'Made in the World': Does the Current Global-Value-Change Economy Require Any Changes in the WTO Regulatory Framework?

Abstract

The international fragmentation of production in global value chains (GVCs) is arguably one of the most important factors shaping international trade today. It challenges the way we look at the global trade. Trade in intermediates, trade in task and trade in services comprise majority of the international trade. More and more products are now 'Made in the World' rather than 'Made in China' or 'Made in Germany'. Exports and imports have been closely interlinked so as to make the capacity of a country to exports heavily dependent on efficient import. The role of multinationals has been crucial in spreading and managing the value chain globally. The rise of the 21st century trade and trade-service-investment-IP nexus has made relevant policy making more complicated and multidimensional. As the World Trade Organization (WTO) was busy with Doha Development Agenda (DDA) and 20th century trade and border disciplines, these behind the border 'deep integration‘ issues have been largely developed and regulated by the Preferential Trade Agreements (PTAs). Though GVCs strengthens the case for multilateralism, they have been increasingly regional leading to the emergence of '21st century regionalism'. Most of the developing and least developed countries (LDCs) remain excluded from the GVCs -- a fact that seriously questions its global face. Rise of the PTAs and the recent under-negotiation mega-regionals have eroded WTO centricity of the world trade regime by threatening to establish an alternative global mechanism for GVCs. Now to stay relevant to these new dimensions, WTO must live up to the challenges before they go out of its ambit. The 'Bali package' has created a momentum by confirming the political support of the world community for WTO rulemaking. WTO must build on it to reach a multilateral consensus dealing with the 21st century trade governance before it is too late.