Trade Policy Review Mechanism Research Articles

Towards meaningful transparency at the WTO: Reinforcing the trade policy review mechanism1

AbstractWe characterise the operation of the World Trade Organization's Trade Policy Review as an exercise, albeit valuable, in performative transparency. We describe steps taken by the St. Gallen Endowment for Prosperity Through Trade to augment this review process so as contribute towards meaningful transparency. Drawing from recent Trade Policy Reviews of G20 countries, specific examples are described where revealing evidence was provided that facilitates government assessment of their economies' exposure to the commercial policy practices of the reviewed nation. While a step forward, further steps are needed to attain meaningful transparency at the multilateral level that translates into better commercial policies.

The Shortcomings of International Organizations in Addressing the Challenge of COVID-19 - The Cases of WHO and WTO

Under the influence of COVID-19, the shortcomings of some international organizations were exposed. This paper focused on the problems of the WHO and WTO in responding to COVID-19 and made suggestions. Lack of power and funding was a major reason for the WHOs failure in responding to COVID-19. Accordingly, we believed that the WHO should establish powerful authority and reform its funding mechanism as soon as possible. In the case of the WTO, although the WTO took some action in response to COVID-19, the shortcomings of the existing treaties, the Trade Policy Review Mechanism, and the Agreement on Trade-related Aspects of Intellectual Property limited the role of it. In addition, Looseness among members was also an issue that the WTO needed to address. Therefore, the WTO needed to do the following: first, clarify the ambiguous concepts in the existing treaties; second, develop new treaties; third, reform the TPRM; and fourth, solve the problems in the TRIPS agreement.

Indonesian Trade Policy in Adjusting the 2020 WTO’s Trade Policy Review

This article analyzes the Trade Policy Review Body (TPRB) review of Indonesia in 2020, mainly in the agricultural sector, and how Indonesian compliance with the WTO Agreement is helpful for the Trade Policy Review Mechanism (TPRM). This study uses the normative method by gathering primary and secondary legal sources. The 2020 TPRB review perceives that Indonesia has applied untransparent safeguard measures related to its agricultural products, prohibited subsidies, and quantitative restrictions on other WTO member states. However, the Job Creation Law, launched in 2020, can be viewed as a proportional law as it puts imported products in an equivalent position with domestic agriculture or food products. The discussions reveal that Law No 11/2020 aims to balance its national interest with the WTO Agreement and the TPRB review of Indonesian trade policy, mainly in agriculture. With such legal certainty, this article recommends that Indonesia consider the TPRB review in good faith by invoking transparent safeguards, reducing its export subsidies on agricultural products, conducting a persistent report to the Committee on Agriculture, and protecting its public health and morals. The Indonesian government should also conduct text mining to determine its trade policies and deal with international trade uncertainty.

WTO 체제의 구조적 위기와 한국의 신 다자협상 대응 방향 (Structural Paralysis of the WTO Multilateral Trading System and New Negotiation Strategies for Korea)

WTO 체제의 구조적 위기와 한국의 신 다자협상 대응 방향 (Structural Paralysis of the WTO Multilateral Trading System and New Negotiation Strategies for Korea)

Energy Pricing Policies and the International Trade Regime

ABSTRACT Energy subsidy and pricing reform is widely heralded as a necessity to transition to sustainable development and keep global warming below 2°C. Energy pricing policies and subsidies are also at the heart of the energy–trade–climate nexus, but progress has been slow within the international trade regime. This is unlike other international organizations or networks, where progress has been more substantial. This article investigates the lack of legitimacy to regulate or coordinate pricing reform and links it to fundamentally divergent interests between fuel producers and importers. The article discusses the regulatory and coordinative potential of the World Trade Organization and preferential trade agreements. It finds that at the World Trade Organization, the Subsidies and Countervailing Measures, the Anti-Dumping Agreement, case law, Ricardian theory, and negotiation history all preempt the consideration of most pricing policies as subsidies. As a result, subsidy notification within the World Trade Organization is low and while other options for improving transparency via the Committee on Trade and Environment and Trade Policy Review Mechanism have been suggested, not much has actually happened because producers protect their comparative advantage. Therefore, support for fuel pricing reform remains on a general level via Ministerial Statements or through general provisions in preferential trade agreements that reconfirm the G-20 and Asia Pacific Economic Cooperation commitments to fuel subsidy reform. The only real advancement has been made within bilateral trade negotiations where heavyweights such as the European Union can push trading partners to abandon dual pricing policies.

Contribution of WTO for Multilateral Trading System

In ancient time, international trade was regulated by bilateral agreement between two or more states. During those times, there was the concept of protectionism and state used to impose huge tariff. However, in modern time, it is regulated under liberal market economy and future tariff rate is supposed to be zero. Production method follows comparative benefit approach. World Trade Organization (WTO) is playing leading role in contemporary time. This paper has sensitized the areas of trade in goods; trade in service, trade related intellectual property rights, dispute settlement bodies and trade policy review mechanism as a part of WTO. It is helpful to understand general overview of WTO. As a member of it, Nepal has to formulate new policy and enact necessary legislation along with the amendment of existing legislation to make it compatible with WTO standards.

The Process Performance of the WTO Trade Policy Review Mechanism: Peer‐Reviewing Reconsidered

AbstractThis survey article provides the first comprehensive assessment of the functioning of the Trade Policy Review Mechanism (TPRM), the central monitoring platform of the World Trade Organization (WTO), over the first 20 years of the WTO's existence (1995–2014). Building on two large new datasets, we assess the performance of the Mechanism along three dimensions: (1) members’ participation rates in trade policy reviews (TPRs); (2) the coverage of trade flows through participation of states in relevant TPRs; and (3) the content of their input into the reviews. Descriptively, we identify a very prominent increase in members’ participation rates, but also a very high share of dyadic trade flows covered by the TPRs. In the most recent period, members accounting for up to 95 per cent of the imports into the reviewed state take part in the TPRs, on average. We also argue that the Mechanism provides space for substantial critical reviewing of members’ policies, especially in some areas such as agriculture. However, we also identify specific pitfalls of the Mechanism, especially in its excessive formalism and lack of interactive discussion.

Do trade flows respond to nudges? Evidence from the WTO’s Trade Policy Review Mechanism

AbstractRelatively little is known about the economic effects of WTO members’ communications outside of official negotiations and dispute proceedings. This paper considers whether interactions between members through the Trade Policy Review Mechanism, the WTO’s prime transparency institution, lead to subsequent changes in bilateral trade flows. Trade policy concern submissions are more likely to lead to positive trade responses when (i) the receiving country is less concerned about terms‐of‐trade losses, (ii) the submitter is more willing to engage in WTO disputes with the reviewed member to challenge controversial trade policies, and (iii) the submitting country challenges trade policies in the nonchemical manufacturing sector. Nudges through the TPR process are not successful in raising agricultural trade.

Utilizing low-wage labour for economic growth: A critical analysis of Bangladesh’s trade policy review

ABSTRACTCritically analysing some suggestions of the WTO’s trade policy review mechanism (TPRM) on Bangladesh’s trade and labour policy, this article proposes that attention to the sustainable development (SD) objective of trade liberalization can redirect the review process. Amartya Sen’s capability-based perspective to SD is borrowed to argue that the TPRM can advise on some urgent social or distributional impacts of trade liberalization, or at least refrain from advising/encouraging economic growth based solely on utilizing low-wage labour. However, it argues that even with a broader approach the TPRM might be unable to address some crucial social or distributional issues: for example, it might not be possible to report on issues relating to semi-formal or informal workers and their life-threatening work conditions. Addressing these complex trade-related social concerns require effective coordination between mechanisms and forces operating at multiple governance frameworks.

World Trade Organization’s Agreements Affecting Pak-Afghan Border Tribes

This paper attempts to highlight the perceived threats of World Trade Organization’s certain agreements to the livelihood of the tribes residing erstwhile FATA and adjacent five-border provinces/wilayatona of Afghanistan. There are seventeen agreements of WTO that deals with issues related to trade and commerce. The Agreement on Agriculture offers obligations for member states in the area of market access, tariff regulations, export competition, domestic support, export subsidies, food security, and environmental protection. If agreements such as Agreement on Agriculture, General Agreement on Trade and Services, Trade Policy Review Mechanism and Social Clause are extended without adjustment to the needs of poor nations and sub-nations living on the peripheries, then it may prove detrimental to their survival. To substantiate my argument, I have briefly discussed the adverse affects and recorded protests against such agreements by the poor indigenous people living across the world’s different peripheries.

Peer-reviewing in the World Trade Organization: The Activity of States in the Trade Policy Review Mechanism

This paper offers the first comprehensive quantitative explanatory study of the World Trade Organization (WTO) member states’ activity in the Trade Policy Review Mechanism (TPRM), the WTO’s central monitoring instrument. We analyze both the written questions submitted and the oral declarations delivered by the WTO members in all 95 trade policy reviews in the six-year period of 2009–2014. Descriptively, we find that the European Union and the United States are the most active members, but that the so-called ‘rising’ powers – namely China, Brazil, and India – very closely follow. In addition, almost the entire membership is involved in reviewing activity, at least to some extent. The explanatory results reveal that activity in the TPRM is strongly associated with a country’s market size. However, the member states’ overall aggregate membership in international organizations plays an almost equally important role.

Der deutsche Leistungsbilanzüberschuss

Persistent and significant current account imbalances are often seen as one of the greatest threats to the global economy and a catalyst for protectionist tendencies. Germany is often criticised for running a high surplus. However, economists disagree about whether and to what extent the German current-account surplus is excessive and which policy measures could help to rebalance the current account. The authors argue that the German current-account surplus is a global phenomenon and hence requires in addition to economic policies that could stimulate investment activity in Germany an internationally coordinated approach. Taking into account the specific circumstances of a country, the WTO could act as an institutional framework to deal with global imbalances. In particular the WTO’s Trade Policy Review Mechanism could be further developed into a forum for coordinating members’ trade policy and for agreeing on reciprocal measures among members. The concrete design could be based on other established international mechanisms, such as the European Semester.

Sunshine over Shanghai: Can the WTO Illuminate the Murky World of Chinese SOEs?

AbstractState-owned enterprises (SOEs) are a major force in the Chinese economy and a growing presence in international trade and investment. The challenge to the WTO legal regime is commercial, given the size of SOEs and their share of Chinese output, and political, given worries that trade and investment by SOEs may be driven by public policy goals. And both challenges may be exacerbated by the murky world of Chinese SOEs. In this article, I first review whether Chinese SOEs are a problem for the WTO, and whether more sunshine on their operations might be a useful discipline. I then ask what we know about SOEs inside the WTO, including in the Trade Policy Review Mechanism. Since the answer is, not much, I consider whether mega-regional trade negotiations offer a better approach. My answer being negative, I finally consider whether an attempt to negotiate a WTO Reference Paper on SOEs might help. I conclude that transparency is likely to be a better discipline on the spillovers associated with SOEs than a search for binding rules, while also helping everyone better understand the efficiency effects.

Sunshine over Shanghai: Can the WTO Illuminate the Murky World of Chinese SOEs?

State-owned enterprises (SOEs) are a major force in the Chinese economy and a growing presence in international trade and investment. The challenge to the WTO legal regime is commercial, given their size and their share of Chinese output, and political, given worries that trade and investment by SOEs may be driven by public policy goals. And both challenges may be exacerbated by the murky world of Chinese SOEs. In this article I first review whether Chinese SOEs are a problem for the WTO, and whether more sunshine on their operations might be a useful discipline. I then ask what we know about SOEs inside the WTO, including in the Trade Policy Review Mechanism. Since the answer is, not much, I consider whether mega-regional trade negotiations offer a better approach. My answer being negative, I finally consider whether an attempt to negotiate a WTO Reference Paper on SOEs might help. I conclude that transparency is likely to be a better discipline on the spillovers associated with SOEs than a search for binding rules, while also helping everyone better understand the efficiency effects.

Trade in Transforming Our World: Options for Follow-Up and Review of the Trade-Related Elements of the 2030 Agenda for Sustainable Development

Trade and trade policy are central to transforming our world, the objective of the 2030 Agenda for Sustainable Development. Trade can make a crucial contribution to sustainable development objectives, including economic growth and poverty reduction, but requires a coherent policy framework that links helping businesses harness trading opportunities with managing the social, economic and environmental impacts of trade. Ensuring policy learning about how trade can contribute to the 2030 Agenda requires robust follow-up and review of the new global framework. The first aim of this paper is to map where trade-related elements are found in the 2030 Agenda. The second aim is to describe the architecture for follow-up and review that could support these commitments, and to map where it exists or could be built. The 2030 Agenda in itself will not cause anything to change, let alone ensure policy coherence, but the review process might.The contribution of trade to the 2030 Agenda is diffuse, which means follow-up and review will be a challenge, but it need not be overly burdensome, and it will be useful. This paper presents options for how progress towards these trade-related commitments could be reviewed in the years to 2030. The process would provide information on progress based on inputs from governments, civil society and international organisations. This information would be reviewed through self-assessment by states themselves, through peer learning by other governments at the regional level (for example in United Nations regional commissions), and at the global level in multilateral agencies and the High-Level Political Forum, the apex of the follow-up and review process. The point of these review processes is not ‘evaluation’, but the sharing of experiences as a way to facilitate learning and policy improvement.The paper identifies six clusters of trade-related elements in the 2030 Agenda. These elements range from improving access to trade finance to strengthening the multilateral trading system. They include commitments to the reform of perverse subsidies to agriculture, fisheries and fossil fuels, and to ensuring that regional trade and investment agreements are coherent with sustainable development. For each cluster, the paper identifies options for indicators, where the necessary data are already collected (if they are) and where progress against these political commitments could be reviewed. The analysis does not pretend to be exhaustive, but to provide a starting point for further discussion. The paper then presents the information from another perspective, focusing on the potential roles of the various peer review mechanisms, summarised in Box 2. These mechanisms range from multilateral reviews like the Trade Policy Review Mechanism of the World Trade Organization and UNCTAD’s voluntary policy peer reviews to regional mechanisms that could review groups of states, like the Organisation for Economic Co-operation and Development or regional economic integration organisations like Asia-Pacific Economic Cooperation. The last part of the paper explains how the various reports could be brought together. Given the profusion of options for review mechanisms, an inter-agency task force on trade could provide an analytical synthesis of reporting and reviews useful for discussions at national, regional and global levels on the interrelated effects and trade-offs between goals.

No Country is an Island in Regulating Food Safety: How the WTO Monitors Chinese Food Safety Law Through the Trade Policy Review Mechanism (TPRM)

Established within the framework of the World Trade Organization (WTO), the Trade Policy Review Mechanism (TPRM) reviews periodically the trade policies of all WTO Members. The review includes many aspects of food safety regulation. China’s trade policy is reviewed every two years. This paper analyses in detail the reviews of China’s trade policy in 2006, 2008, 2010, 2012 and 2014. It focuses in particular on food safety law and types of standards, alignment of domestic standards with international standards, the role of different domestic institutions, transparency and notification of food safety measures under the WTO agreements on Sanitary and Phytosanitary Measures (SPS) and on Technical Barriers to Trade (TBT Agreement), import and export, and geographical indications (GIs). It concludes that the WTO TPRM can contribute, within its mandate, to reform of Chinese food safety law and improvement of food safety in China. It notes that China has already undertaken substantial reforms of its system for regulating food safety. It recommends that China should continue to participate actively in the TPRM, follow its own path with regard to alignment and learn selectively from other WTO Members. It also makes specific recommendations for reform of food safety law in China.

A View on Future Roles of The WTO: Should There be More Soft Law in The WTO

It has been more than ten years since the Doha Development Agenda (DDA) was initiated and there has been little significant progress in negotiations. Is the World Trade Organization (WTO) losing its relevance in the governance of the international trade order? The writer argues that, despite this pessimistic picture, there will be roles of the WTO in building a new international trade system. Although the WTO has accomplished a tremendous success in the dispute settlement area, it has failed in conducting negotiations to create new rules and this is largely due to the change in power structure within the WTO. The Quadrilaterals (U.S., EU, Canada and Japan) (QUAD) countries which played a central role in the Uruguay Round Negotiation have declined in their powers and influences and the Brazil, Russia, India, China and South Africa (BRICS) have emerged as new trade powers. This has created a stalemate and often negotiations come to deadlock. Faced with this situation, trading nations have concluded many Free Trade Agreement (FTA), and Regional Trade Agreement (RTA), and recently there is a conspicuous trend toward negotiating Mega FTAs such as the Transpacific Partnership Agreement (TPP), Transatlantic Trade and Investment Partnership (TTIP), and the Regional Comprehensive Economic Partnership) (RCEP). Observers say that the multilateral trading system may be taken over by regionalism. However, Mega FTAs have their own limitations and problems. Their operations are restricted to certain regions and number of participants is limited. They will not be the substitute for the multilateral trading system as represented by the WTO. Mega FTAs may incline toward block economy and may create political tensions between one FTA vis-a-vis another FTA. Also production systems and supply chains today exceed far beyond the boundaries of FTAs. Different and sometime inconsistent trade rules of Mega FTAs may produce ‘spaghetti bowl’ situation. It is the sense of the writer that someone has to orchestrate activities of FTAs through which their rules can be converged and operations coordinated and this is a future role of the WTO. The WTO can play such a role through activities of Trade Policy Review Mechanism (TPRM) and the Committee of Regional Trade Agreements. The writer suggests that the WTO tries to establish a ‘FTA Network’ in which FTA officials are frequently convened and discuss trade rules and other matters with the view to convergence. Through such activities, there will be collegiality and esprit de corps among various FTA officials and this creates more harmonized and coordinated rules and activities among FTAs and a more harmonized relationship between FTAs and the WTO. This is a ‘soft law’ approach. Since its establishment, the WTO has concentrated its effort in creating trade rules (binding rules). It is time for the WTO to use a soft law approach as well as hard law approach.

Shining a light on fossil fuel subsidies at the WTO: how NGOs can contribute to WTO notification and surveillance

AbstractFossil fuel subsidies undermine efforts to mitigate climate change, and they damage the trading system. Multilateral discussion is hampered by inconsistent definitions and incomplete data, which could increase the risks of WTO disputes. Members do not notify such subsidies as much as they should under the Agreement on Subsidies and Countervailing Measures (ASCM), which limits the usefulness of the SCM Committee. The reports of the Trade Policy Review Mechanism on individual countries and on the trading system draw on a wider range of sources, creating an opportunity for non-governmental organizations (NGOs) to provide the missing data from publicly available sources. We suggest a new template that could be used for such third-party notifications. The objective is to shine a light on all fossil fuel subsidies that cause market distortions, especially trade distortions. The result should be better, more comparable data for the Secretariat, governments, and researchers, providing the basis for better-informed discussion of the incidence of fossil fuel subsidies and rationale for their use.

Shining a Light on Fossil Fuel Subsidies at the WTO: How NGOs Can Contribute to WTO Notification and Surveillance

Fossil fuel subsidies undermine efforts to mitigate climate change, and they damage the trading system. Multilateral discussion is hampered by inconsistent definitions and incomplete data, which could increase the risks of WTO disputes. Members do not notify such subsidies as much as they should under the Agreement on Subsidies and Countervailing Measures (ASCM), which limits the usefulness of the SCM Committee. The reports of the Trade Policy Review Mechanism on individual countries and on the trading system draw on a wider range of sources, creating an opportunity for non-governmental organizations (NGOs) to provide the missing data from publicly available sources. We suggest a new template that could be used for such third-party notifications. The objective is to shine a light on all fossil fuel subsidies that cause market distortions, especially trade distortions. The result should be better, more comparable data for the Secretariat, governments, and researchers, providing the basis for better-informed discussion of the incidence of fossil fuel subsidies and rationale for their use.

Maintaining the WTO's Supremacy in the International Trade Order: A Proposal to Refine and Revise the Role of the Trade Policy Review Mechanism

In light of the stagnating World Trade Organization (WTO) negotiations, this article argues that WTO should not only focus on the development of new rules or the resolution of disputes, but should also develop ‘soft law’ on the basis of informal mechanisms as the successful experiences of the International Competition Network or the International Monetary Fund demonstrate. In this respect, WTO should extend and refine the role of its Trade Policy Review Mechanism (TPRM) in order to be able to address essential issues of contemporary economic concerns and, hence, remain at the centre of global governance. This article explains how the TPRM role should be refined and revised with a view to cover key areas of international trade governance, such as harmonization and coordination of preferential trade agreements as well as convergence of measures dealing with greenhouse gas emissions and other environmental policies which are two key issues questioning the WTO’s supremacy in the international trade order.