One of the more pernicious barriers to trade in today's world are so-called 'rules of origin' that should help customs officers determine a product's origin, but often serve to raise the cost of importing. In practice, such rules prevent final producers from choosing the most efficient input suppliers around the world. This column investigates the impact of rules of origin in the world's largest free trade agreement, NAFTA, on imports of intermediate goods from non-member countries. The findings show that preferential rules of origin in FTAs can violate GATT rules by substantially increasing the level of protection faced by non-members.
Paola Conconi, Manuel García Santana, Laura Puccio, Roberto Venturini, 16 March 2016
Angus Armstrong, 09 March 2016
The upcoming vote on the UK’s membership of the EU has sparked a vibrant debate on topics ranging from sovereignty and sterling to migrants and the military. This column discusses evidence on the economics of Britain’s EU membership drawn from a recent conference where both sides of the debate were represented.
Tsuyoshi Kawase, 10 January 2016
An agreement on the Trans-Pacific Partnership has finally been reached, after many twists and turns. This column examines the new set of rules comprising the agreement, and asks whether the TPP is, as claimed, a 21st century agreement or just an expanded version of a US-style FTA. While the TPP is undoubtedly a highly ambitious agreement that includes areas unaddressed by WTO disciplines, its success rests ultimately on the dispute settlement procedures.
Susan Ariel Aaronson, 14 July 2014
The internet promotes educational, technological, and scientific progress, but governments sometimes choose to control the flow of information for national security reasons, or to protect privacy or intellectual property. This column highlights the use of trade rules to regulate the flow of information, and describes how the EU, the US, and their negotiating partners have been unable to find common ground on these issues. Trade agreements have yet to set information free, and may in fact be making it less free.
Thorvaldur Gylfason, Inmaculada Martínez-Zarzoso, Per Wijkman, 14 June 2014
The Ukraine saw EU soft power met by Russian hard power. This column argues that the EU should counter this hard power using trade policy, among other policies. EU members should agree a common policy and seek support from others to execute this policy. To date, the EU’s response has been too little, too late.
Jayant Menon, 09 June 2014
With the rise of mega-regional trade agreements, the world trade system resembles a jigsaw puzzle. This column discusses the difficulties involved in consolidating free trade agreements at the regional level, and argues that piecing together the blocs around the world will be even more challenging. A potential way forward is to return to the most widely used modality of trade liberalisation – unilateral actions – but this time involving the multilateralisation of preferences rather than unreciprocated reductions in tariff rates.
Aaditya Mattoo, 10 October 2013
The recent launch of negotiations on a transatlantic trade and investment deal has been widely welcomed by policymakers. This column warns that the aspect of the deal that provokes the greatest excitement – its focus on regulatory barriers like mandatory product standards– should evoke the greatest concern. Regional harmonisation may increase intra-regional trade yet exports from excluded developing countries could be hurt.
Jayant Menon, 14 May 2013
Are free trade agreements good for ‘Factory Asia’? This column argues that rather than supporting ‘Factory Asia’, it is more likely that fragmentation trade has prospered despite the noodle bowl of overlapping FTAs in the region. Inter-regional FTAs, on the other hand, may have been able to indirectly support the growth of production networks among existing members, if they led to increased demand for the final goods that the networks produce.
Ganeshan Wignaraja, 06 April 2013
Asia’s trade-policy landscape is set to change with the start of negotiations on a Regional Comprehensive Economic Partnership involving ASEAN and major regional economies. This column argues that such a deal could bring economic benefits, but that realising them depends on tackling several challenges during the negotiations and afterwards.
Kati Suominen, 20 December 2012
Free trade agreements are now the centre of gravity in global commerce. This column says they are also the likeliest pathway to multilateral trade liberalisation. With the US negotiating two mega deals – the Trans-Pacific Partnership and a US-EU free-trade agreement – China and other emerging economies will have no choice but to play by common rules of the game. It concludes that with all heavyweights joining the charmed circle, multilateral talks in Geneva will no longer be needed.
Claude Barfield, 01 August 2012
Canada and Mexico have recently been invited to join negotiations for the Trans-Pacific Partnership. This column argues that this is a big deal. It could produce a domino effect, beginning with the addition of Japan and Korea and leading to a model 21st century trade area encompassing over 700 million people with a combined GDP of some $26 trillion.
Simon Evenett, 20 July 2012
Simon Evenett of the University of St Gallen talks to Viv Davies about the recent increase of protectionist measures in the world trading system. They also discuss the implications of the rise in regional trade agreements, the potential effects of Russia joining the WTO and the impact of slow growth in Europe on the region’s trade with the rest of the world. Evenett maintains that defenders of the world trading system should do more to prevent the current subordination of trade policy. The interview was recorded by telephone on 17 July 2012.
Ganeshan Wignaraja, 04 July 2012
With little end in sight for the Doha Round of trade talks, this column argues that China and India are only going to pursue more free trade agreements. It asks what can be done to make sure these agreements lead to deeper integration between these countries and the rest of the world.
Ganeshan Wignaraja, 20 October 2011
South-South trade and trade agreements are booming amid the stalled Doha trade talks and a fragile world economy. In Asia alone, trade agreements have grown from only 3 to 61 between 2000 and 2010. This column examines Asia’s experience and argues that South-South trade agreements should increase their coverage of goods and services and improve consistency with global rules to fully support South-South trade.
James Anderson, Yoto Yotov, 19 May 2011
Free trade agreements are controversial. While they promote trade between the member countries, they may also divert trade away from non-member countries, potentially reducing welfare. This column provides evidence that, even when trade diversion is taken into account, the overall effects are still strongly positive.
Fred Bergsten, 18 May 2011
US trade policy is moving again as major decisions are being made this month on both bilateral FTAs and multilateral negotiations at the WTO known as the Doha Round. This column argues a conclusion of the Doha Round would be useful but notes that if Doha comes off the rail, the US has other options. In particular, the bilateral FTAs and the Trans-Pacific Partnership talks with Asia-Pacific nations. These non-WTO agreements enjoy very strong US constituencies whereas Doha enjoys very few.
Richard Baldwin, 17 May 2011
Most observers in Geneva expect the Doha round to fail. If that happens, this column argues that the prospects for US market-access policy will be grim. New multilateral tariff cutting is unlikely before 2020 and special interest groups in the US will hold back free trade agreements, leaving the country to fall behind in the bilateral market-access game.
Xuepeng Liu, Emanuel Ornelas, 11 May 2011
The economic effects of free trade agreements are widely studied, but what about their political impact? Using data from over 125 countries over the past 60 years, this column argues that by removing protectionism, free trade can lower the government’s power and hence the incentives of autocrats to hold office. All this can help strengthen democracy.
Thorvaldur Gylfason, Per Wijkman, 01 January 2011
With the end of the Balkan conflicts in the late 1990s, the EU and the US set up the Stability Pact for South Eastern Europe. This column – the first of two – argues that, as well as promoting regional economic integration, the Pact’s central aim was to safeguard peace. It suggests reasons why it took so long for the Balkans to negotiate regional free trade and why they ultimately succeeded.
Philippe Martin, Thierry Mayer, Mathias Thoenig, 09 April 2010
What role can free trade agreements play in an increasingly globalised world? This column argues that both economics and politics matter. Because they involve trade gains, trade agreements reduce the risk of dispute by increasing the opportunity cost of war. But with globalisation, this cost decreases, making such agreements more, not less, important to keep the peace.