implementation issues (definition, monitoring, etc.)•Graduation rules to be discussed multilaterally

However, - SDTs = second best solution: equal rules to unequal partners. Right policy package?- For developing countries: development friendly/neutral rules X exceptions to the rules

Summing up:- Stable and predictable flows not enough- Trade as a means: disciplines compatible with the needs of dynamic transformation of all economies

Thank you!