DEEP MEASURES IN REGIONAL TRADE AGREEMENTS: HOW MULTILATERAL-FRIENDLY?

Transcription

1 DEEP MEASURES IN REGIONAL TRADE AGREEMENTS: HOW MULTILATERAL-FRIENDLY? AN OVERVIEW OF OECD FINDINGS Iza Lejárraga, Trade and Agriculture Directorate OECD Global Forum on Trade Reconciling Multilateralism and Regionalism in a Post-Bali World Paris, February 2014

2 Overview of Presentation TRENDS IN REGIONALISM BACKGROUND TO OECD WORK ON RTAs CHECKLIST OF MULTILATERAL-FRIENDLY ATTRIBUTES HIGHLIGHTS FROM OECD FINDINGS CONCLUSION OECD Trade and Agriculture Directorate 2

3 Regionalism has proliferated and deepened Source: Compiled from WTO Database on RTAs Note: Only includes RTAs notified to the WTO that are in force. 3

4 The focus of regionalism has been shifting First Wave ( ) 1. GOODS Only 5 RTAs include services Second Wave (2001-present) 1. SERVICES Over 105 RTAs include services 2. NEGATIVE INTEGRATION Removal of barriers Trade diversion vs. trade creation 3. GEO-POLITICAL Regional Driven by political interests 4. MAINLY OECD 28% of RTAs North-South South-South RTAs shallow 5. PROLIFERATION New agreements with key partners Duplication and overlaps 2. POSITIVE INTEGRATION Provision of public goods Positive externalities and dynamic gains 3. COMMERCIAL Cross-regional Aligned with Global Value Chains 4. EMERGING ECONOMIES 59% of RTAs North-South South-South RTAs becoming deeper 5. CONSOLIDATION Expansion of existing agreements Harmonization and deepening 4

5 Overview of Presentation TRENDS IN REGIONALISM BACKGROUND TO OECD WORK ON RTAs CHECKLIST OF MULTILATERAL-FRIENDLY ATTRIBUTES HIGHLIGHTS FROM OECD FINDINGS CONCLUSION OECD Trade and Agriculture Directorate 5

6 Background of Trade Committee work on RTAs: Multilateralising Regionalism Questions: Can some deep commitments and disciplines in RTAs be multilsaterilised; if yes, how? What are some good practices in RTA design and content? (TAD/TC(2009)1; TAD/TC/WP(2009)18) Coverage: A dozen policy areas, focusing on deep measures (i.e., not traditional border measures). Main focus on RTAs signed by OECD countries; some studies cover South-South RTAs. Methodologies: All studies look at legal obligations; in a limited set of policy areas, additional analyses have investigated implementation, quantitative impact and political economy. Caveats: Questions addressed from a technical feasibility perspective, and not from a political feasibility point of view. Important questions of political will outside the scope of studies. OECD Trade and Agriculture Directorate 6

7 Policy options for multilateralising deep RTA commitments: Two approaches Bottom up : RTAs-driven --Clauses (e.g., third-party MFN) --Extension of existing agreements --Coordination and convergence --Mega-regionals Top down : WTO-driven --Committees --Disciplines --Negotiations --Dispute Settlement OECD Trade and Agriculture Directorate 7

8 Lego Blocks Process 12 Stages Good practices in RTAs to promote building-block effects Open accession clauses Text (nonregion bound) Provision of Observer Text Status Extension to non-members Text Suspension or replacement of agreements Unconditional (third-party) MFN clause Liberal ROO - denial of benefits Customs union on sectoral basis Dynamic incorporation of WTO Agreements Provision to implementation of WTO obligations Obligation to cooperate in WTO negotiations Clauses on the choice of dispute fora Review and amendment of RTA OECD Trade and Agriculture Directorate

9 Overview of Presentation TRENDS IN REGIONALISM BACKGROUND TO OECD WORK ON RTAs CHECKLIST OF MULTILATERAL-FRIENDLY ATTRIBUTES HIGHLIGHTS FROM OECD FINDINGS CONCLUSION OECD Trade and Agriculture Directorate 9

10 Factors influencing multilateralisability Extent of discrimination Coherence & homogeneity Predictability (compliance) Dispersion Multilateralisation Economic impact (optimal area) OECD Trade and Agriculture Directorate 10

11 Checklist of multilateral-friendly attributes Dispersion: How widespread are WTO-plus measures in RTAs? 1a) Critical mass of RTAs 1b) Broad representation of WTO Members Coherence and Homogeneity: How consisistent are WTO-plus measures across RTAs and with WTO? 2a) Coherence with WTO agreements 2b) Similarity across RTAs Extent of Discrimination: How discriminatory is the treatment granted under WTO-plus practices? 3a) Non-excludable (de facto MFN) 3b) Eligibility an extension of benefits Predictability: How enforceable and transparent are WTO-plus measures? 4a) Mandatory through dispute settlement 4b) Transparency of deep measures Economic Impact: What are the economic dividends and the constraints? 5a) Trade effect from globalising WTO-plus 5b) Political economy constraints OECD Trade and Agriculture Directorate 11

12 Agriculture SPS TBTs Export Restrict. Trade Facilitation Services Labour Mobility E-commerce Investment Competition Intellectual Prop. Rights Government Procurement Transparency Anti-corruption Environment Profile of deep measures by policy area Critical Mass, incl. developing countries Coherence with WTO agreements International standards High degree of homogeneity Non-discriminatory (non-excludable) Liberal ROO or lack of ROO Third-party MFN or extension benefits Mandatory (not bestendeavour) Enforceable via dispute settlement Co-operation on implementation Economic impact Political economy NA NA NA NA NA NA Note: High, good and limited potential for multilateralisation. NA denotes not applicable, and not assessed in OECD work. The OECD findings Trade reflected and Agriculture on this chart Directorate are preliminary and are being refined in a forthcoming OECD paper. 12

13 Overview of Presentation TRENDS IN REGIONALISM BACKGROUND TO OECD WORK ON RTAs CHECKLIST OF MULTILATERAL-FRIENDLY ATTRIBUTES HIGHLIGHTS FROM OECD FINDINGS CONCLUSION OECD Trade and Agriculture Directorate 13

14 Critical mass of RTAs deepen commitments: over 80% of RTAs WTO-plus in services, investment and transparency RTAs that Deepen Obligations, by Policy Area Services Investment Transparency Competition IPR TBT SPS Movement of perople Export restrictions Govt. Procurement E-commerce Environment Percentage of RTAs signed since 2001 Source: Compiled from texts of agreements. OECD Trade and Agriculture Directorate 14

15 Deep provisions spreading to North-South and South-South RTAs; marginal representation of low income countries Composition of 21 st Century RTAs First wave of RTA ( ), only 28 % of deep RTAs were North- South Propagation of deep measures from North- South to South- South RTAs Only 3% of South partners with deep RTAs are low-income countries from texts of Source: Compiled from WTO RTAs Databseoed OECD Trade and Agriculture Directorate 15

16 There is a high degree of similarity in WTO-plus measures, both within and across trading partners In services, 60% of WTO-plus commitments of OECD countries are similar; 49% similarity in overall sample. In investment, most commitments and lists of nonconforming measures are found to be highly similar. In transparency, 45% of RTAs signed since 2001 contain a horizontal transparency chapter with common obligations. In e-commerce, countries have reached similar, albeit not identical conclusions to unresolved issues in WTO. In government procurement, there is high similarity in WTO-plus measures regarding central government, and less so in measures related to local (sub-national) governments. OECD Trade and Agriculture Directorate 16

17 Percentage of RTAs Most WTO-plus measures are mandatory; WTObeyond have best-endeavour or carve-outs Enforceability of WTO-plus and WTO-beyond Commitments, by Policy Area Enforceable via dispute settlement mechanism Mandatory but carved out of dispute settlement Best endeavour Source: Compiled from WTO Database on RTAs 17

18 Weak discrimination in many WTO-plus areas Level of discrimination Agriculture High. Preference margins average 5% (some products 15%). Export restrictions TBTs/SPS Transparency Services Investment Govt procurement Competition IPR Environment Low. De facto MFN effect. Moderate. MRAs with no ROO are less trade distorting-than tariffs. Low. De facto MFN effect. Moderate. Liberal ROO attenuate spaghetti bowl effects. There are exceptions, such as recognition of professional qualifications. Low. MFN clauses relatively prevalent. Moderate. GPA forbids discrimination non-party subsidiaries. Low. Few explicit discriminatory provisions. Low. De facto MFN effect. Low. De facto MFN effect. OECD Trade and Agriculture Directorate 18

19 Deep RTAs are promoting greater transparency, trust and policy coordination Deep measures require greater transparency and trust --Deep measures cannot be liberalised in the same way that traditional border barriers can: greater focus on enhancing regulatory transparency. Evolving scope: more than the exchange of information --Obligations on transparency in RTAs have broadened beyond WTO scope, incorporating elements of policy coordination and cooperation (procedures for designing and reviewing regulations, participation of public-including foreignparties, coherence across domestic regulatory portfolios). Trade-boosting effects: quantitative evidence --A marginal improvement in transparency (each additional WTO-plus obligation) is associated with an increase in trade of over 1 per cent: 1.2% for goods, 1.4% in agriculture. --A marginal reduction in preferential tariffs (1%) is associated with an overall 2% increase in trade in agriculture (1.34% in North-South trade). OECD Trade and Agriculture Directorate 19

20 Overview of Presentation TRENDS IN REGIONALISM BACKGROUND TO OECD WORK ON RTAs CHECKLIST OF MULTILATERAL-FRIENDLY ATTRIBUTES HIGHLIGHTS FROM OECD FINDINGS CONCLUSION OECD Trade and Agriculture Directorate 20

21 Multilateralising regionalism : RTAs can be stepping stones for global trade reform Many improved commitments and disciplines in deep RTAs have multilateral-friendly features GLOBAL Coherence & homogeneity across RTAs Critical mass, North-South & South-South Mandatory & enforceable obligations Generating higher levels of MFN-driven transparency (relatively weakly discriminatory) but the desirability and feasibility of their multilateralisation depends on economic and political considerations.

22 Thank you for your attention See OECD work on RTAs: