Multilateral Trade Research Articles

The Biden Administration’s Trade Policy: Promise and Reality

AbstractThis Article critically analyzes seven elements of the Biden administration trade policy: (1) buy American; (2) tariffs; (3) World Trade Organization; (4) free trade agreements; (5) China; (6) technology; and (7) Russia. Although President Biden has made a clean break from Trump policies in many areas, this is not the case when it comes to international trade. Regretfully, Biden has chosen to keep in place most of the failed trade policies of his predecessor—the Trump tariffs and the China trade war. It is not too late to shift ground, to negotiate mutual abolition of the Trump tariffs, to open free trade negotiations with the EU and UK, to join the Comprehensive and Progressive Trans-Pacific Partnership, to adopt a multilateral strategy with allies to check Chinese trade excesses, and to reengage with the World Trade Organization. Topping the list of needed reforms of the multilateral trading system are: (1) subsidies; (2) state-owned enterprises; and (3) forced technology transfer. These are best addressed through a WTO plurilateral agreement and/or preferential trade agreements. The Biden administration should prioritize these urgent reforms. Rather than promoting “free” trade and multilateral trade reforms, the Biden administration continues its predecessor’s nationalistic policies so that trade serves domestic political ends. Such state intervention in trade policy consists of the strategic use of tariffs, subsidies, “buy American” rules, and regional trade arrangements without regard to the rules of the multilateral trading system. These new policies represent a decisive retreat from globalization and openness to trade.The Congress, directed by the Biden administration, has adopted a far-reaching industrial policy in the form of four laws that subsidize key sectors of the U.S. economy: American Rescue Plan Act ($40 billion); Infrastructure and Jobs Act ($1.2 trillion); Inflation Reduction Act ($369 billion); and Chips Act ($252.7 billion). This subsidization coupled with “buy American” protectionism constitute a departure from the free trade ideal that has characterized U.S. policy since the end of World War II.

The Covid 19 Exogenous Shock and the Crafting of New Multilateral Trade Rules on Subsidies and State Enterprises in the Post-Pandemic World

AbstractThis Article discusses existing WTO rules on subsidies and state enterprises, relevant caselaw and reform prospects in light of key geopolitical developments and changes in the global economy emerging in the aftermath of the Covid-19 pandemic. Following a general introduction, the Article critically analyzes present WTO rules on industrial subsidies, focusing inter alia on the new problems raised by activist industrial policies pursued by global trading powers, foreign subsidization, the climate change shock and environmental exigencies. It then shifts attention to the application of WTO rules on subsidies to the state sector and the increasing demands for new international trade rules on non-subsidies measures to address the negative spillover effects on trade from government influence on state-owned enterprises (SOEs). With respect to each of these matters, the Article first clarifies the terms of the problem in relation to existing WTO rules and caselaw, and next examines the question of how, and to what extent, “deeper” free trade agreements (FTAs)—those that experts designate as models for WTO reforms on the matter—establish new rules that permit to adequately address the trade concerns raised by SOEs’ commercial and financial activities. Based on this multi-layered analysis, the article concludes by examining prospects of reform of WTO rules on state interventionism.

The WTO’S Contribution to the Challenges of Global Commons

ABSTRACT Global trade can be an important part of the solution to modern global challenges, just as the rule-based multilateral trading system played an instrumental role in fostering peace and prosperity since its creation in 1947. Trade has been a lifeline for producing and accessing critical medical supplies from face masks to vaccines almost since the beginning of the pandemic; trade is also an important means for adapting to climate change as well as cutting emissions; and trade has helped net-food-importing countries faced with food crisis. For trade to be a part of solutions to the range of modern challenges, the role of the World Trade Organization (WTO) is indispensable, and it must be updated for it to remain fit for purpose. The continuing reinvention of the WTO will not be easy, but the outcomes of the 12th Ministerial Conference (MC12) are a good start. In this special contribution to the Journal of International Economic Law, I reflect on the WTO’s role for the twenty-first century and beyond and how the MC12 outcomes will serve as a foundation and a platform for Members to build on to reinvent the WTO.

Optimized multilateral crop trade patterns can effectively mitigate phosphorus imbalance among the involved countries

Phosphorus imbalance for cropland can greatly influence environmental quality and productivity of agricultural systems. Resolving cropland phosphorus imbalance may be possible with more efficient multilateral crop trade within the involved trading countries; however, the driving mechanisms are unclear. This study calculates phosphorus budgets in China and five central Asian countries and proposes two optimal multilateral crop trade models to mitigate the phosphorus imbalance. Results show that the current trading pattern between China and Central Asia is causing a phosphorus imbalance intensification. Phosphorus surpluses in China and Uzbekistan are 41.7 and 8.9 kg/ha, while Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan exhibit phosphorus deficits with the negative value of −0.7, −1.2, −0.8, and −0.8 kg/ha, respectively. However, under the optimal multilateral crop trade patterns, phosphorus budget of China and Central Asia will become balanced. Phosphorus imbalance intensification for China is reduced to −2525 and −2472 kt under the single- and bilevel-objective-based crop trades. In Kyrgyzstan, it will drop 61.5 % and 50.0 % and change to 321 and 417 kt under the two optimal crop trades. Moreover, changes of phosphorus imbalance mitigations for other central Asian countries range from 11.9 % to 28.2 %. This provides a scientific basis when establishing policies for strengthening optimal multilateral crop trading across the world to promote global phosphorus management.

Non‐tariff measures: What's tariffs got to do with it?

AbstractAfter successive rounds of tariff reductions by GATT/WTO members, non‐tariff measures (NTMs) have increasingly become the focal point of multilateral trade negotiations. It remains an open question whether the liberalization in tariff rates has subsequently been weakened or even erased by increases in NTMs. Using a product‐level global panel of WTO members over the period 1996–2019, this paper systematically examines the empirical link between various tariff measures and the imposition of NTMs. I find that bound or applied tariff reductions do not correlate much on their own with NTM incidence. The relevant trade policy margin for detecting a tariff–NTM nexus is instead tariff overhangs, the difference between WTO members' bound and applied tariff rates. Countries impose more NTMs when their sectoral applied tariffs are close to their respective bound rates, indicating that small tariff overhangs signal limited legal trade policy flexibility.

Export Cutoff Productivity, Uncertainty and Duration of Waiting for Exporting

Abstract Using China’s transaction-level trade data and firm-level production data during 2000–2006, this study first estimates the duration of Chinese industrial enterprises’ waiting for exporting. The results show that the average duration of waiting for exporting is 4.7 years and the median is 5 years. Besides, the hazard rate of export entry has the prominent positive duration dependence. Then, this study uses Cox proportional hazard model to analyse the impact of export cutoff productivity on the duration of waiting for exporting. The result indicates that the rise in the productivity threshold will significantly prolong the duration of waiting for exporting, and this conclusion is supported by a variety of robustness tests. In addition, the estimation result of hazard ratio shows that every 1% increase in productivity threshold will lead to a 0.1261% decrease in hazard rate of enterprises’ export entry. Moreover, the heterogeneity test indicates that the effect of export cutoff productivity on duration of enterprises’ waiting for exporting has the significant ownership and industry heterogeneity, but does not have the destination heterogeneity. Further, this study finds that China’s accession to the World Trade Organisation helps to weaken the threshold effect of export cutoff productivity on the duration of Chinese enterprises’ waiting for exporting, while the rise in the uncertainty will aggravate this effect. This study indicates that it should be the focus of government to actively promote the establishment of bilateral and multilateral free trade zones, to create a stable business environment for enterprises and to reduce the market uncertainty.

Populism, Globalization, and the Prospects for Restoring the WTO

This article sets out to identify a constructionist framework for a new and expanded “embedded liberalism” and WTO reforms in the global trading system. Globalization and populism led the Trump administration to attack the WTO system by introducing unilateral protectionist measures and undermining its rules and norms. US populist trade policies have persisted under President Biden. Necessary steps to restore the WTO system include (a) domestic reforms by WTO members to improve economic adjustment, labor mobility, and social safety nets; (b) WTO reforms to allow for additional domestic policy space, new negotiated rules to address contentious issues, and a relaxation of the consensus rule; and (c) US restoration of its commitment to multilateral trade rules. Renewed global leadership will be required to pursue these steps. If the current WTO agreement proves to be incapable of resolving these issues, countries will turn increasingly to the alternative of regional trade agreements, which may be able to re-create the conditions for a return to a rules-based global trading system. Yet populism, anti-globalization pressures, and geopolitical tensions present the danger of a continued unwillingness to cooperate among major countries.

The WTO and issues of digital immersion of international trade

The purpose and objectives of this article are determined by the pressing need for acceleration of the digitization dynamics in the international trade. The article emphasizes that in the modern time digital transformation is the key and biggest trend in the global trade business and its retail seсtor. The study has also provided a review related to the experiences of the top and leading global e-commerce countries. The features of the regulation of digital trade in the United States, China, India, and the European Union are identified and summarized. It is shown the World Trade Organization should play the key role in the process of unification and standardization of digital trade rules. The author provides recommendations on the key elements of a legally binding multilateral digital trade agreement and position of Turkmenistan in the context of accession to the World Trade Organization.

A fairer and more resilient multilateral trading system will require a reinvigorated WTO

AbstractThe multilateral trading system, first established formally in 1947 with the goal of bringing about sustainable peace and greater prosperity through increased cross‐border commerce underpinned by globally agreed upon rules, has contributed significantly to economic development and reduced poverty. However, as the global trading system enters the 2020s it cannot rely on past success and must adapt to a rapidly changing world, one that requires both more and different kinds of inclusion in order to address new challenges around inequality and global economic and geopolitical shocks. To address these new challenges the World Trade Organization (WTO) must be updated and reformed by its member governments, who must also recognise that many current global challenges have linkages across trade, tax, environment, and health areas which require increased coordination across global bodies. Further, the challenges of growing domestic inequality in many countries, while a domestic policy concern, will have significant impact on the political will to undertake the necessary updating and reform of the multilateral trading system and the required enhanced coordination with other international bodies and agreements. The recent positive outcomes from the WTO's 12th Ministerial Conference in June of 2022 show that global cooperation on trade issues is possible. Building on this success, the WTO can reshape itself to be fairer and more resilient and better able to address current global and domestic challenges.

State Capitalism in the GATT/WTO Legal Order

ABSTRACT Originally, the multilateral trading regime did not address state capitalism in a comprehensive manner, since none of the General Agreement on Tariffs and Trade founders had espoused this form of economic governance. The General Agreement on Tariffs and Trade did contain specific provisions dealing with state trading and with subsidies, but nothing more. This situation has remained unchanged over the years, except for tightening the screws in areas already regulated (like subsidies), even though the General Agreement on Tariffs and Trade/World Trade Organization membership has become more and more heterogenous, with some members being overtly state capitalists. This was the case because these new members were either too small to really matter (e.g. Hungary) or because it was hoped that bigger players would transform into market economies (e.g. China). In hindsight, this has proved to be a grave error, since many of the difficulties that the world trading system currently faces originate in the unsatisfactory disciplining of state intervention in the workings of the economy of World Trade Organization members.

The Use of Trade Coercion and China’s Model of ‘Passive-Aggressive Legalism’

ABSTRACT There is a growing view among both governments and commentators, especially in the West, that China engages in acts of trade coercion which violate the law and spirit of the multilateral trading system. And while there is a developing literature discussing this issue, the debate currently lacks clarity about how China’s approach differs from other types of coercion which do not inspire the same backlash. This article advances the literature by suggesting that Chinese trade coercion is particularly threatening to the rules-based system (RBS) as it uses methods that had largely been eradicated under the GATT/WTO system. Chinese trade coercion therefore represents a “new” and important phenomenon in international trade as it uses coercion for strategic purposes, usually as retaliation for perceived affronts in matters unrelated to trade. We label this approach “passive-aggressive legalism” because, rather than relying on open dialogue to resolve diplomatic frictions, China implements informal and “plausibly deniable” retaliatory measures to indirectly make its displeasure known and felt. The article concludes by making broader claims about why China’s approach represents a threat to the WTO system and may even undermine the effectiveness of rules-based constraints in other domains of global regulation.

Indonesia’s Interests in the World Trade Organization and the Appellate Body Impasse: Questioning the Existence of Special and Differential Treatment

The World Trade Organization’s role in resolving international trade disputes is crucial, particularly in multilateral trade, which continues to grow alongside information disclosure and technology advancements. Dispute settlement systems often depend on the existence of the World Trade Organization’s Appellate Body. However, in 2019, the United States prevented new members from joining this body, resulting in dysfunction and instability. Moreover, in 2020, the term of the last sitting Appellate Body member expired. As members of the World Trade Organization, Indonesia and other developing nations receive preferential treatment, which frequently backfires when dealing with developed nations. The special and differential treatment provided to developing nations is supposed to minimize the distinctions between developed and developing nations. This study identified possible actions that Indonesia and other developing nations could take to put an end to the World Trade Organization’s impasse. To do this, they could use non-alignment diplomacy and waive their special and differential treatment. Both a conceptual approach and a literature review were used in this study.

Study on the Prospects for the Development of China, Japan and Korea Economic and Trade Cooperation under RCEP

Since the COVID-19 outbreak in 2020, global trade and economic activities have been severely harmed, and changes in the global economic and trade landscape have accelerated. The dramatic reduction in global trade volumes and the development of global industrial chains have been hampered and even partially disrupted, leading to a new wave of “deglobalisation”. Against this backdrop, the signing of RCEP, the largest FTA in the Asia-Pacific region, demonstrates the region’s confidence and determination to uphold the multilateral trading system, build an open economy, promote the Asia-Pacific integration process, and stabilize the global economy. For a long time, China’s economic trade and interests have been tightly intertwined with those of Japan and Korea. By 2020, the combined GDP of the East Asian economic circle represented by China, Japan, and Korea will have surpassed that of the United States, and the global economic center will be shifting to Asia. The RCEP, the first FTA signed by China, Japan, and Korea, creates new opportunities for trade cooperation, industrial chain optimization, and FTA construction in the three countries, but it also increases competition among the three. However, it also introduces potential issues for the three countries, such as the impact on related industries following the opening up and international currency competition. As the world undergoes an unprecedented change in a century, the three countries should strengthen multilateral trade cooperation under the RCEP framework, follow the trend of global economic integration, and contribute to the global economy’s sustainable and healthy development.

The Influence of the Canadian-European Partnership on the Multilateral Trading System A Response to the Declining Leadership of the United States

The Influence of the Canadian-European Partnership on the Multilateral Trading System A Response to the Declining Leadership of the United States

Improvement of corporate governance as a result of capital market development and improvement of the legal and regulatory environment in the Republic of Serbia

The framework of corporate governance in the Republic of Serbia is determined by relevant laws and by-laws. Today's regulations are on the trail of targeted European standards, and a bigger problem is manifested in their application than in the quality of individual legal solutions. With the primary goals of enhancing transparency and defending the interests of minority shareholders, pertinent legal measures have recently implemented additional requirements for public corporations as well as majority owners. The issue at hand is how much public company managers believe the legal and regulatory environment has improved corporate governance. On the other hand, the domestic capital market continued to flourish without receiving the crucial attention of the political and economic authorities. The Belgrade Stock Exchange, the sole operator of the regulated market and multilateral trading platform, is required to list all publicly traded firms in the Republic of Serbia's shares for trading on the exchange. The stock market in the Republic of Serbia still doesn't serve as a location for getting additional (equity or debt) capital, or only seldom does so, despite the undeniable advancements in the organisation and trading system. However, the arrival of new (institutional) investors on the Belgrade Stock Exchange brought changes and set new standards not only among direct market participants but also among managers and majority owners of public companies. For years, the reporting rules of public companies have been one of the regular obligations of their managers. It is important to know how much public company managers believe the growth of the stock market has contributed to better corporate governance.

WTO plurilateral agreements: A multilateral approach in action

Background: The World Trade Organization (WTO), established in 1995, emphasizes multilateralism, necessitating unanimous consent for decisions and agreements among member states. However, the intricate nature of global trade often hinders unanimous agreement. To address this, the WTO has seen the rise of plurilateral agreements, which differ from purely multilateral ones. Plurilateral agreements involve specific WTO members negotiating commitments in particular policy areas. Unlike standard regional trade agreements, plurilaterals offer flexibility, allowing participating states to address issues of economic interest. This approach enables tailored solutions and promotes collaboration among like-minded countries to advance shared objectives without universal consensus.
 Research purpose: This article explores the realm of WTO plurilateral agreements, examining their structure, evolution, and impact on the multilateral trading system. It delves into the dynamics of these agreements, which offer a practical avenue for addressing pressing trade-related issues. By scrutinizing the interplay between plurilateral agreements and the overarching principles of multilateralism within the WTO, this research aims to shed light on the extent to which plurilateral complements the multilateral approach, contributing to a deeper understanding of the evolving global trade landscape.
 Methods: This article employs a mixed-method research methodology, which includes a thorough literature review, analysis of relevant reports on plurilateral agreements, and examination of secondary data sources. The study combines quantitative and qualitative analyses within GATT/WTO activities to assess changes in plurilateral agreements. Data on plurilateral agreements were sourced from the WTO database and ministerial reports. This dual approach offers a robust framework for comprehensively evaluating the evolving landscape of plurilateral agreements in the GATT/WTO framework.
 Conclusions: WTO plurilateral agreements offer enhanced flexibility in trade governance and play a pragmatic role in addressing complex trade issues. While they do not replace the fundamental principle of multilateralism, they serve as complementary mechanisms to facilitate progress on specific trade-related issues. These agreements also have the potential to influence the evolution of trade governance and support multilateralism within the WTO, providing tailored solutions in a dynamic global trade landscape.

The COVID-19 Exogenous Shock and the Crafting of New Multilateral Trade Rules on Subsidies and State Enterprises in the Post-Pandemic World

The COVID-19 Exogenous Shock and the Crafting of New Multilateral Trade Rules on Subsidies and State Enterprises in the Post-Pandemic World

Противоречия и конфликты в многосторонней торговой системе

Although the Doha Round is prominent for its Development Agenda that pays special attention to the needs of developing countries, it is the contradictions between this group of countries and the developed ones that brought the multilateral negotiations to the deadlock. The stagnation of the Doha Round made protectionism an easy choice for too many. Protectionist response to external shocks becomes especially damaging to the multilateral trading system when WTO basic rules are ignored, which is just the case of the US trade policy. A really hard issue was posed in front of the WTO by Washington with the suspension of the work of the Appellate Body and subsequent paralysis of the Dispute Settlement, one of the pillars of the multilateral trading system. The significance of this case goes beyond the multilateral trading system because the experience of the WTO in this field is extremely important for the emerging system of global governance. Since the creation of the WTO the world economy has undergone great changes and major challenges arose that are still to be attended by the multilateral trading system. Moreover, some existing WTO provisions are to be clarified in order to eliminate uncertainty and double interpretation that allow countries to resort to discriminatory practices with impunity. The resumption of the full operation of the multilateral trading system is hardly possible without a review of the decision-making procedure based now on the consensus and single undertaking rules. Changing the decision-making process is a fundamental problem in the multilateral trading system. Plurilateral agreements do not eliminate it but allow the countries concerned to meet challenges that are most important to them. The resolution the 12th ministerial conference is critically important: it sets to summarize proposals for reforming the WTO and prepare a draft decision on their basis by the next conference which is scheduled for February 2024. Taking into account that the divergence of national economic interests will persist indefinitely long, it can be assumed that the process of reforming the WTO will encounter considerable difficulties and will also take long period of time. Overcoming the stagnation of the multilateral trading system will remove an important obstacle that prevents the globalization from entering its next, integration stage, distinctive for the formation of the global governance system. The WTO is not the only, although very important, element of this system, the further development of which will require a close interaction between the main international organizations.

Сравнительный анализ китайского и южнокорейского подходов к торгово-экономической интеграции в АТР

The article provides a comparative analysis of the Chinese and South Korean approaches to the development of integration interactions in the Asia-Pacific region (APR), as well as their changes from the end of the 20th century to the beginning of 2023. As a result, it is shown that from 2003 to 2017, the main priority of the PRC was the conclusion of bilateral free trade agreements with individual states ready to make concessions in order to gain expanded access to the Chinese market. However, starting in 2018, China has revised this strategy in favor of the development of multilateral trade unions. The main reason was the loss of the US leadership position in the determining the norms and rules of APR trade after the country’s integration policy revision. Unlike China, the Republic of Korea (ROK) is steadily developing a network of bilateral free trade agreements, which have already covered almost all major trading partners. ROK is wary of multilateral formats due to the need to reduce tariff and non-tariff barriers in foreign trade, which may lead to a decrease in the protection of national producers. Priority associations within the framework of the new Chinese paradigm are recognized as the Regional Comprehensive Economic Partnership (RCEP), to which Beijing and Seoul have been participants since its inception, as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Chinese application for accession to which was submitted in 2021. In this regard, this work assessed the prospects for expanding economic integration of China and ROK in the Asia-Pacific region through accession to the CPTPP. The stages of the accession process are identified, as well as the main obstacles to becoming full-fledged participants in the partnership. As a result, the hypothesis of the minimum chances of the PRC to obtain the member status is substantiated due to geopolitical problems, inconsistency of the country’s legislation with the rules of the CPTPP and high tariff protection of the country’s commodity market. In its turn, ROK meets almost all the requirements of the partnership, however, along with China, it will also not become its member in the medium term due to the more stringent conditions for the cancellation / reduction of tariffs within CPTPP compared to the RCEP

Foreign Economic Strategy and Innovative Economic Development of Uzbekistan

In the concept of socio-economic development of Uzbekistan until 2030, a macroeconomic policy aimed at ensuring sustainable economic growth and fighting against poverty, as well as increasing the competitiveness of national exports is recognized as an important economic basis. Successful implementation of the Concept of integrated socio-economic development of the Republic of Uzbekistan until 2030, as well as Development Strategy of New Uzbekistan for 2022-2026 undoubtedly, require significant attention to external factors of economic development, including promotion of competitive exports. Today the issue of regulation of global socio-economic processes is one of the most important issues at the international level. The World Trade Organization (WTO), as a legal and institutional body of the multilateral trading system, is an international organization that enjoys differen advantages in the process of free goods exchange. At present, 164 countries are members of this organization, and the accession of Uzbekistan to the World Trade Organization (WTO) has caused a variety of observations among experts and scientists.