Global Trade Regime Research Articles

The Climate Risk of Green Industrial Policy

The proliferation of green industrial policy strategies around the world is taking place within a broader global context of a turn toward deglobalization and the pursuit of national self-sufficiency. The political economy of domestic renewable energy support and the basic principles of global trade regimes are in direct conflict, with direct implications for nations’ abilities to transition to low-carbon economies. Many are calling for decoupling clean energy supply chains from China, yet such responses could slow the global clean energy transition, increasing the cost of deployment in developing countries.

Competing Regionalisms in the Asia-Pacific? Versatile Sustainable Development Issues in FTAs

The essay explores the inclusion of sustainability commitments in free trade agreements (FTAs) in the Asia-Pacific and the potential differences in their emphases that may reflect “competing regionalisms” in the region. Discussing the geo-economics of cross-border regionalism, the diverse trade agreements are compared as to provisions on sustainable development, and reflected with European Union FTAs. Findings indicate a lack of sustainable development issues in the Regional Comprehensive Economic Partnership and in China’s FTAs with regional neighbors, whereas the Trans-Pacific Partnership, and its successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, have substantial commitments on environmental and labor protection. The results suggest that the role of advanced economies as norm setters in sustainability policies may be challenged by a shift toward other emphases in Asia-Pacific FTAs. This contributes to our understanding of the cross-currents in global trade regime leading to competing regionalisms, and therefore, the limits to multilateralizing sustainability issues.

Policy responses to COVID-19: lessons for the global trade and investment regime

BackgroundDuring the past two years, the COVID-19 pandemic has cost millions of lives around the globe, caused major morbidity and provoked widespread economic and social disruption. In response, governments have enacted policies to mitigate the impacts of the pandemic. This research focuses in on policies aimed at increasing access to essential health products and services by comparing them to the global rules governing trade, investment and intellectual property. We have assessed whether these rules have or could have constrained countries in responding to this and future crises. The study identifies the nature and scope of the trade-related health sector policies implemented by our sample group of countries, selected because of their systemic significance: the United States, Germany, France, China, South Africa and India. Each policy is placed into one of five broad categories covered by trade and investment rules so that we could assess their consistency with those rules.ResultsWe found, among other things, that the types of trade-related health measures were quite diverse. The high-income countries in our study were the most active in the policy space and tended to rely on subsidies-based measures while the middle-income countries relied more heavily on export and import measures. Policies directly relevant to intellectual property protection were virtually non-existent. When evaluating the implemented policies against the global trade and investment rules, we found potential constraints under five different types of rules: those governing subsidies, import and export trade barriers, investment measures, government procurement and trade-related intellectual property.ConclusionsGiven the tension between the global rules and the practices of policymaking during the pandemic, we conclude that the tension must be resolved in favor of governments making policy rather than relying on existing exceptions or pushing national governments to comply more exactly with the rules. Although the pandemic itself does not respect national borders, governance still generally occurs at the national level because national governments are often the only entities with both the legal authority and the practical ability to respond.

Re‐Embedding Trade in the Shadow of Populism

In the last 75 years of international economic cooperation, we have witnessed tremendous changes. The global trade and investment regime is under pressure and undergoing a significant transformation. Supply chains are being restructured, new trade blocks are forming based on strategic and political considerations, support for trade among citizens is weak and inconsistent, and populist opposition to the global economic and political order is ascendant. In this time of uncertainty about the future of the world order, the articles for this thematic issue address how and if the global trade and investment regime can be re-embedded into society.

Status-quo enhancing versus status-quo challenging change in global economic governance: the case of China in finance and trade

When a state is dissatisfied with an international institution it has different strategies available to it to secure change. These strategies are increasingly well understood due to research in the areas of regime complexity and institutional selection. But while there is an understanding of how the structure of a regime can influence the chances of success of different change proposals, there is less clarity on how the content of proposed changes impacts their success. In this article we decompose proposed institutional changes into two sub-types: Status-quo challenging and status-quo enhancing. Status-quo enhancing changes promote reforms that advance the objectives of the existing regime and so serve to drive change that would otherwise be limited by the inertia of existing institutions. Conversely, status-quo challenging changes undermine the stated goals of the existing regime. We develop these sub-types by comparing China’s attempts to secure changes in the global finance and trade regimes and find that for China status-quo enhancing changes have met with more success than status-quo challenging approaches because they have created more opportunities for productive coalition building.

TAPED를 활용한 글로벌 디지털무역규범의 형성과 아시아-태평양 지역무역협정의 역할에 관한 연구

As digital trade negotiations have been stalemated at the multilateral level, major countries started to utilize regional trade agreements to establish new and innovative trade rules in the digital era. Using ‘Trade Agreements Provisions on Electronic-commerce and Data (TAPED)’, this paper finds out that the Asia-Pacific (AP) region plays a positive and leading role in shaping global digital trade rules. In each five categories, such as ‘General and Dispute Settlement’, ‘Digital Trade Facilitation’, ‘Digital Trade Regulatory Frameworks and Digital Trust Policies’, ‘Reducing Digital Trade Barriers’, ‘Innovative Technology, Digital Development and Inclusion, and Institutional Coordination’, AP regional trade agreements contain more diverse rules and superior in quantity to American or European ones. The AP region, which was marginalized in the process of shaping traditional trade rules, now leads global negotiations on the new trade agenda. To see a new global trade regime in the digital era, it is crucial to keep a close eye on Asia-Pacific.

Legalization and Compliance: How Judicial Activity Undercuts the Global Trade Regime

AbstractThe crisis facing the World Trade Organization illustrates the trade-off between legalization and compliance in international legal systems. Dispute bodies can sometimes “overreach” in their rulings, leading to resistance from member states. This article looks at one form of legal overreach: the extension of legal precedent. We argue that extending previous decisions can reduce the flexibility that states include deliberately in their agreements. We utilize original data on individual applications of precedent in the World Trade Organization's Appellate Body decisions from 1995 to 2015 and on policy responses to those decisions. We find strong evidence that extending precedent reduces on-time compliance. It also leads to longer delays before members comply. The results speak to the life cycles of international organizations, as well as questions of design and cooperation.

Green Bills for Green Earth: How the International Trade and Climate Regimes Work Together to Save the Planet

Through their Intergovernmental Panels on Climate Change, the scientific community tells us that we are heading towards a climate catastrophe. As a result, various countries are offering various promising and novel policy instruments to mitigate climate change and continue to grow macroeconomically, as we witnessed in the Glasgow Conference of the Parties in 2021. In other words, finding ways to grow economically while, at the same time, protect the environment and mitigate climate change. In that spirit, this article first provides an overview of the global trade and climate regimes. It then offers an analysis of how the World Trade Organization (WTO) globally and the European Union (EU) regionally might combat climate change in remarkable ways. The article also provides an analysis of European Green Deal and the US Green New Deal (GND), two encouraging policy instruments to help mitigate climate change ambitiously. Finally, the article provides a thorough assessment of the EU’s Carbon Border Adjustment Mechanism (CBAM). European Green Deal, US Green New Deal, Carbon Border Adjustment Mechanism, carbon pricing, GATT general exceptions, non-discrimination principle in GATT

The Farsighted Stability of Global Trade Policy Arrangements

In this paper, we study and compare the stability of trade policy arrangements in two different regulatory scenarios, one with and one without Preferential Trade Agreements (PTAs), i.e. current vs. modified WTO rules. Unlike the existing literature, our paper considers an extensive choice set of trade constellations, containing both available PTAs, Customs Unions (CUs) and Free Trade Agreements (FTAs), as well as Multilateral Trade Agreements (MTAs), while assuming unlimited farsightedness of the negotiating parties. With symmetric countries and under both the current and the modified WTO rules, the Global Free Trade (GFT) regime emerges as the unique stable outcome. In the case of asymmetry, the results are driven by the relative size of the countries. If the world is in the vicinity of symmetry and two out of three countries are close to identical while relatively smaller than the other one, the area where the GFT regime is stable increases when prohibiting PTAs. However, when two similar countries are relatively larger, the availability of PTAs is conducive to the stability of the GFT regime. Finally, if the world is further away from symmetry, full trade liberalization is not attainable at all and an area where the Most-Favoured-Nation (MFN) regime is stable appears in the scenario without PTAs. Thus, the direction of the effect of PTAs on trade liberalization depends on the degree of asymmetry among countries.

Beyond U.S.-China Rivalry: Rule Breaking, Economic Coercion, and the Weaponization of Trade

Growing U.S.-China rivalry undoubtedly poses a profound threat to the multilateral trading system. In “Governing the Interface of U.S.-China Trade Relations,” Gregory Shaffer provides a highly nuanced and balanced analysis of the nature of this threat and potential solutions to address it. Yet managing trade conflict between the United States and China is, I argue, only one of the twin challenges currently facing the multilateral trading system. The other is how to rein in growing economic coercion and the arbitrary abuse of power by dominant states in the system. The United States and China have each become highly disruptive forces in the liberal trading order—not simply because of their bilateral trade relations but also, and just as importantly, because of their behavior toward the rest of the world. Both of these countries have increasingly turned away from trade multilateralism and toward aggressive unilateralism and the raw use of coercive power in their dealings with other states. It is this flagrant disregard for the rule of law on the part of the system's two dominant powers that has thrown the World Trade Organization (WTO) into crisis and ultimately poses the greatest threat to the global trade regime.

Policy Space for Capital Flow Management: An Empirical Investigation

ABSTRACT Many in the academic community have identified that some trade and investment treaties restrict the ability of nation states to regulate volatile capital flows to prevent and mitigate financial instability. This paper quantifies the variation across preferential and free trade agreements with respect to their policy space for capital flow management measures. With these data we create a composite score of treaty flexibility and examine the collective level of policy space across the global trade regime. We find that the majority of trade treaties leave significant policy space for regulating cross-border finance in the world economy. South-South treaties tend to have the most policy space, whereas North-South and North-North treaties have less. When weighted by the level of gross domestic product (GDP) and incoming foreign investment however, we find that those treaties with the least amount of policy space for capital flow measures represent 65% of world GDP and 48% of global capital flows. What is more, it appears that the global trend is toward treaties without the policy space for appropriate regulation.

It Is Not Decided Yet: The Scripts of China's and India's Rise Are Still Being Written

It Is Not Decided Yet:The Scripts of China's and India's Rise Are Still Being Written Harsh V. Pant (bio) The rise and fall of great powers has long preoccupied scholars of international relations. This moment in international politics is also rife with the possibility of a power transition as the United States starts to look inward and China asserts its power across the globe. As a result, debates around the concepts of "rising powers," "emerging powers," and "major powers" have attained a new policy relevance as well. Manjari Chatterjee Miller has waded into this discussion with a fascinating new book that details an interesting argument about why some rising powers, like China, become great powers while others, like India, do not. In her assessment, while material capabilities are important, equally significant are the ways in which different states think about their own role in world politics. Miller compares the national narratives of rising powers and makes such narratives integral to the assessment of state power. Why some countries actively rise while others remain reticent is thus a function of "particular type of narratives, narratives about how to become a great power according to the prevalent norms" (p. 11). What is just as interesting and important is Miller's focus on the process of rising to emerge as a great power, and she underscores the differences among rising powers by going beyond standard material arguments. So, "if a country seeks to increase its relative material power without attempting either to acquire global authority or to court both external and internal recognition of itself as a great power in the making, it is unlikely to become a great power" (p. 10). Such powers, which Miller terms "reticent," lack narratives about their roles on the global stage. This results in their not acquiring global authority, thereby hindering their rise to the status of a great power. Rising powers that adopt and debate great-power ideas of the day emerge as great powers, while those who are not able to do this remain forever rising. Miller examines this argument using six cases: three active rising powers (the nineteenth-century United States, Meiji Japan, and [End Page 152] post–Cold War China) and three reticent powers (the nineteenth-century Netherlands, Cold War Japan, and post–Cold War India). With this book, Miller has brought together the material and ideational determinants of great-power politics like few others have managed, and has provided us with a new lens to examine shifts in global politics. Miller's argument once again underlines that ideas matter in shaping the trajectory of international relations, and as great-power politics return with a vengeance, it is important to be aware of how some rising powers will continue to have a disproportionate influence in shaping global outcomes. Not all rising powers are equal, and what makes some more important than others is what Miller explicates in her wide-ranging analysis. In this context, the cases on China and India present an interesting contrast. Miller is right that Chinese foreign policy changed dramatically in the 1990s as China began to integrate itself much more robustly into global multilateral frameworks. This attempt by China to enmesh itself in global trade, diplomatic, and security regimes is an important marker in her argument, as "great power by the late twentieth century meant the exercise of power through multilateralism and international institutions" (p. 108). As China tried to set the global agenda through extant and new institutions, its narratives about its own role in global politics evolved. This included presenting itself as a stabilizing influence in the global order as well as promoting and strategically using regional and multilateral frameworks to burnish its credentials as a "responsible global stakeholder." In contrast, Miller suggests that while India had the potential to emerge as a great power in the post–Cold War world, the country remained a reticent power, not seizing upon the opportunities that presented themselves. India's narratives remained similar to the ideas it propounded during the Cold War. In particular, Miller argues that India remained reluctant to embrace multilateralism the way China did, and thus did not reach out to other nations that...

Multilateralism, Bilateralism and Institutional Choice: The Political Economy of Regime Complexes in International Trade Policy

AbstractThe global trading regime is characterized by the co‐existence of bilateral and multilateral politics. In this article, we offer a political economy explanation for this regime complex, by tracing public actors’ institutional choices back to political incentives for economic sectors and the firms active within them. First, we argue that product differentiation creates mixed motives on the part of firms, which in turn leads to a preference for the segmentation of markets, and thus bilateralism. Second, we contend that among these firms, multinational corporations (MNCs) are particularly well‐positioned to exert influence over policy decisions in multiple international fora, both bilateral and multilateral. This provides incentives for multinationals to push governments to create and sustain regime complexes in the form of nested regimes. We show how these expectations are largely born out in an empirical test for six different economic sectors.

Plurilateral Cooperation as an Alternative to Trade Agreements: Innovating One Domain at a Time

AbstractAt the end of 2017 different groups of WTO members decided to launch talks on four subjects, setting aside the WTO consensus working practice. This paper argues that these ‘joint statement initiatives’ (JSIs) should seek to establish open plurilateral agreements (OPAs) even in instances where the outcome can be incorporated into existing schedules of commitments of participating WTO members. Designing agreements as OPAs provides an institutional framework for collaboration among the responsible national authorities, transparency, mutual review and learning, as well as alternatives to default WTO dispute settlement procedures which may not be appropriate for supporting cooperation on the matters addressed by the JSIs. In parallel, WTO members should establish enforceable multilateral principles to ensure OPAs are compatible with an open global trade regime.

Globalization and health policy space: Introducing the WTOhealth dataset of trade challenges to national health regulations at World Trade Organization, 1995-2016.

Do international trade rules and agreements constrain health policy space? A multitude of global actors and institutions with different interests and power can shape national health policy, and trade rules provide one means through which to exert pressure on governments. Yet, the full scope of political pressure on health policy within the global trade regime is insufficiently understood, as previous research largely focussed on challenges to food, alcohol, and tobacco regulations and used small-N case studies. This potentially overlooks other domains of influence and we lack an understanding of quantitative trends and patterns therein. In this article we introduce a novel dataset, WTOhealth, comprising all challenges to national health regulations at the WTO Technical Barriers to Trade (TBT) Committee between 1995 and 2016. The dataset is based on 1496 pages of minutes from 71 TBT meetings. We describe how we developed this dataset and present an exploratory analysis of key patterns within the data. Our analysis shows that WTO members raised 250 trade challenges to health regulations between 1995 and 2016. 83.6% of challenges to low- or lower-middle income country (LMIC) members were raised by high-income countries (HICs). Many challenges centred on food (16.4% challenges), alcohol (10.4%), and tobacco (4.2%) policies, but a substantial proportion concerned other products, including toxic chemicals (9.1%), pharmaceuticals and medical devices (8.1%), machinery (7.8%), and motor vehicles (7.3%). This includes measures targeting medical device safety, increased access to pharmaceuticals, and reduced exposure to toxins harmful to both health and the environment. We further examine these challenges, finding that HIC members made claims with contentious scientific support. In short, diverse health regulations may be changed or delayed following contentious challenges at the TBT Committee. There is a need for further research investigating the nature and influence of WTO challenges to diverse health regulations.

Economic Statecraft in the 21st Century: Implications for the Future of the Global Trade Regime

AbstractThis article introduces a special issue that examines the effects of strategic competition on the future of the global trade regime. We argue that traditional work in economics and the current set-up of global economic regimes ignores economic statecraft as a key element in understanding trade conflict. Specifically, we outline three examples of contemporary economic statecraft – industrial policy, trade restrictions, and new investment rules – that have been used to block foreign direct investment on the basis of national security claims. Based on this analysis, we explore how the WTO and other economic regimes might address the global economic governance of economic statecraft. In concluding, we outline the theoretical and empirical work in the subsequent case studies that examine the use of economic statecraft in the United States, China, India, Japan, and South Korea.

America and the Trade Regime: What Went Wrong?

AbstractThe era of American leadership in the multilateral trading regime has ended. This paper argues that this current antipathy to trade is unsurprising: support for US leadership of the regime has always rested on a precarious balance among domestic interests. To overcome a historic bias in favor of home market production, American leaders created incentives for exporters to organize while creating roadblocks for import-competing firms and their employees. The dominance of the exporters’ voice had a significant influence on the policies the US pursued in the design and execution of the global trade regime. Most importantly, the absence of labor's voice undermined the prospect for “embedded liberalism” and instead resulted in an anemic system of adjustment for job loss at home and limited support for worker interests within the regime. While policymakers’ decision to shift power away from potential “veto” groups may have been necessary for US leadership of the Liberal International Order, this institutional design undermined a robust response to the economic dislocation thought to be a result of globalization. The result was a fracturing of the coalition in support of American leadership in the GATT/WTO regime.

Domain-specific Plurilateral Cooperation as an Alternative to Trade Agreements

At the end of 2017 different groups of WTO members decided to launch talks on four subjects, setting aside the WTO consensus working practice. This paper argues that these ‘joint statement initiatives’ (JSIs) should seek to establish open plurilateral agreements (OPAs) even in instances where the outcome can be incorporated into existing schedules of commitments of participating WTO members. Designing agreements as OPAs provides an institutional framework for collaboration among the responsible national authorities, transparency, mutual review, and learning, as well as alternatives to default WTO dispute settlement procedures which may not be appropriate for supporting cooperation on the matters addressed by the JSIs. In parallel, WTO members should establish enforceable multilateral principles to ensure OPAs are compatible with an open global trade regime.

International Trade Norms in the Age of Covid-19 Nationalism on the Rise?

Simultaneous with the rise of trade protectionism in the twenty-first century has been a resurgence in nationalist politics, most notably in the USA, the UK, and parts of the EU. These developments in international and US trade policy, including Washington’s launch of a full-fledged trade war against China in March 2018, have converged disastrously with the outbreak of the novel coronavirus in November 2019 and the onset of a worldwide pandemic. Given the status of the USA as the world’s hegemon since 1945, what is new here is the effort of the Trump administration to abdicate US leadership, jettison longstanding alliances, and turn back the clock on the country’s close integration with the world economy. Already, greatly reduced flows of goods, services, and people have translated into radically reduced global growth, widespread business disruptions, and high unemployment. Remarkably, the White House has refused to recognize the severity of the pandemic and has undermined the precautions of the US science community. We argue that these multiple shocks constitute a major critical juncture on par with what the world community faced in 1945. However, in the twenty-first century we have seen that high levels of economic uncertainty and political instability have superseded the long-held notion that international interdependence would pull the world community through tough times such as these. Could the triple whammy of a destructive trade war, deadly pandemic, and secular decline of US leadership trigger a new generation of policy innovation and institution building on par with the post-1945 era? In terms of the global trade regime, it would be difficult to imagine a buoyant recovery of the world economy in the absence of a serious reckoning with the pattern of norm erosion that we identify here.

Understanding regional value chains through the interaction of public and private governance: Insights from Southern Africa’s apparel sector

Regional value chains (RVCs) and South–South trade are increasingly considered key features of 21st-century globalisation. This article investigates how RVCs are shaped by the interaction of private and public governance. It evaluates how this interaction unfolded in Southern Africa’s apparel RVCs, exploring trade, investment and labour regimes across three levels of analysis: national, regional, and global. The paper draws on trade data, secondary literature, and interviews with suppliers and institutions in Eswatini and Lesotho (the largest exporters to the region), and lead firms in South Africa (the largest regional importer). The findings underline the critical role of public governance in shaping retailers’ and suppliers’ participation in RVCs through: (i) regional ‘trade regimes’ protecting regional exporters from global competitors, and recent shifts in global trade regimes; (ii) national and regional ‘investment regimes’ facilitating investment flows from South Africa to Lesotho and Eswatini, and the more recent shift of US-oriented suppliers towards regional markets; and (iii) ‘labour regimes’, including lower wages, less comprehensive labour legislation and weaker trade unions in Lesotho and Eswatini compared to South Africa. The article concludes by considering the policy implications of the interaction of private and public governance for existing and future RVCs in Sub-Saharan Africa.