INSTITUTION-BUILDING IN RTAS: TRANSPARENCY, INTEGRITY AND PARTICIPATIVE DECISION-MAKING Iza Lejárraga OECD Trade and Agriculture Directorate Expert Group Meeting on Preferential Trade Agreements and Regional Integration Tunis, 5-6 December 2012
Feb 22, 2016
INSTITUTION-BUILDING IN RTAS: TRANSPARENCY, INTEGRITY AND PARTICIPATIVE DECISION-MAKING
Iza Lejárraga
OECD Trade and Agriculture Directorate
Expert Group Meeting on Preferential Trade Agreements and Regional Integration
Tunis, 5-6 December 2012
Presentation
Overview of OECD work on RTAs
Importance of transparency in trade
Emerging best practices in RTAs
Quantitative impact
3
BE
ST
PR
AC
TIC
ES
Agriculture
Standards
Export restrictions
Govt procurement
Services
E-commerce
TR
AD
E IM
PAC
T WTO-plus
WTO-beyond
WTO-minus
Enforceability
Homogeneity
MU
LTIL
ATE
RA
LIS
ATIO
N
Bottom-up (non-parties)
Top-down (WTO)
Convergence
Consistency
Political Econ.
OECD work on “Multilateralising Regionalism”:What can be multilatrealised – and how?
Presentation
Overview of OECD work on RTAs
Importance of transparency in trade
Best practices in regional transparency
Quantitative impact
OECD Trade and Agriculture Directorate 5
Institution-building in RTAs
‘Positive integration’ (Tinbergen 1954): the creation of inter-governmental public goods in regional integration schemes is also welfare-enhancing
Beyond liberalization, countries are deploying RTAs to build trust and develop mechanisms for informational exchanges and predictability: market opacity
Greif (1993) 11-th century Mediterranean trade was facilitated by informal reputation and information mechanisms within the ‘Maghribi trading coalition.’
Effects of transparency in regional trade
Trade Reduces
market entry costs
Improves implementa-
tion
Lowers expropriatior
risksPromotes
cooperation
Reduces trade
disputes
OECD Trade and Agriculture Directorate 7
From shallow to deep integration: Behind-the border agenda requires greater transparency
Along with NT and MFN, transparency is one of the key pillars of the global trading system (Art X GATT 1947) In recent years, has migrated from the periphery to the
core of WTO jurisprudence: from ‘dormant provisions,’ “subsidiary” to “substantive“ commitments
Remains narrow in scope and undefined.
Quest for ‘deep integration’ in RTAs has gone hand in-hand with greater demands for transparencyBehind-the-border agenda call for more sophisticated
mechanisms for information and for influenceNon-tariff barriers require greater information and
predictability in domestic rule-making & enforcement
OECD Trade and Agriculture Directorate 8
Transparency goes a long way in making NTMs less trade-restrictive
Introducing a distortion
(trade-restrictive)
Addressing a market failure
(welfare-enhancing)
9
• Not huge financial resources• Coordination, administrative culture
Costs
• Avoids second-best complications• Lower trade diversion
Impact
• de jure preferential• de facto MFN!!!
Multilateralisation
Transparency: Public Goods in RTAs
Presentation
Overview of OECD work on RTAs
Importance of transparency in trade
Best practices in regional transparency
Quantitative impact
Transparency features as a core objective of an RTA: an end in itself, rather than a means
ResolvedResolved to promote transparency as regards all relevant interested parties, including the private sector and civil
society organisations… EU-Korea FTA 2010
The objective of this chapter is to establish a mechanism to strengthen transparency...
SPS Chapter, AANZFTA 2010
56% of RTAs cite transparency as a core objective in preambles
WTO-plus definition of transparency
Fighting corruption
Information
• Crimininalization• Sanctions • Whistleblower
• Foreign party• Publish comments• Consideration
• E-Publication• Rationale• Explanations
• Peer review• Dispute settlement• Cooperation
30% of RTAs signed by OECD and key emerging economies endorse these four elements.
RTAs horizontalize transparency: harmonizing and streamlining procedures for all sectors & measures
Transparency Chapter
SPS TBT GATS
Rules
Over 40% (52 RTAs) have a horizontal transparency chapter
Recent APEC Ministerial endorsed inclusion of transparency chapters.
In most jurisdictions, regulated horizontally in administrative law
...while deepening WTO-plus area-specific transparency in corresponding chapters
AustraliaBrazil (MERCOSUR)
Canada
Chile
China
EFTA
EUIndia
Indonesia (ASEAN)
Japan
Korea
New Zealand
Turkey
US
0
5
TBT
SPS
Cross-border services
Movement of persons
Level of enforceability of WTO-plus transparency
CB
MP
WTO-plus Regulatory Transparency in Agriculture & non-Agricultural Goods
WTO-plus Regulatory Transparency in Services
& Investment
78% of WTO-plus SPS transparency obligations are enforceable,, while less than 7% in TBTs are subject to DSU
80% of services and 92% investment transparency provisions are enforceable, while 59% of transparency measures for movement of persons are mandatory.
16
WHAT?
WHEN?
HOW?
WHOM?
Specificity
RTAs provide transparency procedures with greater operational specificity
WHAT?
Relevant measures(GATS ArtII)
+Non-exhaustive list
Central, local, regiona; goverm, non-governml
Justification or policy rationale
Statistical information
WHEN?
Promptly (GATT Art X)
+Prior to enactment
Timing specified (30-60-90 days)
Prior consultation with RTA partners
Opportunity for comment
HOW?
Publish or otherwise make available (GATT Art X)
+Available on the
internet
English translation
At no cost
Technical assistance
RTAs introduce more precision and specificity: Example of Prior Publication
WHOM?
Private sectors is a direct receiver, and often supplier, of transparency
Member A (Exporter)
Member B (Importer)
Enquiry Point A
Enquiry Point B
“contracting party applying the restrictions shall provide, upon the request of any contracting party , information concerning ..”.GATT
Creating incentives: Aid-for-Transparency
Aid-for-transparency Technical assistance to help administrations
coordinate and collect information Support to SMEs on foreign market information Cooperation chapters address transparency
Contextualization: Adapting procedures to administrative culture and
regime
Making transparency safeDe-linking transparency from litigation
Austra
lia (2
004)
Bahra
in (2
005)
CAFTA-DR (2
004)
Chile (
2003
)
Colombia
(200
6)
Korea
(200
7)
Morro
cco (
2004
)
Oman (2
006)
Panam
a (20
07)
Peru (
2006
)
Singap
ore (
2003
)0
1
2
3
4
5
6
7
Mandatory Best-endeavour
No.
of A
nti-c
orru
ptio
n M
easu
res
Anti-corruption Measures in US FTAs
New Frontiers: Combating corruption and bribery in regional arrangements
Number of anti-corruption obligations in RTAs signed by United States
Presentation
Overview of OECD work on RTAs
Importance of transparency in trade
Best practices in regional transparency
Quantitative impact
OECD Trade and Agriculture Directorate 22
Can countries stand to gain from negotiating transparency disciplines in their RTAs?
Transparency provisions in RTAs are associated with trade-boosting effects:A marginal improvement in transparency
(additional transparency obligation) is associated with an increase in trade of over 1 percent.
Sensitivity of trade flows to transparency can vary by specific sectors and products:The elasticity of trade with regards to RTAs
transparency provisions is slightly higher in agricultural than in industrial goods.
OECD Trade and Agriculture Directorate 23
Transparency is not free: where is the biggest bang for the buck of transparency obligation?
Horizontal measures on transparency are more impactful than area-specific procedures Ag: horizontal transparency chapters are more
important that WTO-plus SPS/TBT transparencyAmong area-specific transparency, rules of
origin emerges as the most significant.
Transparency related to the implementation of obligations in the RTA, including dispute settlement, are also important.
OECD Trade and Agriculture Directorate 24
What factors could contribute to a wider diffusion of WTO-plus transparency norms?
Democracy
Regulatory quality
Rule of law
Political stability
Control corruption
Distance in incomeDistance in culture
Size of country
Accesion to the WTO
Common legal familiy/colony
Differentiatted produtcts
Factors facilitating WTO-plus
transparency
Countries with good governance negotiate more transparency-friendly treaties
North-South RTAs have more comprehensive transparencyprovisions
Reflections for multilateralsing regionalism
Critical mass?
Homogeneity & consistency with WTO?
Legally enforceable obligations?
Public goods: non-excludable, de facto MFN?
Trade-boosting effects?
In some areas, WTO-plus transparency provisions are
“regionalising multilateralism”
Thank you for your attention.Chokran jasilan!
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