Provisions In Trade Agreements Research Articles

Synergizing trade and sustainability: advancing SDG 14 through international trade dynamics

This paper explores the intricate relationship between international trade and the achievement of the United Nations Sustainable Development Goal 14 (Life Below Water), focusing on the potential of trade to contribute positively to marine conservation and sustainable use of ocean resources. By examining the intersection of economic, social, and environmental dimensions, the study delves into how trade policies and practices can be aligned with environmental objectives, particularly concerning marine ecosystems. A principal challenge identified is the tension between economic growth driven by international trade and the sustainability of marine ecosystems, exacerbated by practices such as overfishing and pollution from maritime transport. Another significant challenge is the lack of robust enforcement mechanisms for existing environmental provisions in trade agreements. To address these challenges, the paper recommends the integration of stringent and enforceable environmental clauses in trade agreements, coupled with the promotion of sustainable trade practices through international cooperation and capacity building. Furthermore, the study suggests the adoption of innovative trade mechanisms, such as eco-certification and the implementation of Marine Protected Areas (MPAs), to enhance the protection of marine life, support sustainable fisheries, and reduce ocean pollution. The paper concludes with specific policy recommendations for leveraging international trade as a tool for the sustainable management of marine resources, ultimately contributing to the broader agenda of sustainable development.

Reserving the right to say no? Equilibria around hard trade‐sustainability commitments in power‐asymmetric contexts

AbstractWhen will stringent sustainability commitments (not) be a stumbling block in the negotiation of trade agreements? Although the existing literature has explored the determinants of the design of sustainability provisions in trade agreements, few works have explored when countries will accept/reject those provisions once their content cannot be changed. Based on insights from game theory, we flesh out the conditions under which there will be an equilibrium in favor of hard sustainability provisions in trade deals. We then present empirical illustrations related to Mexico's participation in the United States–Mexico–Canada Agreement (USMCA) and Brazil's participation in the EU‐Mercosur trade negotiations. Our model shows that (1) fears of partner opportunism, (2) the costs of nonparticipation in trade deals, and (3) costs of adjustments to hard trade‐sustainability commitments are key to understanding whether a compromise can arise on trade and strong sustainability commitments. The model highlights what sorts of concessions ought to be made for negotiations to prosper. The findings point to how the changing structure of trade governance may affect the decision‐making process of Global South countries. The paper concludes with recommendations and avenues for further research.

Trade agreements and CO2 emissions in Asian countries: accounting for institutional heterogeneity.

This paper aims to measure the impact of environmental provisions in free-trade agreements on pollution levels in 40 Asian economies for the period 1990-2019. Following the failure of WTO negotiations, there has been a rapid proliferation of preferential trade agreements incorporating various types of environmental clauses. We exploit such changes to assess their influence on pollution emissions. We use a DOLS approach that considers the potential endogeneity of environmental clauses. Further, panel vector error correction models (VECM) are employed for examining the presence of a cointegration relationship among the variables studied. Overall, our findings indicate that these environmental clauses have heterogenous effects on CO2 emissions. We do not find significant effects of environmental clauses on pollution. However, this result is driven by environmental provisions that are not legally enforceable. We do find a positive effect of environmental clauses with a higher level of legalism on the environmental quality. These results show that the inclusion of environmental provisions in trade agreements is not sufficient by itself. Such provisions should incorporate a legally enforceable framework to effectively address environmental concerns. These findings have significant policy implications for Asian countries.

The Evolution of Digital Trade Law: Insights from TAPED

Abstract This article discusses and contextualizes the very recent advancements in digital trade regulation based on the insights provided by the Trade Agreement Provisions on Electronic-commerce and Data (TAPED) dataset. Within the time frame of January 2020 to November 2023 that we analyze, digital trade negotiations have increased in preferential trade agreements (PTAs) significantly, and there has been a sharp rise in the negotiation of new types of treaties, known as ‘Digital Economy Agreements’. Beyond the critical advances in substantive rulemaking, we observe non-traditional actors stepping into the gap left by the shifting interest of traditional rulemakers to craft rules that best fit their policy priorities. Additionally, we see a broadening of topics beyond conventional digital trade matters, underscored by commitments of limited legal enforceability. The TAPED dataset has been updated to reflect these recent developments, emphasizing the importance of regular reviews to stay current and accurately inform research and policymaking in the area of digital trade regulation.

Environmental Provisions in Trade Agreements

This article investigates the impact of environmental clauses in regional trade agreements on the international trade of CAN and MERCOSUR countries between 2001 and 2019. We use a gravity model estimated with the PPML estimator to analyze the relationship between environmental provisions in trade agreements and total exports. We find that the simple inclusion of environmental provisions does not have a significant effect on trade. However, the presence of a Preferential Trade Agreement (PTA) in the midst of compliance is associated with a negative and significant effect on total exports. This result is accentuated if the trade occurs in a South-North structure. This finding complements previous research and provides a more complete understanding of the impact of environmental clauses on international trade in the countries of the region.

Trade agreements and tobacco control policy: analysis of the impact of FCTC on regulatory contents of trade agreements from 2001 to 2019

BackgroundThis study aims to analyze the impact of Framework of Convention of Tobacco Control (FCTC) on regulatory contents of trade agreements from 2001 to 2019.MethodsA search of trade agreements from‘WTO Regional Free Trade Agreement Database’ using keywords including “tobacco”, “cigarette”, “smoking” and “FCTC” from May to August 2020 resulted in a total sample of 268 trade agreements, from which 69 trade agreements were coded and analyzed. Provisions in trade agreements, identified via the aforementioned keywords, were categorized into 6 trade measures. The word counts of the provisions containing; FCTC; were calculated. Chi-square tests were applied to analyze the differences of regulatory patterns between different time frames. The import and export values (USD) of tobacco products under trade agreements containing the term “FCTC” were further collected from the “International Trade Statistics 2001–2020” for understanding the impact of the provision on the trade flow.ResultsAmong 69 agreements, the percentage of trade agreements containing keyword as “FCTC” increased significantly from 0% to 2011 to 12% after 2011. A significant decrease of using trade measures as “the exclusion list” was found after 2011 (from 10% to 0). The word counts of provisions containing; FCTC; increased from 24 words in 2011 to 164 words in 2018, and the content of the provisions became more concrete over time. There are six trade agreements containing “FCTC”, and all these 6 agreements were ratified by European Union (EU). Despite EU ratified trade agreements with “FCTC”, the import and export values of tobacco products between EU and the other party countries increased with time. But the gap of average trade values between trade agreements with and without “FCTC” being widened with time.ConclusionsAs a first study evaluated the impact of FCTC on regulatory contents of trade agreements, our study results showed that after countries signed trade agreements containing keyword FCTC, the regulatory contents changed significantly. Further studies are recommended to understand the reason and criteria for incorporating FCTC provisions into trade agreements, especially in the EU.

Labour provisions in trade agreements and women's rights in the global south

AbstractThe effect of trade liberalisation on women has been hotly contested. Here, we take a step back and explore the effect of the institutions underlying trade on freedoms for women in the Global South. We build on the literature showing that the design of trade agreements matters for social welfare outcomes and argue that labour provisions in preferential trade agreements (PTAs) can contribute to improved women's rights. We assess this claim using statistical evidence and find a robust, positive correlation between labour provisions in PTAs and civic freedoms for women and no robust relationship with economic or political freedoms for women. Our study aims to establish an empirical link between PTA design and women's rights, suggesting new policies are needed to better balance economic globalisation with social goals in the current protectionist era.

Is Using Trade Policy for Foreign Policy a ‘SNO Job’? On Linkage, Friend-Shoring, and the Challenges for Multilateralism

AbstractUsing trade policy to achieve foreign policy objectives, such as stable international relations, has a long history, from Kant to the founders of the GATT. Punishing enemies and rewarding ‘friends’ by granting or withholding market access is also not new, and sanctions or blockades are a venerable form of trade policy used as foreign policy. A more recent form is influencing the domestic policy of another country with non-commercial provisions in trade agreements. All these tools are based on linkage, on the assumption that a desired outcome can be achieved by interventions that would increase or decrease trade. The latest instance is so-called ‘friend-shoring’, which would in principle isolate enemies, although it will be difficult in practice and risks undermining multilateralism. The cost of these interventions is susceptible to economic analysis, even if the conclusion is that it is worth paying. Influenced by Alan Winters who referred to national security as a motivation for agriculture protection as a ‘so-called non-economic objective’ or SNO, I argue that using a trade policy tool for a foreign policy purpose as if there is no cost is a SNO job, an attempt to justify an intervention aimed at one objective by framing it as being valuable for another.

When do business associations want a hard trade-sustainability nexus? A framework of analysis and the EU case

ABSTRACT This paper proposes and probes the plausibility of a framework to explain how business associations position themselves politically as trade-related sustainability obligations get stronger. An analysis of the submissions of EU business associations during a consultation on trade and sustainability indicates that firm-level and organisational characteristics explain well trade associations’ political cleavages. The paper can provide new insights to help understand a major development in the EU and beyond. The EU is passing through an unprecedented shift in its approach to trade and sustainability as it is likely to rely on legal sanctions to enforce sustainability commitments in trade agreements. Understanding the position of EU business interests in that process is relevant to project the consequences of such shift. Besides, as sustainability provisions in trade agreements get stronger, associations may play an ever-important role in promoting their members collectively or in shielding them from reputational costs. Understanding their political positioning is thus key to understanding the very politics of trade and sustainable development.

How do labour provisions in trade agreements affect decent work?

This study investigates how labour provisions in both EU and US trade agreements impact on decent work in countries that ratified such agreements. It uses a new database of workers’ rights spanning a large cross-section of 125 partner countries. The results show that such labour provisions in EU trade agreements are only effective in reducing violations of workers’ rights in member countries, while those of the US were not effective in reducing the total violations of workers’ rights for member countries. Further evidence shows that both the EU and US labour-inclusive trade agreements significantly increase the violations of their rights in practice – indicating inadequate enforcement of labour provisions. Such evidence highlights that labour provisions in trade agreements may bolster the protection of legal labour rights without an improvement in their practical application. This calls for a strong commitment to the implementation of decent work policies by aligning domestic labour practices to international best practices.

Trade, policy, and economic development in the digital economy

This paper assesses the impact of internet connectivity and digital trade policies on trade and welfare. Using new measures of internet connectivity, we find a significant positive relationship between internet use, bandwidth capacity, and trade. The positive relationship between internet use and trade is present for international and domestic trade, goods and services, high- and low-income exporters, and at the intensive and extensive margin. We also find that digital trade facilitation provisions in trade agreements have significantly increased trade for high-income exporters, especially for services trade. Informed by these findings, we use a general equilibrium model of trade to assess the trade and welfare impacts of increased internet connectivity and digital trade policies for developing countries. Increasing internet connectivity can have large positive welfare impacts on poorly connected countries, but these results also highlight the dangers of developing countries falling behind if they are not able to improve internet infrastructure. Introducing digital trade provisions into an existing trade agreement between high- and low-income countries can facilitate growth in trade in services for both members.

Labor provisions in trade agreements: recasting the protectionist debate

Abstract Labor provisions are integral to regional trade agreements (RTAs). Critics argue that they are a protectionist measure by reducing trade flows. Efforts to test that argument by employing various economic gravity models to trade agreements with labor provisions have failed to apply clear legal criteria and updated estimation methods. Drawing from the law of transnational contracts, we apply clear legal criteria to labor clauses and estimate a Poisson regression by pseudo maximum likelihood with high-dimensional fixed effects and controls for other “deep” agreement provisions associated with trade. We estimate the relationship between labor provisions and bilateral trade by classifying labor clauses found in all World Trade Organization-notified RTAs from the 1990s through February 2016. Contrary to previous efforts, our concise typology, updated estimation methods, and controls for additional trade-agreement variables find no robust evidence that labor provisions impact, much less reduce, trade flows (JEL F1, C5, F14, F66).

Trade effects of non-economic provisions in trade agreements

We assess the relationship between non-trade provisions (NTPs) pertaining to labor standards and the environment in preferential trade agreements (PTAs) and bilateral exports of environment and labor-intensive products between PTA partners, controlling for aid-for-trade, development assistance for labor and environment-related projects, and the enforceability of NTPs. NTPs are associated with greater exports of environment- and labor-intensive goods from high-income PTA members, while there is a negative relationship between NTPs and labor-intensive exports from developing countries. Bilateral exports of donors granting aid for trade are strongly associated with a higher propensity of recipients to participate in deep PTAs. Results are consistent with arguments that NTPs may increase trade costs for developing countries and that NTPs in part reflect commercial interests of high-income countries.

On How the Human Rights Framework Can Contribute to Inclusive Trade Agreements

There is a growing willingness to include inclusivity and sustainability provisions in trade agreements. This has gone hand-in-hand with a new trend in trade policy circles to acknowledge the differential impacts of trade. These developments offer an unprecedented opportunity to deepen reflection about ways of anticipating what possible impacts of new trade agreements might be, how to avoid adverse impacts, and how to design flanking and mitigating measures. This article considers the pertinence of a human rights-based approach for identifying economic, social and environmental impacts. Noting that discussion about human rights in the trade context has been hampered by misunderstandings, the article clarifies the legal basis for undertaking human rights impact assessment (HRIA) and what a human rights approach can achieve. It demonstrates that the function of HRIA goes beyond determining impacts of trade rules on human rights, to be a tool for ascertaining whether trade is fulfilling its intended societal functions. The article draws on a recent ex ante assessment of the European Free Trade Area (EFTA)-Mercosur trade agreement (EMFTA) to illustrate how HRIA methodology can be applied. Referring to this and other HRIAs, it concludes that human rights-based methodologies are well-suited to assess potential impacts of planned trade agreements, and that such assessment is a promising route towards trade agreements that are inclusive, robust, and supportive of the Sustainable Development Goals (SDGs). International trade, trade negotiations, Mercosur, EFTA, inclusive trade, human rights, impact assessment, sustainability impact assessment

Women’s descriptive representation and support for the inclusion of gender-related provisions in trade agreements

Recent regional trade agreements (RTAs) tend to link gender and trade issues through gender-related provisions. This pattern is mostly observed in RTAs formed between global North and South countries. Despite a growing interest in gender-related provisions among countries, there have not been systematic studies on the formation of RTAs with these instruments. Our study underscores women’s descriptive representation. Female representatives care more about advancing women’s interests and improving their status than their male counterparts. Thus, we posit that when women’s political representation in a country’s legislature is high, it is more likely to support gender-related provisions. Focusing on RTAs between the European Union and democratic developing countries from 1997 and 2016, we find some support that women’s presence in the legislature affects trade policy outcomes. Countries with higher female representation in the legislature tend to join RTAs with gender-related provisions, but these countries do not increase their commitment to gender equality by adding multiple provisions on gender.

Implementing and Enhancing Labour Standards Through FTAs? A Critical Analysis of the Panel Report in the EU-Korea Case

The EU has been a long-time advocate of including labour provisions in trade agreements. The labour provisions in the EU’s Free Trade Agreements (FTAs) have gone through intergenerational development and become a staple practice. Moreover, recent years witnessed the EU’s strengthened enforcement of labour commitments made in FTAs by trade partners. In 2018, the EU initiated a dispute settlement process against Korea based on the EU-Korea FTA, which is the first and, up to now, the only case on alleged violations of labour provisions in an EU FTA. In the published report, the Panel makes findings on three key jurisdictional and substantive issues: the requirement of a trade-labour linkage, the incorporation of International Labour Organization (ILO) labour standards into the FTA, and the obligation to ratify the fundamental ILO Conventions. Based on a critical analysis, the Panel’s decisions arguably not only left much to be desired at the technical level, but may exert an unpleasant effect on the development of the relationship between labour protection and FTAs. Nevertheless, the EUKorea case provides an important opportunity to revisit the appropriateness of using FTAs to implement and enhance labour standards, including enforcing labour provisions through a dispute settlement process. Dispute Settlement, Free Trade Agreements, Labour Standards, The EU-Korea Labour Dispute, Trade-Labour Linkage

Sanctions or No Sanctions: Enforcing Labour Provisions in Free Trade Agreements

The inclusion of labour provisions in trade agreements which commenced with the North American Free Trade Agreement (NAFTA) in the 1990s and other developed countries such as Canada and the EU saw the reaffirmation and implementation of commitments undertaken as part of the International Labour Organization (ILO) Conventions that these countries have ratified – with specific emphasis on respecting, promoting and realizing the core labour standards. While the general commitments and the nature of labour standards included in different agreements are largely similar, the approaches to enforce these standards under various agreements have differed widely. While the major developed economies (US, Canada and the EU) all include substantive labour provisions in their trade agreements as a standard practice now, their approaches to enforcement of these provisions are strikingly different (with US-Canada approach largely similar). These two contrasting approaches are – (1) that entails a possibility of monetary assessment, countermeasures or suspension of preferential benefits (sanctions based) and (2) that is based exclusively on recommendations and directions by a Panel of Experts as part of the dispute resolution process without any possibility of economic assessment (non-sanctions-based). This article provides an overview of these two main approaches towards enforcement of labour provisions in trade agreements. In light of the recent emphasis placed on including stronger enforcement mechanisms within the Free Trade Agreements (FTAs’) on sustainability, specifically in the EU this article examines the two approaches and highlights the approach which would be better suited for enforcing labour standards. Labour Standards, occupational safety and health, TSD, Dispute Settlement, Enforcement, NAFTA, NAALC, USMCA, Labour Provisions in FTAs’, Rapid Response Labour Mechanism, ILO Conventions, EU-Korea Labour Dispute, countermeasures, monetary assessment, suspension of benefits.

Non-trade provisions in trade agreements and FDI

Preferential trade agreements (PTAs) increasingly feature a variety of provisions related to economic and social rights (ESR), environmental protection (EP), and civil and political rights (CPR). In this paper we estimate the effect of the degree of legalization of PTAs in these non-trade provisions on the flow of bilateral greenfield FDI. We explore this relation in a structural gravity setting and find that all three types of non-trade provisions affect the flow of FDI negatively. This effect is driven by investments directed to middle- and low-income countries, in particular for more directly economically relevant (ESR and EP) provisions. These latter are also found to have a larger negative impact on FDI between origin-destination country-pairs which differ the most in their commitment on non-trade issues in PTAs with third parties.

Data Sovereignty and Trade Agreements: Three Digital Kingdoms

For centuries, international lawyers have wrestled with the relationship between national sovereignty and international law. This is also the case of international trade law, where the tension between trade liberalization and national sovereignty culminated in the famous “Great 1994 Sovereignty Debate” between the late Prof. John Jackson and other leading scholars when the WTO came into being. As we enter the digital age, the issue of sovereignty resurfaced once again in the form of data sovereignty. In this paper, I will examine provisions in trade agreements which deal with data sovereignty issues, such as restrictions on data flow such as internet filtering and censorship; data localization requirements including the requirements to use certain technologies. In particular, the paper will focus on the clash between the US, China, and the EU, which chooses to champion the sovereignty of the firm, the state and the individual respectively. With a critical examination of their relevant policies and positions, the paper will also suggest ways the issue should be dealt with in future trade agreements.

Inclusive Trade: Justice, Innovation, or More of the Same?

AbstractInclusive trade is taking hold in various forms in international organizations and in the trade policy of national governments. Absent empirical evidence that will take time to generate, it can be difficult to assess the achievements of this new approach to trade. Nancy Fraser's three justice idioms provide a conceptual entry point for evaluating the potential of the inclusive trade agenda. Fraser argues that the contemporary global justice conversation must acknowledge claims for recognition, representation, and redistribution. Applying this conceptualization to the inclusive trade agenda shows that trade agreement provisions intended to favor women and Indigenous peoples go some distance in addressing claims for recognition and representation but accomplish less in remedying injustices associated with maldistribution. Therefore, the inclusive trade agenda does significantly advance global justice for marginalized groups, but works primarily in ways that are political and cultural, not economic.