International Trade Regime Research Articles

Explaining Energy Disputes at the World Trade Organization

The WTO and the broader international trade regime have seen an explosion of challenges to government support for renewable energy in the last seven years, while no country has brought a formal dispute challenging fossil fuel subsidies in the GATT/WTO’s history. This pattern is puzzling because global fossil fuel subsidies dwarf global renewable energy subsidies. Moreover, it suggests that WTO rules may slow the transition to clean energy. Renewable energy technology must compete with highly subsidized fossil fuels, while trade disputes effectively restrict subsidization only for the former. Existing explanations for the absence of trade challenges to fossil fuels support policies have focused primarily on the lack of a mandate within the WTO. Major fossil fuel exporters have not historically been GATT/WTO members; WTO rules allegedly do not apply to energy or are inadequate to deal with the specifics of energy trade; or even if they do, nations have developed separate institutions, such as the IEA or the Energy Charter Treaty, to govern energy. This article argues that, although these explanations have some explanatory power, they cannot fully or satisfactorily account for the pattern of WTO energy disputes in light of the recent focus on some forms of energy in the WTO but not others. Instead, I hypothesize that the economic diversification of energy-producing countries plays a major role in driving challenges to renewable energy support policies, but not fossil fuel support policies. It does so in two ways. First, states challenging energy support policies expect to have greater success in changing the respondent’s behavior when the respondent has diversified exports. Renewable energy technologies tend to be produced in countries with diversified economies, while fossil fuel reserves are located overwhelmingly in countries with little diversification in their exports. Second, under what I term the loss aversion hypothesis, states may be more likely to challenge new trade restrictions, rather than similar but long-standing trade restrictions. The loss-aversion hypothesis suggests that trade challenges will arise more in sectors of the economy in which innovation leads to competition, as opposed to in mature sectors of the economy. Economic diversification, in turn, is a good predictor of innovation. As applied to energy, economic diversification contributes to innovation and competition in the renewables sector – and hence triggers demand for new trade restrictions – but not the fossil fuel sector, even though trade restrictions have a long history in that sector as well.

International Institutions and Interest Mobilization: The WTO and Lobbying in EU and US Trade Policy

What affects lobbying patterns in trade policymaking? Existing explanations focus mainly on economic determinants, like the rise of intra-industry trade. We argue that the international trade institutions of the World Trade Organization (WTO) themselves are also key for understanding which type of interest mobilization is likely to arise. We contend that the institutional setting of issue-linkage based trade negotiations creates incentives for firms to work through broad sector-wide lobbying organizations, while judicial adjudication and enforcement in WTO dispute settlement stimulates de-linkage, leading to product-specific interest mobilization. We illustrate how these two arguments can explain the coexistence of both sector-wide and product-specific lobbying in the contemporary international trade regime. We provide evidence on interest mobilization for United States (US) and European Union (EU) initiated WTO disputes, and on EU and US domestic interest organizations that mobilize during multilateral trade rounds or are present at WTO ministerial conferences.

An Analysis of the New Trade Regime for State-Owned Enterprises under the Trans-Pacific Partnership Agreement

I. INTRODUCTIONThe negotiation for the Trans-Pacific Partnership (TPP) Agreement, a mega regional trade agreement among 12 countries, was concluded on 5 October 2015.1 One of the new features of this regional trade agreement is that it contains a standalone chapter on state-owned enterprises (SOEs). Some of the rules contained therein are not completely new, as it draws upon related disciplines that already exist. However, there had never been a separate, integrated discipline specifically covering SOEs before. In particular, the restriction on what is called non-commercial assistance is a significant new addition to what the current trade agreements provide. The TPP SOE discipline therefore sets a new standard, a minimum floor, which will affect other negotiations such as TISA, TTIP and RCEP that are still on-going. Since many prominent SOEs are engaged in the services sector, its ramifications for services trade rules are potentially great. So far, there are no comprehensive discipline governing subsidies in services. Given such significance, it is worthwhile to analyze the substantive rules of the TPP SOE discipline and understand the background from which they were born.Three distinct sources of influence on the TPP SOE discipline can be traced. First of all, the TPP SOE discipline integrates and further strengthens relevant rules in the existing trade regimes such as the WTO and bilateral FTAs. The TPP therefore has a consolidating role. The main multilateral instrument on SOEs in the WTO is the GATT Article XVII on state trading enterprises (STEs), which was inspired by the fear that some government-sanctioned monopolies might play fast and loose by manipulating markets (Hafbauer and Cimino-Isaacs, 2015: 686). However, the article applies only to STEs that are monopolies or those that have special rights and privileges, and are limited to trade in goods. The article is rarely invoked these days.2Since NAFTA, many bilateral trade agreements the US has pursued typically contain provisions regarding SOEs under competition chapters. Here again, main concern is about those state controlled entities that have special privileges and designated monopolies rather than SOEs in general. In the NAFTA, the SOE provision has been specifically included to address state dominated energy and telecommunication sectors in Mexico. Mexico had not liberalized these sectors under the NAFTA, and the US sought to discipline possible anti-competitive actions of state enterprises through the competition chapter (Yun, 2007). In the KORUS FTA, the concern with state enterprises were minimal and only non-discrimination obligation was introduced with respect to state enterprises. The pinnacle of SOE discipline is embodied in the very one-sided US-Singapore FTA, where Singapore's state enterprises are subject to extensive transparency rules.3 The TPP SOE discipline draws upon all these existing regimes, building on them by extending the scope of coverage and sometimes re-organizing existing obligations to overcome what is seen to be shortcomings of the current regime in dealing with past trade disputes.Second, as described above, it has broken the tradition of placing SOE rules under the competition chapter, and set up a stand-alone chapter on SOEs and designated monopolies. In this, it is firmly based on the principle of what is known as neutrality. The competitive neutrality concept provides an explanation as to why SOEs may behave differently from private firms, and offers a justification for setting up a separate regulatory mechanism apart from competition law.No doubt, frustration with increasingly aggressive use of SOEs for industrial policy by China, allegedly propped up with subsidies, has probably played a big role in this attempt to create an international regime on SOEs. Whether or not China is a member of the TPP, the TPP SOE regime will significantly pressure China, as the new SOE regime is set to become the model for developing international trade regime regulating commercial activities of SOEs. …

Correcting twail’s Blind Spots

Third World Approaches to International Law (twail) may serve as an apt critique for examination of international economic governance from a Third World angle, given its intimate concern for the welfare of these States in international law. twail’s critique has improved significantly in terms of quality and quantity. Nevertheless, the critique continues to be plagued by a fundamental shortcoming, namely, it merely critiques international law systems and fails to provide suggestions for reforming them to suit the needs of Third World States. This is particularly true in relation to its critique of international economic governance. While twail has produced numerous critiques of the foreign investment and international trade regimes since its emergence, these have failed to provide any constructive suggestions for improvement in these areas. twail should therefore aspire to be more than a tool of system criticism and offer practical solutions to improve Third World States’ place within this system.

Hubs of Governance: Path Dependence and Higher-Order Effects of Preferential Trade Agreement Formation

In this paper, we investigate the causes and consequences of institutional design choices in the liberalization of services trade and investment in preferential trade agreements (PTAs). We distinguish between a positive-list and a negative-list approach to services liberalization, and analyze PTAs signed by countries of the Asia-Pacific. We develop an information-based argument that explains why these different types induce path dependence in subsequent choices, and derive hypotheses that capture the “history” effect of choosing either institutional model. In doing so, we examine whether particular “modes of governance” diffuse through the growing network of trade agreements through the adoption of rules by third parties in their own PTAs. The empirical analysis tests these hypotheses using simulation-based dynamic network analysis methods. We find evidence of strong path dependence in the choice of liberalization approach, affecting the evolution of PTA networks in the Asia-Pacific and the diffusion of services liberalization in general. Such path dependence has long-term consequences for the institutional features of the international trade regime.

Evidentiary Challenges for Public Health Regulation in International Trade and Investment Law

Recent challenges to public health regulation such as Indonesia’s challenge to the USA’s tobacco flavouring ban in the World Trade Organization (WTO), and the WTO and investment treaty challenges to Australia’s plain tobacco packaging scheme, have raised common problems of evidence in the international trade and investment law regimes. Responding states are faced with high expectations in justifying their public health measures with empirical evidence connecting the measure with its purported health outcomes. This article compares approaches to evidence in international trade and investment law and seeks to derive lessons for policymakers in developing public health regulation with potential trade and investment treaty challenges in mind. The article reflects on the kinds of evidence needed to successfully defend such challenges and the appropriate approach to assessing such evidence in disputes in these two fora.

Labour Rights Protections within International Trade: A Study of Free Trade Agreements and Generalised Systems of Preferences

This study examines the phenomena of “social clauses” that aim to uphold labour standards within the international trade regime and discusses examples of their implementation. “Social clauses”, despite their contentious past within the World Trade Organisation and preceding frameworks, can be found in a number of Free Trade Agreements and Generalised Systems of Preferences. The study initially sets out the history of the link between trade and labour rights and the concerns of various States and academics to the inclusion of “social clauses” in the international trade regime. The study continues to principally examine the content of “social clauses” within Free Trade Agreements concluded by the United States, the European Union, and Canada. Further, the mechanisms for implementing these obligations through various procedures are discussed. Following this, examples of implementation through utilisation of the mechanisms are provided. Additionally, the study also examines similar issues and examples in relation to the Generalised Systems of Preferences of the United States and the European Union. The study finds, in addition to the information relating to content, mechanisms for implementation, and examples of implementation of these social clauses, that although these clauses linking trade and labour proved contentious at an international level, they have been included in a number of subsequent agreements but rarely utilised in practice.

On Crises, International Trade and Exchange Rate Regimes

The main objective of this paper is to study the performance of exchange rate regimes on international trade during crisis episodes. To that end, a gravity equation is estimated for a sample of 194 countries over the period 1970-2011, by adding a set of regressors built from a de facto classification of exchange rate arrangements and the dates of recognized financial crises. This paper studies the behaviour of the different exchange rate regimes in the context of both global and domestic economic crises. The results indicate that sharing a common currency seems to be the best exchange rate arrangements in terms of its effect on trade during crisis episodes. The results also suggest that the fixer the regime is, the more intense is its promoting impact on trade during crises.

Finding an Equilibrium Towards Corporate Compliance: Solving the Gordian Knot of Trade Violations Eliciting Institutional Corruption

This working paper analyzes best practices in compliance and explores how a corporation could adopt an efficient compliance scheme. Such a scheme greatly benefits a corporation by helping it mitigate the risk of harmful procedures while allowing it to maximize profit. Corporate compliance programs also deter institutional corruption and serve the public interest. The difficulty lies in finding an equilibrium in compliance that allows the corporation to efficiently abide by the law while still achieving adequate business performance. Sanctions that might severely damage the ability of a corporation to generate profits do not serve the interests of the company, the regulator, or the public. Focusing on the trade sector, the paper starts by exploring the nexus between corporate compliance and institutional corruption. Ineffective compliance involves poorly conceived and communicated sanctions on the regulatory side and inadequate commitment and implementation on the corporate side, both of which generate distrust of both private enterprise and government. Ineffective compliance in the form of trade violations also undermines trust in international trade regimes. From the regulatory perspective, we review the sanctions used to incentivize corporations to be compliant, as well as other good options available to the state. Turning to the corporation, we review the incentives for a compliance program and offer “ten commandments” that establish best practices. The end goal is to achieve optimal corporate compliance, which subsequently leads to openness and transparency, as well as minimizing, among other things, incidents of institutional corruption, fraud or negligence that generate liability.

The Trade Facilitation Agreement: A New Hope for the World Trade Organization

AbstractThe new WTO Trade Facilitation Agreement (TFA) is a significant step forward for the international trading regime, representing new hope for the relevance of the WTO.The TFA is the first multilateral agreement since the creation of the WTO in 1995 and includes novel measures to help developing countries build capacity, while also taking into consideration regulatory concerns of WTO members through the application of the general GATT exceptions to the new agreement. While the TFA may appear narrow in scope, with regards to goods it is arguably the broadest WTO Agreement besides the GATT, since all goods that cross national borders find themselves subject to trade facilitation measures. If the TFA is properly interpreted, the combination of capacity-building measures, a focus on technological improvements and the judicious invocation of Article XX could result in a win-win situation wherein routine positive trade is streamlined, reducing time required to cross borders, while negative trade is more easily controlled and regulated at the border.Despite regulatory questions concerning implementation, it is likely that the TFA will reduce the cost of trading across borders, while improving trade for developing countries and allowing WTO members to better control trade flows, through a combination of procedural streamlining and regulatory discretion.

Diffusion of Japanese preferential trade agreements: Why is no evaluation underway?

ABSTRACTIn the last two decades, the worldwide diffusion of bilateral free trade agreements (FTAs) has altered the international trade regime. East Asian governments are eager to conclude FTAs. Japan is an especially interesting case in East Asia because it initially did not consider FTAs as a policy option, but subsequently changed its position drastically, and is now one of the main FTA-hubs in the region. After mainly signing bilateral agreements, Japan entered a second stage of FTA diffusion when it joined the ongoing Trans-Pacific Partnership (TPP) negotiations and started talks with the EU in 2013. Discussions on a trilateral FTA among Japan, China, and Korea are also underway. However, Japan has not undertaken any measures to evaluate its present FTAs in order to secure the best possible political and economic outcome in future negotiations. This article will examine the challenges of trade policy evaluation in Japan.

Principles-Based Regulations: A Model for Legal Reform in the Nigerian Insurance Industry

AbstractThe development of global standards has led to a convergence in domestic regulations in the financial services sectors. Principles-based regulations (PBRs) have become essential for effective regulatory efforts in insurance and other financial services because of their flexibility, support for regulatory efficiency and the development of a good compliance culture amongst the regulated. The legal framework of the Nigerian insurance industry mainly contains prescriptive and performance-based regimes that have become ineffective as regulatory strategies. This article recommends the adoption of PBRs from available models found in international standard setting organizations such as the International Association of Insurance Supervisors, other jurisdictions such as the UK's Prudential Regulation Authority and Financial Conduct Authority, together with international trade regimes such as the General Agreement on Trade in Services. It reviews aspects of Nigerian insurance industry regulations supporting PBRs and highlights laws not supportive of PBRs and therefore requiring reform.

Information revelation and structural supremacy: The World Trade Organization’s incorporation of environmental policy

The international trade regime offers various instruments by which states can pursue environmental policies, even at the expense of freer trade. Why - and what are the implications? This article traces environmental instruments to pressures on governments when the World Trade Organization (WTO) was designed in the early 1990s: environment-related trade disputes were on the rise, environmentalists were concerned even with regional trade agreements, and countries from the North and the South clashed over the possibility of green-protectionism. Today, WTO-permissible environmental instruments share key features: 1) information-revealing conditions compel states to divulge private information in order to maintain trade-restricting environmental measures, and 2) that information is funneled through the trade regime’s formal dispute settlement mechanism, endowing WTO rules and officials with structural supremacy over areas of international law that lack such mechanisms of their own. An illustration from the WTO’s Sanitary and Phytosanitary (SPS) Agreement shows how this works in practice, putting trade law experts in the delicate position of adjudicating in matters beyond their area of expertise. Examining this advances knowledge in political science, law, and policy: about dispute settlement, institutional design, and information-provision in international organizations.

The dynamics of China-Ethiopia trade relations: economic capacity, balance of trade & trade regimes

China’s trade with Ethiopia currently at 1.3 billion USD annually is expected to rise to US$3 billion by 2015. This not only informs the level of bilateral trade ties that Ethiopia has had with China as compared to any other country in the region but also signifies the highest and the closest level of bilateral relations that Ethiopia has built upwith China over the past decade since the new government under Ethiopian People’s Revolutionary Democratic Front (EPRDF) took over power in 1991. There have been extensive debates on China’s role in Africa - whether it could be viewed as a constructive partner or otherwise. This essay puts forward the argument that while trade ties as one important channel of bilateral relations that China has embarked with the outside world and particularly with Africa is uneven and lop-sided. This is true of the Ethiopian context as well particularly when we look at the economic capacity, balance of trade and at the two countries relations with international trade regimes. While China is a full member of WTO for over a decade Ethiopia on the other hand has been aspiring to become a member for some time now and hence one of the important aspect of Ethio-China trade relations is the heavy reliance on bilateral/international trade regimes. Therefore, this research is aimed at unraveling the dynamics in Sino-Ethiopia trade relations with emphasis on the economic capacity of the two countries, balance of trade and explore whether Ethiopia’s attempts to join WTO would lead to a more predictable trade relations between the two countries. In this attempt the research would largely rely on the analysis of relevant archival resources and literatures directly relating to the themes in this paper.

South Korea’s Search for Nuclear Sovereignty

South Korea’s Search for Nuclear Sovereignty Toby Dalton (bio) and Alexandra Francis (bio) keywords south korea, united states, nuclear sovereignty, nuclear policy [End Page 115] EXECUTIVE SUMMARY This article argues that the narrow technical disagreements stalling the renegotiation of the U.S.–South Korea nuclear cooperation agreement mask a far larger and more complicated set of issues and interests that challenge both the future of bilateral nuclear cooperation and the nonproliferation regime. main argument An oft-stated South Korean objective in bilateral nuclear negotiations with the United States is to achieve “peaceful nuclear sovereignty.” This complex term, reflecting South Korea’s desire to decrease U.S. leverage over its nuclear affairs, has multiple connotations, including energy security, industry competitiveness, legitimate rights, status, and autonomy. There are tensions among these competing objectives, which, coupled with the inherent limitations on nuclear independence resulting from international nuclear trade regimes, make the concept of peaceful nuclear sovereignty a chimera. Other states—Iran, Brazil, and Turkey, for instance—are driven by similar sentiments, meaning that Washington must take care to resolve its differences with Seoul in a way that balances nonproliferation and nuclear energy interests. policy implications • The wellspring of South Korea’s likely disappointment is the unattainability of peaceful nuclear sovereignty itself. Negotiating among the bureaucratic and public interests that embody these complex aspirations in Seoul will be a greater challenge for the Park Geun-hye administration than the talks with Washington. • How the United States and South Korea resolve the enrichment and reprocessing issue will set a precedent for how states should address other non–nuclear weapons states interested in pursuing sensitive nuclear technologies and thus holds implications beyond the Korean Peninsula. • There is common ground between Seoul and Washington on the need to strengthen global standards for nuclear security and safety, which provides a basis for resolving their differences through deeper collaboration coupled with enhanced monitoring. [End Page 116] Since 2010, negotiators from the United States and the Republic of Korea (ROK) have sought to bridge an impasse holding up the conclusion of a bilateral nuclear cooperation pact. The outdated agreement governing this issue, concluded in the 1970s when South Korea was a nuclear neophyte, was to expire in 2014; the sides agreed on a temporary extension to 2016, giving negotiators more time to work. Seoul and Washington concur on the need to make the new agreement consistent with South Korea’s stature as an advanced nuclear energy state. But South Korea also seeks to win U.S. permission to conduct advanced, proliferation-sensitive nuclear activities, such as reprocessing spent fuel, which Washington has refused on nonproliferation grounds. Although this disagreement might seem narrow and technical, the impasse masks a far larger and more complicated set of issues that implicate not just the future of U.S.-ROK nuclear cooperation but also the viability of the nonproliferation regime to continue to satisfy the interests of states such as South Korea. For the United States, nuclear negotiations with South Korea primarily are focused on facilitating commercial nuclear trade and sustaining nonproliferation standards. The latter, however, conflict with South Korea’s nuclear ambitions in two ways. First, Seoul’s desire to conduct the enrichment and reprocessing of nuclear materials—activities that can also be used to make fuel for nuclear weapons—contradicts U.S. policy to discourage the spread and use of these technologies. Second, Seoul’s continued adherence to a 1992 joint declaration between North and South Korea, under which both sides agreed not to possess enrichment and reprocessing facilities, represents a central element of U.S. policy toward the denuclearization of North Korea. Although North Korea long ago broke that agreement, South Korean enrichment and reprocessing activities could confound efforts to roll back North Korea’s nuclear weapons program. For these reasons, Washington opposes Seoul’s request to enrich or reprocess U.S.-obligated nuclear material. But Seoul is not just negotiating for enhanced terms of nuclear trade or permission to conduct enrichment and reprocessing. For South Korea, the negotiations have a strong political impetus, as they symbolize both its global aspirations and complicated relationship with the United States. The deeper motivation behind its negotiating stance, as captured in terminology used...

The Scope and Limits of Trade's Influence in Shaping the Evolving International Investment Regime

This paper examines the extent to which the international trade regime impacts the international investment regime. While commentators have identified rich areas of cross-fertilization and suggested increasing convergence between the two regimes, the evidence reveals only a limited and selected degree of influence. Specific attention is paid to four areas: the design and architecture of the investment regime; the patterns of investment treaty formation; the substance of investment treaty provisions; and treaty interpretation. Across these four areas, interactions between the two regimes remain sporadic and decentralized. Given the different normative orientations of the two regimes, one should not expect growing rapprochement in the foreseeable future between the two regimes.

Enforcement and Escape in theAndean Community: Why theAndean Community of Nations is Not a Replica of theEuropean Union

AbstractEmphasizing the presence of similar ‘supranational’ doctrines and a ‘preliminary reference’ mechanism, recent scholarship has argued that the legal institutions of theAndean Community were designed as replicas or clones of those in theEuropean Union. From an alternative perspective, however, focused on the importance of inter‐state retaliation mechanisms, as well as trade remedies, in international trade regimes, the similarity is much less apparent. Rather, theAndean Community appears to be designed as, and in fact operates as, a treaty regime that continues to rely on enforcement and escape behaviours by states that are common to many international trade regimes, but have been persistently rejected by theEU.

The Politics of Precedent in International Law: A Social Network Application—ERRATUM

There is no formal binding precedent in international law. Yet, as this article demonstrates, countries nonetheless expend considerable resources in seeking to shape legal precedent. Looking at the international trade regime, I show that while some disputes are initiated to gain market access in response to domestic interests, others are filed primarily to build favorable precedent for future cases of greater commercial value. I construct an original dataset consisting of the network of all rulings spanning the WTO period, and the cases they cite. I analyze this network to provide systematic evidence for the existence of "test cases" in international law: countries initiate commercially unimportant disputes to shape legal precedent to their advantage. And wealthy countries with high legal capacity are significantly better able to do so. While the existence of binding precedent in international law remains a point of continuous debate, countries observably behave in a manner consistent with its existence.

The International Trading Regime and the Regulation of Trade in Energy Resources. Is Reform Necessary and is a New Energy Agreement within the WTO Framework the Way to Go?

Although the WTO does not address energy as a distinct sector, numerous suggestions have been made, so far essentially in scholarly writings, to adopt a sectoral agreement dealing with energy issues. This contribution argues that a new Energy Agreement (EA) within the WTO framework would raise more problems than it would offer solutions. If such an Agreement were to be added to the WTO framework, several fundamental choices would have to be made in advance, e.g. will this new EA be plurilateral or multilateral; what will the scope of its provisions be, etc.? It may be argued that the sectoral approach is not new in itself, as it has already been used on several occasions. However, a comparative teleological analysis of these agreements proves that the issues in these sectors are substantially different from those concerning trade in energy resources. The model of existing sectoral agreements is therefore hard to transpose to the energy sector. Even if new rules were to be designed and Members reached an agreement as to the scope ratione materiae and ratione personae of such an EA, its integration into the WTO framework would have to be carefully regulated. Given all these complexities, combined with the current difficulty in reaching consensus, proposals for an Energy Agreement may hit a dead end, at least for several years to come. However, there are less problematic alternatives, such as the addition of an Annex to the WTO Agreement, a Reference Paper, or the adoption of an Interpretation decision. Arguably, all these solutions offer only partial adjustment of the existing framework. Major adjustment efforts will however prove to be futile, as most of the existing provisions are already either adjusted to deal with energy issues or sufficiently flexible to allow for an interpretation that will take into consideration sectoral specificities.

North-South Imbalances in the International Trade Regime: Why the WTO Does Not Benefit Developing Countries as Much as it Could

Participation in international trade potentially brings huge benefits to developing countries. However, the design and setup of the international trade regime, most importantly the rules and regulations stipulated in the agreements of the World Trade Organization (WTO), often make it difficult for developing countries to fully tap this potential. As will be argued in this paper using descriptive statistics, some of these agreements lead to imbalanced consequences for developing vs. developed countries. First, one of the key objectives of WTO agreements, namely to enhance member states access to other members markets, has so far been realized in a rather imbalanced fashion, to the detriment of developing countries. Second, various WTO stipulations contribute to reducing the “policy space” of developing countries, thereby hampering their ability to pursue national policies aimed at fostering economic development. A lot of this can be related to asymmetries in the governance structure of the WTO which help explain why international trade negotiations have preserved such imbalanced outcomes. Against this backdrop, this paper advocates for a pro-development international trade regime that facilitates a more sustainable integration of developing countries into the world economy and that supports their efforts to fully reap the benefits that participating in the international division of labor offers to them. Author’s Note Thomas Bernhardt is a second-year Ph.D. student in economics at the New School for Social Research, and a visiting student at Columbia Universitys School of International and Public Affairs (SIPA). His areas of specialization are development economics and international economics.