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INR 3933 Reading Notes (Post-Final)Week 9-10:WTO World Trade Report – Section D *Originally week 8 rdg – pushed off midtermI. Are lower tariffs still important for PTAs?a. Tariffs have fallen since GATT  8 rounds of negotiationsb. MFN = great reductionsi. Significant barriers still in agricultural/manufacturing sectorsc. PTA’s aren’t caused by wishing to remove tariff peaks, b/c most “sensitive” industries maintain higher tariffs in PTAsd. “Preferential” rates are no lower than MFN ratesi. Negative value: country = worse market condition than competitorsii. “Domino effect”II. Patterns in the content of PTA’sa. Sectoral coverage and enforceabilityi. Methodology1. WTO+ provisions: subject to form of WTO agreementsa. # of these is increasing2. WTO-X: outside of mandate of WTO (more common)a. Largely regulatory in natureb. Deepening commitmentsc. Competition policy, intellectual property rights, investment and movement of capitali. Environment/labor standards, asylum3. Legal Enforceability: higher w/more clear languagea. Ex: “should” vs. “shall”b. Developed countries usually have legally enforceable agreements w/each other: developing countries usually donot4. Depth of Obligation: Is it binding in practice?5. Most of EU’s PTAs = neighbors; US’s = everywhereii. Empirical evidence on PTA content by income, policy area, over timeb. PTA commitments in selected policy areasi. Services1. Most services PTAs share broad commonalitya. National treatment, market access, domestic regulationii. How much more market access than under GATS?1. Services PTAs offer better level of treatment than GATS2. PTA commitments are different w/each country, but no exact explanation why (and generally more far-reaching than those in GATS)a. Reciprocity, economy size = possible factorsi. Mode 1ii. Mode 31. BITsiii. Investment1. What are investment provisions in PTAs commonly about?a. Investment/trade covered by diff treaties b/c diff but complimentary objectivesi. Trade: increase trade opportunity1. Investment: protect/promote foreign investmenta. BITs/PTAs = help spread int’l production networksb. Coveragei. Broad (FDI/portfolio investment)ii. Narrow (enterprise-based)c. Principle of non-discriminationi. Negative list1. Likely to yield greater investment opportunitiesii. Positive listd. Standard of treatmenti. Fair equitable treatment, ii. Freedom in transferring payments abroade. Investor protectioni. Protection/compensation if nationalizedf. Senior management and personneli. Possible stipulations of their nationalityg. Dispute settlementi. Coordination & negotiationii. State-to-stateiii. Investor-state (NAFTA)2. Patterns over timea. Later agreements – more open than early ones3. Are there families of investment provisions?a. PTA’si. NAFTA-like: Establishment, acquisition, post-establishment operations, & resale1. Agreements btw developed countries often go past multilateral level provisionsii. Developing countries1. MERCOSUR  open graduallyiv. Technical barriers to trade1. What are the TBT provisions in PTAs normally about?a. Mutual Recognitionb. Harmonization of Regulationsi. Promote transparency/openingii. Harm. = Better to match products1. More negotiation costs2. Who Integrates TBT provisions the most?a. Countries at similar development levels – deeperi. Likely to trust e/o, similar objectives, etc.b. North-North – highest integration of TBT’s3. Are there families of PTAs in the context of TBT integration?a. EU prefers harmonizationi. Likely has hub-and-spoke characteristicsb. North American prefers mutual recognitionv. Competition policy1. Monopolies & Cartelsa. Prevent multinational corps from true benefits/costsb. ITO (failure) but included restrictive businesses practices provisionsc. Transparency: publication of laws promoting fair competition/addressing anti-competitive actionsd. Procedural Fairness: admin proceedings = consistent, impartial, & reasonable; it’s possible to renew/appeal admin-made decisions2. Pattern over timea. Commitment to promote competition increased3. Are there families in the PTA in context of competition policy?a. Horizontal principles: more pronounced in US -centered PTAs4. Are competition Rules Preferential?a. Can’t be b/c of transparencyb. Spillovers from info sharing/cooperationIII. Production Networks and Deep PTAsa. Greater depth of agreement = big increase in trade w/PTA membersi. PTAs - vehicles to narrow gaps btw countries’ regulations/lawsb. Deep integration and production networks: An empirical analysisi. Do higher levels of trade in parts and components increase the likelihoodof signing deeper agreements? (Yes: positive impact)c. ASEAN: from regionalization to regionalismi. Manufacturing & int’l trade more intertwined; networks: more countries@ diff income levels; intra-firm/arm’s-length relationshipsii. ASEAN est to deal w/territorial tensions1. 1992: Cooperation led to FTA: reduce tariffs to 0-5% in 10yrs2. From ISI to export-promotion (EOI)3. Japan: regional hegemon? JAP Firms = big role in developmentiii. Production networks require low trade costs/predictable econ policyiv. ASEAN has played major role managing big-power rivalries in E. Asiad. Costa Ricai. Trade opening = accompanied by FDI attraction (hi-tech manufact.)ii. Intel established huge semiconductor assembly/test plant thereiii. C.R. Participation in int’l prod networks = trigger trade w/US & ChinaIV. African Regional Cooperation: lessons from deep integration?a. Lack of economies of scale  need to combine econ markets/political idealsb. Lagos Plan of Action (LPA)i. ECOWASii. PTA covering east & southern Africa, precursor so COMESAiii. ECCAS – Economic Community of Central African Statesiv. SADCC  SADC (1992) awaiting S. Africa democratic transition1. Good example of linear model of progressive integrationv. Regional Indicative Strategic Development Plan of 20031. FTA 2008, CU 2010, C. Mkt 2015, MU 2016, 1 currency 2018vi. Time-consuming/inefficient border measures = worse than tariffs1. Geography: Ex, good waterways can mean bad railroadsWorld Bank Trade Blocs Ch. 5I. IntroII. How RIAs set external tariffsa. Krugman’s Argumenti. Trade barriers lowest/income greatest, with:1. Global free trade (multilateralism)2. Market power set by countless small countriesa. No incentive to deviate from free tradeii. In-between both extremes1. 3 RIAs = worst prisoner’s dilemmab. WTO rules prohibit increase in trade barriersi. Rules

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FSU INR 3933r - Reading Notes

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