WTR( World Trade Report)-2011

8/4/2019 WTR( World Trade Report)-2011

1/32

WORLD TRADE REPORT

2011

The WTO and preferential trade agreements:

From co-existence to coherence

Group 5:

Abhishek Agarwal

Aditya Alok

Carol Karian

Swati Sinha


2/32

Presentation Outline

1. World Trade in 2010

a) Introduction

b) The State of the World Economy and Trade in 2010

2. The WTO and Preferential Trade Agreements: From Co-existence

to Coherence

a) Introduction

b) Historical Background and Current Trends

c) Causes and Effects of PTAs: Is it all about Preferences?

d) Anatomy of Preferential Trade Agreements

e) The Multilateral Trading System and PTAs

f) Conclusions


3/32

World Trade in 2010

a) Introduction

i. Putting the trade recovery into perspective


4/32

World Trade in 2010

b) The State of the World Economy and Trade in

2010

i. Economic Growth

ii. Merchandise Trade in Volume Terms

iii. Merchandise and Commercial Services Trade in

Value Terms

iv. Sectoral Developments

v. Trade Balances and Exchange Rates


5/32

The WTO and Preferential Trade

Agreements: From Co-existence to Coherence

SECTION- A

Introduction

i. Perspectives and insights in the World Trade

Report 2011

International production networks

Preferential trade flows and tariffs

A viable WTO agenda on PTAs

Beyond trade creation and trade diversion


6/32


7/32

SECTION- B

Historical Background and Current

Trends


8/32

Formation of PTAs

The nineteenth century: surging trade and expandingagreements

Early economic depression and the Great depression:

trade blocs

GATT and WTO: landmarks of broader and moreinclusive trade

The modern era: three new waves of regionalism


9/32

Stylized Facts about PTAs

Changes over time

Cross regionalism

Type of Trade

Degree of market integration


10/32

Trade flows related to PTAs

Value of World Trade between PTA members

1. Increased from US$537 million in 1990 to US$4 trillion in

2008

Has trade become more geographically concentrated?

1. Europe's total exports remained roughly constant at around

73 % from 1990 to 2009

2. Asia's intra-regional trade share increased from 42% to 52%

3. Chinas export to Japan has decreased while its export to the

world has increased


11/32

How Preferential is trade?

EU and US reveal preference utilization rates of 87 and 92 per cent

16 % trade is preferential

Brazil grants high preference margin of 7% to its importers


12/32

Key Facts

Almost 300 preferential trade agreements (notified and not

notified) were in force in 2010. On average, a WTO member

is party to 13 PTAs.

Non-preferential (MFN) tariffs are low, equal to 4% on

average in 2009. Most sensitive sectors remain sensitive

in PTAs: approximately 66% of tariff lines (products defined

by their customs codes) with MFN rates above 15% have not

been reduced in PTAs


13/32

SECTION- C

Causes and Effects of

PTAs


14/32

Motives for PTAs

To neutralize beggar-thy-neighbour trade policies

Gaining credibility

Non traditional motives


15/32

The Standard Economics ofPTAs

Effect ofPTAs on trade

Supply chain arrangements

Natural trading partners

Political economy forces

Rules of origin and trade diversion


16/32

Going beyond the StandardAnalysis

Deep integration

Deep integration and trade

The trade-offs involved


17/32

SECTION- D

Anatomy of preferential tradeagreements


18/32

Preferential tariffs and PTAs

The estimated average applied tariff across all products and

countries was 4% in the year 2009.

Most sensitive sectors remain sensitive in PTAs.

Approximately 66 per cent of tariff lines with MFN rates above

15 percentage points have not been reduced in PTAs.

If the preferential access enjoyed by other exporters is takeninto account, less than 13 per cent of preferential trade benefits

from a competitive advantage exceeding 2 percentage points.


19/32

Patterns in the content of PTAs

Examining in detail the contents of a large sample

of PTAs.

Analyzing the Sectoral Coverage and

enforceability

Analyzing PTA commitments selected policy

areas


20/32

Analyzing the Sectoral Coverageand enforceability

Methodology

Empirical evidence on PTA contentby income, policy area and over time


21/32

Analyzing PTA commitments inselected policy areas

Services

Investments

Technical barriers to trade

Competition policy


22/32

Production networks and deepPTAs

Empirical analysis confirms the positive

association between deep integration and

production networks.

The case of ASEAN: from regionalization to

regionalism

The case of Costa Rica


23/32

SECTION- E

The Multilateral Trading Systemand PTAs

Systemic effects of preferential tariffliberalization

Deep PTA provisions and the multilateraltrading system

Regionalism and the WTO: historicalperspective

The relationship between PTAs and the WTO


24/32

Multilateral Trading System

Sixty years ago, the multilateral trading system wascreated out of the ashes of World War II. In 1947,23 countries met in Geneva and founded amultilateral system based on rules and principles ofnon-discrimination

The multilateral trading system is regarded byWTO as the central pillar of dispute settlement tomake the business environment more stable andpredictable


25/32

Systemic effects of preferentialtariff liberalization

Many mechanisms have been identified through

which PTAs could foster or hinder multilateral trade

opening

Groups of nations can always raise their collective

welfare by forming a trade bloc.

Fear of preference erosion

Political economy factors

Affect the pace at which preferential tariffs are extended to

non-members on a MFN basis


26/32

Deep PTA provisions and themultilateral trading system

Deep integration provisions may be non-

discriminatory

The MFN clause

Several mechanisms supporting further

liberalization are found in PTAs

Effects of global production sharing

The WTO and PTA dispute settlement systems

relationship

Caveats: mechanisms generating negative systemic


27/32

Regionalism and the WTO:historical perspective

The origins of the GATT

Preferential trading arrangements eventually becamethe basis for the GATT

Developments during the GATT years

Creation of the European Economic Community

(EEC)

PTAs in the Uruguay Round

Developments in the WTO

Committee on Regional Trade Agreements

Dispute settlement


28/32

Relationship between PTAs andthe WTO

Coherence in international trade governance

Multilateral disciplines on PTAs: 3 core provisions

GATT Article XXIV

Enabling Clause

Article V of the GATS

Possible ways to improve coherence


29/32

SECTION- F

Conclusions Regional and multilateral approaches to trade

cooperation need not be incompatible, but neither can

they be seen simply as substitutes

Growth shown in the recent trends of PTA

PTAs involve deep rather than shallow integration

Many of these agreements go beyond tariff commitment Countries may use trade cooperation as part of a

broader political agenda.


30/32

Conclusions (Contd)

Growing Trade and Investment links among

countries

One country is affected by another country trade

action

Small developing countries want to import best-

practiced rules

Large developed countries want to export their

regulatory regimes through PTAs


31/32

Conclusions(Contd)

Many recent PTAs include commitments in areas

such as competition policy, investment, and

movement of capital

One constraint to bear in mind is the political

feasibility of various options.

Focused on international production networks.


32/32

WTR( World Trade Report)-2011

Documents