Recent Preferential Trade Agreements Research Articles

Dairy concessions in Canadian trade: a discursive institutionalist account

ABSTRACT Canadian policymakers have long been protective of their dairy industry despite reducing state interventions in other sectors. Recent preferential trade agreements (CPTPP, CETA, and CUSMA), however, have shown there are limits to this insularity. These new agreements have introduced dairy access concessions at a moment of flux within the rules-based international order. Why are there dairy concessions at this moment? This article combines political economic and ideational factors to explain this shift in Canadian trade policy. Applying discursive institutionalism, we observe a collapse of the dairy industry’s discursive power over sovereignty and federalism. This discursive breakdown is a function of (1) the legacy of earlier preferential trade agreements and (2) the success of challenger coalitions in persuading actors in favour of economic liberalization. Incorporating content analysis of public statements, we characterize this discursive breakdown within both federal and intergovernmental networks.

The International Settlement of Disputes Under the (Draft) CAI

Abstract The EU-China Comprehensive Agreement on Investment (CAI) establishes a sophisticated inter-State dispute settlement mechanism, directly inspired by the World Trade Organization (WTO) and adapted to a bilateral context, as is also found in recent preferential trade agreements. The novelty here lies in its extension to the field of investment entry and investment facilitation. Some variations in detail are also important. Because of partial material overlap, it is necessary to consider how choice of forum is organized between CAI procedures and those under WTO or other agreements, and to clarify the possible interplay with bilateral investment treaties previously concluded by China with EU Member States. The attention given in CAI to specific procedures for sustainable development and subsidies is also notable. In sum, the solutions adopted show a willingness on the part of the two powers to exert a certain influence on developments in international investment law, without upsetting the methods of dispute resolution.

Taxation of Digital Services Under Trade Agreements

ABSTRACT The digitalization of the economy combined with sophisticated tax planning has enabled some multinationals to avoid paying almost any income tax in most market jurisdictions from which they earn substantial profits. Faced with financial and political pressures to act, market states have sought to expand their tax bases so that these multinationals, especially those providing internet advertising and digital intermediation services, pay their ‘fair’ share of tax. The failure to reach an agreed outcome among Organisation for Economic Co-operation and Development and Group of Twenty members has led to an increasing number of states to take unilateral measures. In doing so, states need to navigate their obligations under double taxation agreements and trade agreements. An examination of typical double taxation agreements, the General Agreement on Trade in Services, and recent preferential trade agreements shows that states have limited options to expand their tax bases in compliance with their international obligations. Here, the imposition of an appropriately designed digital services tax has political and legal advantages. The growing volume of cross-border digital services and data flows suggests that greater engagement between the international tax and trade regimes is likely in the future, including in the negotiations of disciplines on electronic commerce.

Addressing Domestic Regulation Affecting Trade in Services in CETA, CPTPP, and USMCA: Revolution or Timid Steps?

Abstract The number of international agreements purporting to liberalise trade, mainly focused on reducing protectionist measures through the imposition of general principles, has increased greatly over the last 25 years. More recently, the United States and the European Union (EU) concluded comprehensive agreements covering trade in goods, trade in services, and foreign investment. This article inquires whether, and the extent to which, such agreements represent a departure from previous practice. It focuses on (a) the instruments employed to address domestic regulation affecting trade in services and (b) three specific agreements concluded between 2016 and 2018: the EU-Canada Comprehensive Economic and Trade Agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the United States-Mexico-Canada Agreement. While these recent Preferential Trade Agreements put forward novel approaches to regulatory diversity affecting trade in services, it is too early to ascertain whether these will have any ground-breaking impact in terms of services trade liberalisation.

Kick‐starting diffusion: Explaining the varying frequency of preferential trade agreements’ environmental provisions by their initial conditions

AbstractMost recent preferential trade agreements (PTAs) include environmental provisions. While a number of these environmental provisions remain rare and are incorporated in just a few PTAs, others are widely popular and are duplicated in more than 100 PTAs. We still lack a convincing explanation for this varying frequency. While the diffusion literature typically tries to explain how diffusion occurs, we investigate why certain provisions diffuse more often than others. We hypothesise that the initial conditions under which provisions first emerge determine the scope of their diffusion. Our results support this hypothesis and indicate that provisions originating from intercontinental agreements diffuse more often than others. At the same time, provisions first designed by economically powerful or environmentally credible countries are not related to more frequent occurrences of diffusion. These findings are of interest for the literatures on international institutions' design, interaction and diffusion.

Recent Preferential Trade Agreements’ Disciplines for Tackling Regulatory Divergence in Services: How Far beyond GATS?

AbstractThe paper reviews the disciplines for tackling regulatory divergence in services included in 23 PTAs entered into by China, the EU, Japan, and the USA. It identifies a remarkable expansion in the number and extent of disciplines on regulatory transparency, regulatory coherence, and regulatory cooperation compared with GATS, which, subject to adequate implementation, will allow these agreements to deliver a degree of market integration well beyond what could be achieved simply by removing market access restrictions and discriminatory measures from the rule book. However, the paper calls for some restraint when estimating the potential impact of these disciplines, mainly because of the soft language used for phrasing some of them and the anticipated high implementation costs, particularly for countries with unsophisticated domestic legal systems.

Harmonization of Rules of Origin: An Agenda for Plurilateral Cooperation?

This article discusses the deadlock in the WTO on multilateral harmonization of non-preferential rules of origin (RoO) and reviews some of the RoO included in recent preferential trade agreements. We argue that there is a trend towards adoption of similar approaches and that this suggests that cooperation to reduce the trade-impeding effects of differences in RoO across jurisdictions is more feasible than often is assumed by observers and policymakers. From a trade facilitation perspective such cooperation could be based on plurilateral initiatives under the umbrella of the WTO. These could include a focus on pursuit of greater convergence between preferential and nonpreferential RoO helping to achieve the long-standing goal of moving towards harmonization of rules of origin.

Harmonization of Rules of Origin: An Agenda for Plurilateral Cooperation?

This article discusses the deadlock in the WTO on multilateral harmonization of non-preferential rules of origin (RoO) and reviews some of the RoO included in recent preferential trade agreements. We argue that there is a trend towards adoption of similar approaches and that this suggests that cooperation to reduce the trade-impeding effects of differences in RoO across jurisdictions is more feasible than often is assumed by observers and policymakers. From a trade facilitation perspective such cooperation could be based on plurilateral initiatives under the umbrella of the WTO. These could include a focus on pursuit of greater convergence between preferential and nonpreferential RoO helping to achieve the long-standing goal of moving towards harmonization of rules of origin.

The Ties between the World Trade Organization and Preferential Trade Agreements: A Textual Analysis

Although many believe preferential trade agreements (PTAs) are incompatible with the World Trade Organization (WTO), we lack empirical evidence on this topic. In this article, we examine international trade agreements—the source of trade law—and employ two types of text analysis to determine the presence of the WTO in PTAs. Our systematic comparisons of post-Uruguay Round PTAs and relevant WTO agreements reveal a strong, two-part presence of the WTO in PTAs. Nearly all recent PTAs reference the WTO explicitly, often dozens of times across multiple chapters. Likewise, in many of these same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement. Moreover, multiple regression analyses reveal that larger countries and those most active in preferential agreement making are actually most likely to include a strong WTO presence in their PTAs. Additionally, the presence of the WTO in PTAs has increased over time. Our study contributes novel and robust empirical evidence to suggest that the ties between the WTO and PTAs are more solid than is realized.

Rules of Origin as Non-Tariff Measures: Towards Greater Regulatory Convergence

This paper examines some of the features of rules of origin (RoO) that makes these policy instruments nontariff measures, reflects on the causes of the longstanding deadlock in the WTO on multilateral harmonization of non-preferential RoO, and reviews recent trends in RoO included in recent preferential trade agreements (PTAs) involving the EU and/or the US. These reveal a steady and substantial movement towards adoption of similar approaches and illustrate that cooperation to reduce the trade-impeding effects of differences in RoO across jurisdictions is feasible. We argue that from a trade facilitation perspective such cooperation can and should pursue greater convergence between preferential and nonpreferential RoO, building on the developments observed in PTAs.

Differentiation within reciprocity: the European Union approach to preferential trade agreements

Recent statements on European Union (EU) trade policy towards developing countries (DCs) have stressed the need for differentiation between trading partners depending on their level of development. But what does this mean in practice? This article assesses the substance of EU trade policy towards a number of partners at different levels of development on the basis of the texts of recent preferential trade agreements (PTAs). It argues that EU PTA policy exhibits differentiation within a general shift towards reciprocity vis-à-vis DCs and that this needs to be assessed at the level of specific policy areas as much as partner country. It also suggests that the factors shaping EU policy vary from case to case with commercial competition and sector interests relatively more important in PTAs with emerging markets and high-income DCs and norms and institutional factors relatively more important in shaping those with least developed or low-income DCs.

Trade in Healthcare and Health Insurance Services: The GATS as a Supporting Actor (?)

The General Agreement on Trade in Services (GATS) is broader in policy coverage than conventional trade agreements for goods and, at the same time, offers governments more flexibility, in various dimensions, to tailor their obligations to sector- or country-specific needs. An overview of existing commitments on healthcare and health insurance services shows that WTO Members have made abundant use of these possibilities. While most participants elected not to undertake bindings on healthcare services at the end of the Uruguay Round, nor to make offers in the ongoing negotiations, insurance services have been among the most frequently committed sectors. If there is a common denominator, regardless of the Members concerned (except for recently acceded countries), it is the existence of a lot of 'water' between existing commitments and more open conditions of actual access in many sectors. This may also explain, in part, why there have been very few trade disputes under the GATS to date - far fewer than under the GATT in merchandise trade. Also, governments appear to be generally hesitant in politically and socially sensitive areas to take action in the WTO. There are indications, however, that the same 'players' have acted differently in other policy contexts. For example, it appears that under recent preferential trade agreements (PTAs) the European Communities has been even more cautious in committing on hospital services and protecting scope for (discriminatory) subsidies than under the GATS. Yet, this is not necessarily true for the obligations assumed by many countries, including individual EC Member States, under bilateral investment treaties (BITs). These treaties overlap with the GATS, as far as commercial presence is concerned, and may be used by aggrieved investors to challenge policy restrictions in host countries. However, though frequently invoked, BITs do not meet the same standards, in terms of transparency, open (consensual) rulemaking and legal certainty, as commitments under the GATS.