Alan V Deardorff University of Michigan For presentation at University of Athens February 28 2017 How Trade Negotiations Have Changed Three phases since 1945 194594 GATT rounds multilateral ID: 583632
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Slide1
The Past and Uncertain Future of of International Trade Negotiations
Alan V. DeardorffUniversity of Michigan
For presentation at University of Athens
February 28, 2017Slide2
How Trade Negotiations Have Changed
Three phases since 19451945-94: GATT rounds, multilateral1995-2016: FTAs, bilateral and regional
2016-?: The uncertain future
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How Trade Negotiations Have Changed
1945-1994Under GATT, 8 Rounds of Multilateral Trade NegotiationsReduced tariffs to about 1/10 what they had been before
On MFN (Most Favored Nation) basis
Among all GATT Signatories
15 countries in 1945
128 countries in 1994
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1945-1994Culminated in the 1995 creation of the World Trade Organization, which included
GATTGATSTRIPs
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How Trade Negotiations Have ChangedSlide5
1995-2015Under WTO, only one Round of multilateral negotiations covering broad trade policy: The Doha Round
Began 2001Ended without success at Nairobi Ministerial December 2015
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How Trade Negotiations Have ChangedSlide6
1995-2015Only multilateral successes have been
The 2014 “Bali Package” dealing primarily with Trade FacilitationThe 2016 Nairobi agreement to limit agricultural exports subsidies
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How Trade Negotiations Have ChangedSlide7
1995-2015Other negotiations under WTO have been “plurilateral”
Involve a subset of WTO members in agreements that others may or may not choose to joinInstead, Free Trade Agreements (FTAs) have proliferatedMostly zero tariffs within only a group of 2 or more countries
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How Trade Negotiations Have ChangedSlide8
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WTOSlide9
9
The EU’s
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FTAs:
With Europe
1972 Iceland
2008 Bosnia
&
Herzeg
.
1972 Switzerland
2008 Serbia
1973 Norway
2014
Moldova
2001 Macedonia
2014 Ukraine
2006 Albania
2014
Georgia
2007 Montenegro
How Trade Negotiations Have Changed
Years are dates FTAs on goods were signed.Slide10
10
The EU’s
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FTAs:
With Africa
1995 Tunisia
2002 Algeria
1996 Morocco
2008 Côte d'Ivoire
1999 South Africa
2009 Cameroon
2001 Egypt
2009
Eastern & Southern African States Interim EPA*
How Trade Negotiations Have Changed
Years are dates FTAs on goods were signed.
*4
Countries (Madagascar; Mauritius; Seychelles; Zimbabwe)Slide11
11
The EU’s
5
FTAs:
With Middle East
1977 Syria
1997 Palestinian
Auth
1995 Israel
2002 Lebanon
1997 Jordan
How Trade Negotiations Have Changed
Years are dates FTAs on goods were signed.Slide12
12
The EU’s
4
FTAs:
With Latin America
1997 Mexico
2012 Colombia & Peru
2002 Chile
2012 Central America*
How Trade Negotiations Have Changed
*6 Countries (Costa
Rica; El Salvador; Guatemala; Honduras; Nicaragua;
Panama)
Years are dates FTAs on goods were signed.Slide13
13
The EU’s
6
FTAs:
With Other
1970 Overseas Countries
& Territories*
2009 Papua New Guinea / Fiji
1996 Faroe Islands
2010 South Korea
2008 CARIFORUM ETA*
How Trade Negotiations Have Changed
*19 Overseas Countries & Territories (Anguilla, Aruba, …)
*14 CARIFORUM States (Antigua & Barbuda, Bahamas, …)
Years are dates FTAs on goods were signed.
Years are dates FTAs on goods were signed.Slide14
14
The EU’s
3
Customs Unions
1991 Andorra
1995 Turkey
1991 San Marino
How Trade Negotiations Have Changed
Years are dates CUs were signed.Slide15
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The EU’s
14
FTAs:
In Process
Canada
Morocco
East African Com.
SADC
India
Singapore
Indonesia
Thailand
Japan
Tunisia
Malaysia
Vietnam
Philippines
West Africa
How Trade Negotiations Have Changed
Also: US TTIP ???Slide16
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Mega-FTAs of the PastEuropean Union (grew from 6 to 28 countries) – Customs Union
MERCOSUR (Grew from 4 to 6 South American countries)ASEAN FTA (10 countries)
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Recently: “Mega-FTAs”Slide27
TPP: Trans-Pacific Partnership12 countries
Negotiations completed Oct 5, 2015Not ratified President Trump pulled US out
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Recently : “Mega-FTAs”Slide28
RCEP: Regional Comprehensive Economic Partnership10-member ASEAN, plus 6 countries with which ASEAN has FTAs:
AustraliaChinaIndiaJapan
S. Korea
New Zealand
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Recently : “Mega-FTAs”Slide29
TTIP: Trans-Atlantic Trade and Investment Partnership US
28-member EUStatus today unclear but unlikely
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Recently : “Mega-FTAs”Slide30
Preferential tariff cutsPro: trade creation
Similar to the classic “gains from trade”Cons: Trade diversionRules of origin (ROOs)
Exemption of sensitive sectors
Sensitive = Most likely to be trade-creating if included
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Pros and Cons of all FTAs Slide31
Other aspects of actual FTAsPros:
Extension to trade in servicesHarmonization of regulationsCons (?): Extension of IP protection
Trade enforcement of labor standards
Trade enforcement of environmental standards
Investor-State Dispute Settlement
31
Pros and Cons of
all FTAs Slide32
Preferential tariff cutsPros:
Larger potential for trade creationIf ROOs are cumulative, less distortingPotential for adding membersReplace multiple rules with a single set
Cons:
Though there are fewer outsiders, each
is
harmed more by trade
diversion
In fact (in TPP) there was more complexity
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Additional Pros and Cons of Mega-FTAs Slide33
Other aspects of actual Mega-FTAs
Pros:May contribute to broader and more uniform standardsCons: Their use as weapons of geopolitics
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Additional Pros and Cons of Mega-FTAs Slide34
Might have created pressure to complete Doha Round. Possible, just as NAFTA motivated Uruguay
RoundDidn’t happen; Round is dead.
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Implications of Mega-FTAs for the WTO Slide35
By lowering trade barriers regionally, Mega-FTAs wouldH
asten the decline of uncompetitive industries,Thus gradually reduce political forces for protectionThis could reduce the need to use WTO-sanctioned administrative protection (anti-dumping, etc.)
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Implications of Mega-FTAs for the WTO Slide36
Trade disputes will have alternative fora in which to be settled: Choice between WTO panels and FTA panels
This may lessen the role of the WTO Dispute Settlement MechanismBut it will remain relevant
36
Implications of Mega-FTAs for the WTO Slide37
WTO will continue to be important for plurilateral negotiations on issues that transcend the Mega-FTAsSome issues that lend themselves neither to plurilateral agreements not to Mega-FTAs will remain unresolved
Most important: Subsidies
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Implications of Mega-FTAs for the WTO Slide38
Most immediately: Whether to complete TTIP (if US under Trump is willing)
Longer term:Continue with ever more bilateral FTAs?Or consolidate EU existing FTAs into one larger one?
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Implications of
Mega-FTAs for
EuropeSlide39
BrexitUK exit from EU
Not motivated by trade agreementsConcerns were migration and rulesNonetheless matters for many FTAsUK negotiations with EU & EU FTA partners
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The Uncertain FutureSlide40
TrumpRenegotiation of (or exit from) NAFTA
FTAs withUKJapanSays he prefers bilateral dealsMost recently indicated he would not use the WTO dispute settlement mechanism!
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The Uncertain FutureSlide41
Anti-Globalists in EuropeFrance: National Front, Marine Le Pen,
FrexitGermany: Alternative for GermanyNetherlands: Dutch Freedom Party, Geert Wilders
Austria: Freedom Party
Italy: Northern League
Greece: Worry that it might leave the euro, and what this could imply for its membership in EU
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The Uncertain FutureSlide42
Outside US and EuropeChina is proceeding with RCEP
China is courting Latin AmericaMay see China take the lead on trade away from US
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The Uncertain FutureSlide43
ConclusionThe US is clearly giving up its world lead on trade
Whether the world trading system will continue to function well depands on others:EU?China?
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The Uncertain Future