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New Trade Politics After the Doha Round

New Trade Politics After the Doha Round. Joost Pauwelyn Professor of International Law (HEID) Geneva, 5 December 2007. Havana Conference, December 1947. Opening of the Centre William Rappard. 60 years old « operating system ». Reciprocal exchange of market access concessions 

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New Trade Politics After the Doha Round

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  1. New Trade Politics After the Doha Round Joost Pauwelyn Professor of International Law (HEID) Geneva, 5 December 2007

  2. Havana Conference, December 1947

  3. Opening of the Centre William Rappard

  4. 60 years old « operating system » Reciprocal exchange of market access concessions  • Domestic politics lead to protectionism • GATT/WTO enables liberalization through an exchange of market access ‘concessions’ • Producer driven (replace import with export politics) • Merchantillistic • Mistrust of own government (replace open with closed politics)

  5. Frequency of WTO Agreements Addressed in the 79 Appellate Body Reports Circulated between 1996-2006 Source: WTO Appellate Body, 2007

  6. « New Trade Politics » London, 1946 Seattle, 1999

  7. « New Trade Politics » New Delhi, 2005 Geneva, 1926

  8. Overview • What has changed in last 60 years ? • What consequences should we draw for the WTO ? • Conclusions

  9. Reduction of Tariffs on Industrial Goods1931 to 2000 Source: Findlay and O’Rourke, 2007

  10. Regional Trade Agreements, 1958-2004 Annual number Total in force Cumulative in force New agreements annually

  11. Shares in World Trade 1947 Benelux (11%) Other (12%) Brazil Canada USA (25%) China France (9.5%) India UK (25%) Source: Irwin & Mavroidis

  12. Shares in World Merchandise Trade 2006 China (9.6%) Other (40%) EU (17%) India Japan Mexico Switserland (1.6%) USA (16%) Source: WTO

  13. FDI Inflows, Global and by Group of Economies1980-2006 (billions of dollars) Source: UNCTAD

  14. CONVENTIONAL More members More trade Less tariffs More preferential agreements LESS CONVENTIONAL Country shares in world trade What is traded & how International flanking policies Domestic forces against free trade What changed in 60 years ?

  15. Southern Democrats 1940s – 2000s John Edwards Cordell Hull

  16. Consequences of these changes I. Is the WTO still needed ? II. Does trade liberalization continue to require producer-driven « closed politics » ? III. In the future, where can the biggest gains be made ?

  17. I. Is the WTO still needed ? Market access fuel is running out People support globalization

  18. The End of History ?

  19. The End of History ?

  20. The End of History ?

  21. A different role for the WTO after Doha … • From « engine » to « stabilizer » against resurgent protectionism (DSM) • From « engine » to « clearing house » where liberalization agreed to elsewhere is bound

  22. Decomposing Tariff Reductions Average Tariffs, 1983 and 2003 Decomposing 20% pt. decline Regional 29.9 Multilateral 9.3 Unilateral Source: Martin and Ng, 2004

  23. A different process for the WTO after Doha … • From prisoners’ dilemma to assurance game • From reciprocal ‘concessions’ (mercantillism) to ‘do yourself a favor’ (welfare analysis) • From single package to variable geometry

  24. II.Does free trade continue to require « closed politics » ? London, 1946 Seattle, 1999

  25. « New Trade Politics » Seattle, 1999 Hong Kong, 2005 Geneva, 1926

  26. Move back from « closed » to « open » politics • Engage & convince (rather than « cheat on ») domestic politics • Offer adjustment & tailor-made policies • From producer focus to consumer/values focus • Support of open trade + ‘policy space’ = « new embedded liberalism »

  27. New « Embedded Liberalism »

  28. New « Embedded Liberalism »

  29. New « Embedded Liberalism »

  30. III. Where are the biggest gains ?

  31. Impacts on Real Income from Full Liberalization of Global Merchandise Trade Source: Anderson, Martin and van der Mensbrugghe, 2005

  32. A failed Doha Round doesn’t cost China or India much; less so for Brazil Source: Simon Evenett, 2007

  33. Dani Rodrik (Harvard University) How to Save Globalization from Its Cheerleaders (July, 2007) « the obstacles faced by developing countries do not originate from inadequate access to markets abroad or to foreign capital. The gains to be reaped by further liberalization of markets are meager for poor and rich countries alike … it is lack of policy space – and not lack of market access – which is … the real binding constraint on a prosperous global economy ».

  34. Conclusions I. The world has changed since 1947 II. The GATT/WTO did not (or little) III. Reform proposals focus on insider concerns IV. New trade politics must adjust to outside world: * New « embedded liberalism » * Open politics & Policy space * Assurance game rather than PD * WTO as stabiliser & clearing house * Low hanging fruit is gone

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