Robert Teh

Trade Remedy Provisions in Regional Trade Agreements

This paper maps and examines the provisions on anti-dumping, countervailing duties and safeguards in seventy-four regional trade agreements (RTAs). The RTAs vary in size, degree of integration, geographic region and the level of economic development of their members. The key policy concern of the paper is that the elastic and selective nature of trade remedies may lead to more discrimination, with reduced trade remedy actions against RTA partners, but a greater frequency of trade remedy actions against non-members. The adoption of RTAspecific trade remedy rules increases this risk of discrimination, with trade remedies against RTA members being abolished outright or being subjected to greater discipline. The templates used for mapping the trade remedy provisions reflect this central concern. The results of the mappings suggest the need to be vigilant about increased discrimination arising from trade remedy rules in RTAs. A number of RTAs have succeeded in abolishing trade remedies. Probit and multinomial logit model estimations suggest that these RTAs are characterized by a higher share of intra-RTA trade and deeper forms of integration that go well beyond the dismantling of border measures. A fairly large number of RTAs have adopted RTA-specific rules that tighten discipline on the application of trade remedies on RTA members. In the case of anti-dumping for example, some provisions increase de minimis volume and dumping margin requirements and shorten the duration for applying anti-dumping duties relative to the WTO Anti-dumping Agreement. In similar fashion, many of the provisions on bilateral safeguards lead to tightened discipline or reduce the incentives to take safeguard actions. Safeguard measures can be imposed only during the transition period, have shorter duration periods and require compensation if put in place. Further, retaliation is allowed if there is no agreement on compensation. RTA provisions on global safeguards require that, under certain conditions, RTA partners be exempted from multilateral safeguard actions. This conflicts with multilateral rules which require that safeguard measures be applied to all sources of imports and highlights the problem of trade diversion. A small number of RTAs give a role to regional institutions to conduct anti-dumping and countervailing duty investigations and to review final determinations of national authorities. There is a theoretical presumption and some empirical evidence to suggest that this reduces the frequency of anti-dumping initiations and final determinations against RTA members. In the case of CVDs, we are unable to find major innovations in CVD rules and practice by past and present RTAs. A major reason for this may be the absence of commitments in the RTA on meaningful or significant curbs on subsidies or state aid.

The impact of disasters on international trade

In this paper we examine the impact of major disasters on international trade flows using a gravity model. Our panel data consists of more than 170 countries for the years 1962-2004 yielding approximately 300,000 observations. We find that the driving forces determining the impact of such events are the democracy level and, to a lesser extent, the area of the affected country. The less democratic and the smaller a country the more are its trade flows reduced in case it is struck by a disaster. We are also able to distinguish between the effect of a disaster on an importing and an exporting country.

Preferential Trade Agreements: Contingent Protection Rules in Regional Trade Agreements

This paper examines the provisions on antidumping, countervailing duties and safeguards in seventy-four regional trade agreements (RTAs). A number of RTAs have succeeded in abolishing contingent protection measures. In addition, about half of RTAs have adopted RTA-specific rules that tighten discipline on the application of contingent protection measures on RTA members. This is most especially the case for antidumping. There is less of an impact for countervailing duty; this is likely due to the fact that the economic impact of subsidies is global and also to the absence of commitments in RTAs on meaningful curbs on subsidies or state aid. It is very difficult to offer a simple summary characterization of the provisions in RTAs. RTAs vary in size, degree of integration, geographic scope, and the level of economic development of their members. Contingent protection provisions vary greatly from one RTA to the next. In fact, contingent protection provisions differ for the same country across different RTAs. Some RTAs have additional rules; some have no rules, and other prohibit the use of these actions. Even if we focus just on the RTAs that incorporate additional rules it is hard to characterize what happens; there is no consensus set of provisions that are found in all (or even most) RTAs. The results of the mappings suggest the need to be vigilant about increased discrimination arising from trade remedy rules in RTAs. If nothing else, the complicated pattern of inclusion of these provisions threatens the delicate “give and take” balancing of incentives that is at the crux of the GATT/WTO agreements. An ongoing policy concern is that the elastic and selective nature of trade remedies may lead to more discrimination, with reduced trade remedy actions against RTA partners, but a greater frequency of trade remedy actions against non-members. The adoption of RTA-specific trade remedy rules increases this risk of discrimination, with trade remedies against RTA members being abolished outright or being subjected to greater discipline. In turn, this makes it more difficult for nonRTA members to agree to WTO liberalization as the requisite quid-pro-quo from RTA members may not be realized. Said differently, RTAs may erode the market access that non-members thought they had secured in prior WTO rounds, not primarily because of the discriminatory tariffs but rather because of contingent protection rules.

Trade Imbalances and Multilateral Trade Cooperation

Rising current account and merchandise trade imbalances marked the years before the global financial and economic crisis. These imbalances either contributed to or precipitated the crisis and to the extent that they create systemic risks, it is desirable that they be reduced. There are many factors related to macroeconomic, structural, exchange rate and financial policies that contributed to the imbalances. The inability to manage these issues at the international level reflects the “coherence gap” in global governance. This paper examines the contribution that the WTO can make in its three areas of activities — negotiations, rule-making and dispute settlement — to deal with trade imbalances and with the main factors leading to them, including exchange rate misalignments. First, market opening efforts in services, including in the area of financial services, can reduce policy-related distortions and market imperfections in surplus countries that lead to the build-up of unsustainable imbalances. Second, in the context of a broad international effort to coordinate macroeconomic, exchange rate and structural policies to deal with the roots of imbalances (the first-best solution), there is a general efficiency argument that could be made for the use of WTO-triggered trade actions to enforce cooperative behaviour towards rebalancing. Absent this first-best response, trade rules alone would not provide an efficient instrument to compensate for the weaknesses in international co-operation in macroeconomic, exchange rate and structural policies.

A New Look at the Extensive Trade Margin Effects of Trade Facilitation

We estimate the effects of trade facilitation on the extensive margins of trade. Using OECD Trade Facilitation Indicators - which closely reflect the Trade Facilitation Agreement negotiated at the Bali WTO Ministerial Conference of December 2013 - we show that trade facilitation in a given exporting country is positively correlated with the number of products exported by destination and with the number of export destinations served by product. To address the issue of causality, we employ an identification strategy whereby only exports of new products, or exports to new destinations, are taken into account when computing the respective margins of trade. Our findings therefore imply a positive causal impact of trade facilitation on the extensive margins of trade. The results are, to a large extent, robust to alternative definitions of extensive margins, to different sets of controls variables and to various estimation methods. Simulating the effect of an increase to the regional or global median values of trade facilitation, we are able to quantify the potential extensive margin gains of trade facilitation reform in different regions.