Arvind Panagariya

The Regionalism Debate: An Overview

AbstractThe following sections are included:IntroductionDefinitionsWTO Provisions for PTAsHistorical EvolutionEffects on Union MembersVinerian Analysis: Welfare Effects of a Tariff PreferenceTransport Costs and PTAsRules of Origin in FTAsNon-traditional Gains: Guaranteed Market Access, Shelter from Contingent Protection, Locking-in the Reforms and Dispute SettlementImplications for the Global Trading SystemCan PTA Expansion Lead to Global Free Trade?Do PTAs Make Multilateral Liberalization Less Likely?Do PTAs Lead to a Rise in Trade Barriers against Nonmembers?The Spaghetti-Bowl PhenomenonWTO-Illegal Policies in PTAsOpen Regionalism“Deep” IntegrationConclusions: Minimizing the Adverse Effects of PTAsReferences (This abstract was borrowed from another version of this item.) (This abstract was borrowed from another version of this item.)

The new regionalism : a country perspective

The following sections are included:IntroductionWelfare economics of FTAsInstitutional dimensions of RIGrowth effects of RI schemesConclusions

The Theory of Preferential Trade Agreements: Historical Evolution and Current Trends

The theory of preferential trade agreements (PTAs), or what might be described in policy terms as the General Agreement on Tariffs and Trade (GATT) Article XXIV sanctioned freetrade areas (FTAs) and Customs Unions (CUs), has undergone two phases of evolution, in two very different modes, largely reflecting the contrasting policy concerns of the time. In this paper, we trace this evolution, offering both a historical context and an intellectual coherence to diverse analytical approaches.

E-Commerce, WTO and Developing Countries

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On necessarily welfare-enhancing free trade areas

Abstract The well-known Kemp–Vanek–Ohyama–Wan proposition establishes that if two or more countries form a customs union (CU) by freezing their net external trade vector through a common external tariff and eliminating internal trade barriers, the union as a whole and the rest of the world cannot be worse off than before. Owing to the fact that a Free Trade Area (whose member countries impose country specific external tariff vectors) does not equalize marginal rates of substitution across its member countries (in contrast to a CU), the literature has been unable to provide a parallel demonstration regarding welfare improving Free Trade Areas (FTAs). The present paper eliminates this gap. In extending the result to the case with intermediate inputs, the paper also sheds new light on the rules of origin required to support such necessarily welfare enhancing FTAs. We show here that provided no trade deflection is permitted, all that is required by way of rules of origin is that the goods produced within the union – whether final or intermediate – be allowed to be traded freely. The proportion of domestic value added in final goods does not enter as a criterion in the rules of origin.

Variable returns to scale in general equilibrium theory once again

Abstract This paper relaxes some assumptions made by Jones (1968) and reconsiders the implications of variable returns to scale (VRS) for the Stolper-Samuelson and Rybczynski theorems. It also analyses for the first time the relationship between factor-returns and factor-supplies at constant commodity-prices. It is shown that the validity of the Rybczynski and/or Stolper-Samuelson theorem is neither necessary nor sufficient for the production possibilities frontier to be locally strictly concave to the origin. Several other new results are derived and an attempt is made to give an intuitive explanation of the most important findings.

Political-Economy Arguments for a Uniform Tariff

During the 1980s the Bank aggressively promoted greater uniformity in tariffs in developing countries. The Banks structural adjustment and trade reform programs have often recommended abolition of quantitative import restrictions and increased uniformity in tariffs. This report is a formal analysis of some political economy arguments for uniform tariffs. The authors present three models in which unifrom tariff rules may be adopted as a way of minimizing the welfare costs of endogenously determined tariffs. In the first two models, tariffs are demand determined : the government is essentially unable to resist the lobbying pressure. In the third model, tariffs are supply determined in the sense that they result from the governments preference for certain sectors over others. After examining the three models, the authors conclude that in each case it is possible for a uniform tariff regime to yield higher welfare than a regime in which tariffs can diverge across sectors.

EU Preferential Trade Arrangements and Developing Countries

T HE European Union, or the European Community (EC) as it continues to be called in the WTO parlance, has had the most extensive network of preferential trade areas (PTAs) of any WTO member. Prior to the current wave of PTAs, christened ‘New Regionalism’ by Bhagwati (1993), the EC was a participant to half of such arrangements. Thus, according to the WTO list current at the time of writing, a total of 32 PTAs, notified to GATT/WTO prior to 1990, were still in force. The EC was a participant to 16 of these arrangements. The New Regionalism saw the PTAs form with vengeance with their number rising to a staggering 172 by early 2002. The EC remained a major player in the game with membership in 33 additional arrangements. To be sure the EC PTAs have not been confined to developed countries. The EC has made a conscious effort to forge preferential trade arrangements with developing countries as well. Thus, it maintains special economic relations with its 12 developing Mediterranean neighbours, namely, Algeria, Cyprus, Egypt, Israel, Jordan, Lebanon, Malta, Morocco, Mauritania, Syria, Tunisia, Turkey and the Palestinian Authority. Recently, it has also forged FTAs with some far away trading partners, notably Chile and Mexico in Latin America and South Africa in Africa. The EC also maintains a complex web of one-way trade preference to all developing countries under the Generalised System of Preferences (GSP) and to a large number of African, Caribbean and Pacific (ACP) group of countries under the so-called Lome Convention, recently succeeded by the Cotonou Agreement. In this paper, I offer an overview and qualitative assessment of the EC preferential trade arrangements with developing countries. My main conclusion is

Gains from trade under variable returns to scale, commodity taxation, tariffs and factor market distortions

Abstract This paper examines the effect on welfare of improvements in the terms of trade and movement from autarky to free trade in the presence of variable returns to scale, production and consumption taxes, tariffs and factor market distortions. By expressing welfare in terms of a social welfare function and by considering infinitesimal changes in prices, sufficient conditions for the nonharmfulness of trade and improvements in the terms of trade are obtained which substantially weaken those obtained by Kemp and Negishi (1970).

Developing Countries at Doha: A Political Economy Analysis

This paper offers a political economy analysis of the Doha Ministerial Conference with special reference to developing countries. One of my key objectives is to understand the politics underlying the negotiations with a view to assessing the influence developing countries exerted on the outcome and the success they achieved in relation to the Uruguay Round Agreement, which is widely perceived as favouring mainly if not exclusively the developed countries. The main conclusions of the paper may be summarised as follows. First, with trade liberalisation as its central focus, the Doha negotiating agenda is to be welcomed from the viewpoint of developing countries. Second, the opposition by developing countries to the inclusion of at least some of the Singapore issues at Doha is defensible. Among other things, the countries lack the necessary negotiating and implementation capacity. Third, while the UR Agreement benefited both developing and developed countries, on balance, it benefited the latter more. The Doha outcome offers a better balance when taken by itself but does not go so far as to significantly correct the imbalance in the UR Agreement. Fourth, despite this better balance, the Doha negotiations offer little evidence of a shift in the relative bargaining powers of developing and developed countries. Nor can the superficially development friendly language of the Doha Declaration be viewed as signalling the softening of the tough negotiating stance developed countries took during the UR Round. Fifth, much of the negotiating power continues to reside with developed countries. Relatively equal levels of incomes gives greater coherence to interests of developed countries on issues that divide along North–South lines. Moreover, the presence of three large players – the USA, EU and Japan – allows them to exploit their bargaining power more effectively. Finally, to negotiate more effectively in the future, developing countries must improve their research capacity, thi (This abstract was borrowed from another version of this item.)