Constantine Michalopoulos

The Economics of Customs Unions in the Commonwealth of Independent States

In the aftermath of the breakup of the Soviet Union, trade among the new independent states collapsed. To help reestablish interstate trade, the 12 members of the Commonwealth of independent States (CIS) established a Free Trade Area. More recently, four members of the CIS -Belarus, Kazakstan, the Kyrgyz Republic, and Russia- agreed in principle to establish a Customs Union. The authors analyze the economic implications for potential members of establishing such a Customs Union. They conclude that the dynamic effects of the Union (and the Free Trade Area) are likely to be negative, because they would tend to be mixed but would be more harmful to countries that have already established relatively liberal trade regimes with lower average and less-differentiated tariffs than the common external tariff contemplated by the proposed Customs Union.

WTO Accession for Countries in Transition

Countries in transition have considered membership in the World Trade Organization (WTO) an important step toward integration in the international economic system. After several years of negotiations, five members of the former Soviet Union (FSU) - Armenia, the three Baltic countries, and the Kygryz Republic - may become members in 1998. It will probably take longer for Russia, Ukraine, and some others. It takes four to five years to process applications for FSU countries - which is close to average for recent applicants. The five countries expected to accede to the WTO this year are among the more liberal member of the FSU. With those five processed, there will be a backlog of another 26 application, most of them countries in transition, including China and Russia. At the current rate of processing, it will take five to six years to process them - and a decade or more for the 25 or so developing and transition economies that have yet to apply. Processing is tine-consuming because: legislative requirements needed for accession are time-consuming; candidate countries are weak institutionally and unfamiliar with the economic and legal issues to be addressed; the fact finding process is unnecessarily cumbersome and time-consuming; technical assistance to applicants in meeting the requirements for WTO accession is not effectively coordinated; and addressing the commercial interests of all members requires protracted negotiations. Governments seeking accession must coordinate the legislative and regulatory changes needed in their foreign trade regimes, adopt liberal trade policies, and identify areas of institutional weakness that require delays in implementation of WTO provisions and seek agreement on such delays. WTO members, for their part, should expedite the process, as universal membership is in everyone s best interest. They should: agree to suitable, time-bound extensions to allow acceding governments to address institutional weaknesses; provide coordinated assistance to acceding countries to strengthen their institutional capacity; and streamline the fact finding aspects of the accession process and give the WTO secretariat the budgetary resources it needs to work with applicant governments for this purpose.

The role of special differential treatment for developing countries in GATT and the World Trade Organization

The author analyzes how changes in thinking about the role trade plays in economic development have been reflected in provisions affecting developing countries in the GATT and the WTO. He focuses on the provisions calling for the special and differential treatment of developing countries. The WTOs special, and differential treatment has been extended to include measures of technical assistance, and extended transition periods to enable countries to meet their commitments in new areas agreed on in the Uruguay round of negotiations. At the same time, many WTO provisions encourage industrial countries to give developing countries preferential treatment, through a variety of measures, none of them legally enforceable. The author concludes that weaknesses in the institutional capacity of many developing countries, provide a conceptual basis for continuing special, and differential treatment in the WTO, but that the benefits should be targeted only to low-income developing countries, and those that need help becoming integrated with the international trading system. In addition, an effective system of graduation, should be put in place for higher-income developing countries. Developing countries find it politically easier to argue, that all should be treated the same, except for least developed countries, although their capacities, and need for assistance differ vastly. Industrial countries are expected to provide special, and differential treatment, but in practice, their commitments on market access, preferential treatment, and technical assistance, are not enforceable. Leaving it up to the industrial countries to decide which developing countries get preferential treatment, invites extraneous considerations in determining who gets how much special treatment. Unless higher-income developing countries accept some type of graduated differentiation in their treatment (beyond that granted the least developed countries), there is little prospect of implementing meaningful, legally enforceable special, and differential treatment favoring all developing countries under the WTO.

More Favorable and Differential Treatment of Developing Countries: Toward a New Approach in the World Trade Organization

This paper discusses options that could be considered in the WTO to respond to the call of WTO trade ministers to make special and differential treatment (SDT) provisions in the WTO more effective. We argue for a new approach that puts the emphasis on nondiscriminatory liberalization of trade in goods and services in which developing countries have an export interest; complemented by efforts to improve the development relevance of WTO rules and consideration of mechanisms to allow for greater differentiation across WTO members in determining the reach of WTO disciplines.

The Western Balkans in world trade: Some implications for Greece

The integration of Albania, Croatia, Bosnia‐Herzegovina, the Former Yugoslav Republic of Macedonia and the Federal Republic of Yugoslavia in the world trading system has been retarded by regional conflict. But recent progress in stabilization and democratization has been accompanied by closer ties with the European Union, membership for some countries in the World Trade Organization and increasing trade links within the region. The Greek economy has benefited significantly from these developments and stands to gain even more in the future; but much remains to be done in accelerating market‐orientated reforms and in strengthening these countries’ trade‐related institutions and infrastructure, for which external assistance is needed.

Developing country trade policies and market access issues: 1990-2012

The study presents a comprehensive review of developing country trade policies and market access issues as they evolved over the period 1990-2012. The main findings are, first, that applied tariffs as well as traditional core non-tariff measures have declined significantly over time in both developed and developing countries. Second, the instruments of protection used by developed and developing countries are becoming increasingly similar: trade remedies, especially anti-dumping are the instruments of choice for all except low-income developing countries. Third, agriculture is the main sector where developing countries face access problems in OECD markets. Fourth, regional and other preferential trade agreements are both a result and a cause of the lack of progress in multilateral trade negotiations. They violate the basic World Trade Organization tenet of most favored nation and thus pose a potential threat to the multilateral system and a potential stimulus to further multilateral collaboration. Fifth, sanitary and phytosanitary and technical barriers to trade are being increasingly used by both developed and developing countries but their protective intent is difficult to gauge. There is a need for increased vigilance, transparency, and reporting to ensure that they are not being used as a means of protection of economic interests. Sixth, the service sectors are the most promising area where efforts for further liberalization are needed and may produce significant benefits. And seventh, far less additional protection has been put in place following the 2008 financial crisis compared with what had been feared or what had happened in earlier crises.

Are customs unions economically sensible in the Commonwealth of Independent States

The twelve members of the Commonwealth of Independent States established a Free Trade Area to help maintain trade among each other. More recently, Belarus, Kazakstan, the Kyrgyz Republic and Russia agreed, in principle, to establish a Customs Union (CU). The paper concludes that the dynamic effects of the CU (and Free Trade Area) are likely to be negative because it would tend to lock the countries into the old technology of the Soviet Union. The static effects are mixed but are adverse for countries that have liberal trade regimes compared to the common external tariff contemplated for the CU.