CONTENTS. ABBREVIATIONS AND SYMBOLS...vii ACKNOWLEDGEMENTS...ix DISCLAIMER...x FOREWORD BY THE DIRECTOR-GENERAL...xi EXECUTIVE SUMMARY...

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1 CONTENTS CONTENTS ABBREVIATIONS AND SYMBOLS...vii ACKNOWLEDGEMENTS...ix DISCLAIMER...x FOREWORD BY THE DIRECTOR-GENERAL...xi EXECUTIVE SUMMARY...xiii I THE TRADE SITUATION IN A INTRODUCTION... 1 B OVERVIEW OF TRADE AND PRODUCTION DEVELOPMENTS IN C MERCHANDISE TRADE, VOLUME (REAL) TERMS, D MERCHANDISE AND SERVICES TRADE, VALUE (NOMINAL) TERMS, II TRADE POLICY COMMITMENTS AND CONTINGENCY MEASURES A INTRODUCTION B FLEXIBILITY IN TRADE AGREEMENTS Economic theories of trade agreements and the role of flexibilities Circumstances for suspension of commitments and flexibility measures built into the WTO agreements Conclusions...39 C ECONOMICS, DISCIPLINES AND PRACTICES Safeguards Dumping and anti-dumping measures Subsidies and countervailing duties Other selected measures of contingency protection Choosing among different measures Conclusions D EMPIRICAL EVIDENCE Patterns and trends in the use of contingency measures Contingency measures and the multilateral trading system Factors explaining the use of trade contingency measures The economic impact of contingency measures Conclusions E CONCLUSIONS BIBLIOGRAPHY TECHNICAL NOTES iii

2 world TradE report 2009 list OF TaBlES, CHarTS and BOXES I THE TRADE SITUATION IN Table 1 GDP and merchandise trade by region, Table 2 World exports of merchandise and commercial services, Table 3 World exports of commercial services by major category, Charts Chart 1 Real GDP and trade growth of OECD countries, Chart 2 Prices of selected primary products, January 2002-January Chart 3 Growth in the volume of world merchandise trade and GDP, Chart 4 Real merchandise trade growth by region, Chart 5 Export prices of selected primary products, Chart 6 Dollar exchange rates of selected major currencies, January 2000-January Appendix App. Table 1 World merchandise trade by region and selected country, App. Table 2 World exports of commercial services by region and selected country, App. Table 3 Merchandise trade: leading exporters and importers, App. Table 4 Merchandise trade: leading exporters and importers, 2008 (Excluding intra-eu (27) trade) App. Table 5 Leading exporters and importers in world trade in commercial services, App. Chart 1 Monthly merchandise exports and imports of selected economies, January 2006-February II TRADE POLICY COMMITMENTS AND CONTINGENCY MEASURES B. FLEXIBILITY IN TRADE AGREEMENTS Table 1 A categorization of circumstances and arguments for a temporary increase in protection Boxes Box 1 Terms-of-trade and the international cost-shifting problem...22 Box 2 Time-inconsistency...23 Box 3 Commitment versus flexibility: the case of safeguards in the GATT and WTO C. ECONOMICS, DISCIPLINES AND PRACTICES Table 2 Suspension of concessions pursuant to SGA Article Charts Chart 1 Binding coverage including and excluding subheadings with an overhang exceeding 20 resp. 15 percentage points, by region Chart 2 Binding coverage including and excluding subheadings with a binding overhang exceeding 15 percentage points, by product category iv

3 CONTENTS Boxes Box 4 Automatic safeguards in agriculture...50 Box 5 Is there a need for a services safeguard? Box 6 Effects of tariff, quota and tariff-rate quota...60 Figure 1: The effect of a tariff...60 Figure 2: The effect of a quota...60 Figure 3: The difference between a tariff and a quota Figure 4: The effect of a tariff-rate quota (TRQ) Box 7 How anti-dumping can be used to facilitate collusion Figure 1: Representation of the game in profit space...72 Box 8 Effects of an export subsidy...85 Figure 1: The effect of an export subsidy implemented by a large country...85 Box 9 Strategic trade policy...87 Figure 1: Output subsidy and reaction functions in Cournot model...87 Box 10 The effects of an export subsidy combined with a CVD...90 Figure 1: The effects of an export subsidy combined with a countervailing tariff: the case of large countries...90 Box 11 Water in banking sector commitments Table: Degree of discrimination against foreign-owned banks relative to domestic banks: reported practices compared with WTO commitments D. EMPIRICAL EVIDENCE Table 3 Number of tariff increases: selected members and selected years Table 4 Number of AD initiations, by user and target, Table 5 Number of CVD initiations, by user and target, Table 6 Safeguard initiations, by user and target, Table 7 Number of products subject to export taxes as reported in TPRs , selected countries Charts Chart 3 Annual initiations of AD, CVD and safeguard investigations Chart 4 Annual number of new AD, CVD and safeguard measures Chart 5 Trade contingent measures and the global business cycle Chart 6 Number of Article XXVIII requests, by year Chart 7 Number of Article XXVIII requests after round of negotiations Chart 8 Number of initiations and world import share, by HS section Chart 9 Number of renegotiations, by HS section Chart 10 Number of members applying export taxes, by HS chapter Chart 11 Number of cases of tariff increases of at least 15 percentage points, by product, Chart 12 AD initiations, by level of development Chart 13 Number of requests for renegotiations, by member Chart 14 Number of cases of tariff increases of at least 15 percentage points, by country, Boxes Box 12 Anti-dumping duties Table: Average AD duties for selected users (in per cent) Box 13 Cautionary note on relying on the number of initiations/measures Box 14 The use of contingency measures in Latin America: evidence based on country case studies Box 15 Contingency measures in preferential trade agreements (PTAs) v

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5 ABBREVIATIONS AND SYMBOLS abbreviations and SYMBOlS AD ANZCERTA BIS BOP BSE CAFTA CAMAD CARICOM CEO CEP CEPAL CEPII CEPR CGE CIA CIS CMEA COMPAS CRS CVD EC EEC EFTA EU FAME FDI FTA GATS GATT GDP GNP GTAP HS ICT IF IFPRI IMF INRs IPRs IRS ISIC IT ITC ITC ITU LDCs MERCOSUR NAFTA NAMA NIEs NTBs ODCs Anti-dumping The Australia New Zealand Closer Economic Agreement Bank for International Settlements Balance of Payment Bovine Spongiform Encephalopathy (Mad cow disease) Central American Free Trade Agreement Common Analytical Market Access Database The Caribbean Community and Common Market Chief Executive Officer Centre for Economic Performance Comision Economica para America Latina y el Caribe Centre d Etudes prospectives et d Informations Internationales Center for Economic Policy Research Computable General Equilibrium Central Intelligence Agency Commonwealth of Independent States Council of Mutual Economic Assistance Commercial Policy Analysis System constant returns to scale Countervailing Duty European Community European Economic Community European Free Trade Area European Union forecasting analysis and modeling environment Foreign Direct Investment Free Trade Agreement General Agreement on Trade in Services General Agreement on Tariff and Trade Gross Domestic Product Gross National Product Global Trade Analysis Project Harmonized system Information and Communication Technology Integrated Framework International Food Policy Research Institute International Monetary Fund initial negotiating rights Intellectual Property Rights increasing returns to scale International Standard Industrial Classification Information Technology International Trade Center International Trade Commission International Telecommunication Union Least-Developed Countries Southern Common Market North American Free Trade Agreement Non-agricultural market access Newly Industrialized Economies Non-tariff barriers other duties and charges vii

6 world TradE report 2009 OECD OEEC OPEC PPP PSI PTAs R&D S&D SI SITC SOC SPB SPS SSM SSRN STDF STP TAA TFP TOT TPRs TRQs UK UNCTAD UNDP US USDOC USITC USSR VAT VERs WCO WWI Organization for Economic Co-operation and Development Organization for European Economic Cooperation Organization of the Petroleum Exporting Countries purchasing power parity Principal Supplying Interest Preferential Trade Agreements Research and Development Special and differential treatment Substantial Interest Standard International Trade Classification Standard Occupational Classification Sunset Policy Bulletin Sanitary and Phytosanitary Measures Special Safeguard Mechanism Social Science Research Network Standards and Trade Development Facility Software Technology Parks Trade Adjustment Assistance Total Factor Productivity Terms-of-trade Trade Policy Reviews Tariff-rate quotas United Kingdom United Nations Conference on Trade and Development United Nations Development Programme United States of America United States Department of Commerce United States International Trade Commission Union of Socialist Soviet Republics Value-Added Tax Voluntary Export Restraints World Customs Organization World War I The following symbols are used in this publication:... not available 0 figure is zero or became zero due to rounding - not applicable $ United States dollars euro UK pound viii