This article analyses the role of non-governmental organizations (NGOs) and social movements in the World Trade Organization (WTO). After providing a theoretical overview that outlines the rationale for NGO involvement in intergovernmental organizations, it discusses the role of NGOs in the multilateral trading system from a historical perspective. The General Agreement on Tariffs and Trade (GATT) offered little scope for NGO involvement, but the WTO accorded some recognition to NGOs through a vague reference to the possibility for consultation by the General Council in the Marrakesh Agreement. This relationship was clarified through the 1996 guidelines on arrangements for relations with NGOs. Although the WTO offered more engagement with NGOs than the GATT, they still had no place in the ‘inner sanctum’ of its decision making. The article also looks at the determinants of interaction between WTO and non-state actors.
Mark S. Copelovitch and Jon C.W. Pevehouse
The inextricable link between trade and exchange rates is a central feature of the international economy. As the cost of traversing international borders has decreased, as production of goods has become globalized, and as exchanging currencies has become easier, the effect of exchange rates on the price of goods and services has become more visible to the average citizen. Yet despite widespread acknowledgment of the links between trade and exchange rates, international political economy scholars have largely treated the two policy areas as distinct. And while the literature traversing these topics is not an empty set, it is substantially smaller than one might expect. This chapter highlights some of the work that has begun to explore the linkages between trade and exchange rate policies, focusing on policies such as optimal currency areas and preferential trade agreements. We also take stock of our state of knowledge and suggest fruitful avenues for research in the years ahead.
Robert E. Baldwin
The General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), are generally regarded as the most successful international economic organizations established in the post-World War I period. The most important accomplishment of the GATT/WTO has been a significant reduction in the levels of tariffs and non-tariff trade barriers that emerged during the great depression of the 1930s. This article highlights the successful empirical record of the GATT and the WTO in the areas of trade liberalization and dispute resolution. It also explores theories of political economy to explain why countries need to form trade agreements at all (and why they do not commit readily to unilateral trade liberalization, despite the promise of its benefits). The article first considers the terms of trade externalities and the approaches used to offset market imperfections and long-term protectionism, before concluding by discussing negotiating techniques and results.
This chapter argues that Central Asia’s post-Soviet economic liberalization and integration into the global economy remains selective and incomplete, especially when compared to its post-Communist peers. Patrimonial structures, informal economic practices, and authoritarian regime survival are enduring domestic practices that also drive foreign economic policy, while elite rent-seeking strategies depend on the relative resource endowments of each of the states. The emergence of new external economic actors such as China and Russia, as well as new Asian partners, has dramatically increased the region’s formal trade and economic links outside of the region, even as regional trade remains depressed and despite the proliferation of a number of new regional organizations designed to promote cooperation and integration. Additionally, the chapter also considers the debates surrounding the energy-rich states’ prospects for escaping the “resource curse,” and examines the region’s growing links to the murky world of offshore finance.
Margaret M. Pearson
The evolution of China’s foreign economic performance and policy is one of the biggest stories of the late twentieth and early twenty-first centuries. China’s trajectory has had repercussions domestically, regionally, and internationally, and at the level of markets and governmental institutions. As this chapter illustrates, though, there are really two stories, and the narrative regarding the drivers of these phenomenal foreign economic changes often seems to head in diametrically opposed directions. One story emphasizes a liberalizing China that has taken world markets and economic institutions by storm. The second story tells of the empowerment of the Chinese state, its consolidation as a major economic actor. Both stories must be reported, not merely to be even-handed, but because they are both crucial for illustrating China as a highly successful and yet, in crucial respects, deeply ambivalent integrator into the global economy.
This article explores the diplomacy of climate change negotiations – their form, structure, and the principles that shaped them. It focuses on two interacting levels of climate change diplomacy – one empirical and one analytical. The first – the empirical level of analysis – examines the architecture of climate change negotiations, starting with the UN General Assembly resolution that set the terms of reference for the intergovernmental negotiating committee on a framework convention on climate change and ending with the sixteenth conference of parties in Cancún, Mexico in December 2010. The second level of analysis locates the move from club to network forms of climate diplomacy on a larger canvas of debate about the nature, relevance, and adequacy of diplomacy in a complex and global world. The story explored here raises questions about legitimacy and effectiveness that are central to debates about global governance.
The phenomenon of collective bargaining in the multilateral trade regime is not new; coalitions of developing countries go back to the days of the General Agreement on Tariffs and Trade. But coalitions formed by developing countries to negotiate the Doha Development Agenda (DDA) display two new features that distinguish them markedly from their predecessors. First, the coalitions themselves have emerged as much ‘stronger’ actors. Second, the strong coalitions of the DDA have had an institutional impact, demonstrated not only in the recognition that they have received within the World Trade Organization (WTO), but also in their contribution to the proclivity of the system to deadlock. This article explores the role of coalitions in the institutional processes of the WTO. It argues that while bargaining coalitions, especially of developing countries, are first and foremost agents of the power which stems from collective agency, they have come to acquire a vital role in the WTO's decision-making and negotiation processes. The article also traces the changing rationale and structure of coalitions, from the Uruguay Round to the DDA.
Walter Hatch, Jennifer Bair, and Günter Heiduk
Multinational corporations (MNCs) and production networks are responsible for a large and perhaps growing share of international trade. Some observers describe this trend as the sum of economic flows responding to relative factor intensities of processes and relative factor endowments of locations. Others, however, view it as strategic behavior by organizations eager to control assets and exercise influence. This chapter shows that scholars have used both of these lenses to study investment and trade linkages in East Asia, North America, and Europe. While a structural approach emphasizing organizations and strategy now seems more common in the analysis of trends in East Asia and North America, where dominant firms have built elaborate production networks, a liberal approach emphasizing west-to-east foreign direct investment continues to prevail in the analysis of Europe.
Saori N. Katada and C. Randall Henning
Asian states’ management of their currencies plays a central role in their development strategies, international relations of the region, and the region’s relationship with the rest of the world. The US dollar’s dominance as a currency for international transactions in Asia has been a stable equilibrium serving the political and economic purposes of most of the export-oriented Asian countries. The choice of exchange rate regime among many Asian governments has been driven in large part by countries’ economic growth models, which have favored exports, while path dependence, network externalities, and political rivalry prevented the emergence of regional alternatives to the dollar. Counterintuitively, the widespread use of the dollar facilitated a shift on the part of many Asian countries toward shadowing the renminbi, as the weight of the Chinese economy increases within the region. The extent to which the renminbi displaces the US dollar as a trade, investment, and vehicle currency, however, remains to be seen.
Soo Yeon Kim
Deep integration is the hallmark of the modern regional trade agreement (RTA). RTAs with deep integration provisions seek to strengthen the contestability of markets for firms in partner economies through three main functions: protection of foreign firms and their interests; liberalization of “behind-the-border” trade barriers; and harmonization of domestic trade rules to enhance the efficiency of international production. This chapter delineates the main lines of research on the causes and consequences of deep integration commitments in RTAs and identifies avenues for future research, focusing on the importance of trade within global and regional production networks and the role of multinational firms as political actors in host countries. The chapter also calls for future work to address the problem of identifying the “baseline” in assessing the strength of deep integration commitments and the likelihood of regulatory disarray due to the diversity of deep integration models encoded in RTAs.
Defining the borders of the World Trade Organization's (WTO) agenda has been an intensely debated issue for several decades. Although the original General Agreement on Tariffs and Trade already reached ‘behind the border’, early multilateral trade negotiation rounds had the distinctive characteristic of dealing mainly with border measures, particularly tariffs. The fact that numerous regional trade agreements concluded after 1995 go significantly further ‘behind the border’ than multilateral agreements signals that at least part of the WTO membership is willing to include themes into their trade agenda which have not reached support at the multilateral level. This article examines the linkages between trade liberalization and internal or ‘behind the border’ measures from the point of view of the WTO, and discusses the process of agenda-setting in the WTO and the rationale for linking domestic regulations to trade negotiations. It also considers other types of internal measures such as subsidies or public procurement. The terms ‘international regulation’ or ‘international standards’ are used to refer to domestic regulatory measures that have been harmonized across countries.
Leslie Johns and Lauren Peritz
In recent decades there has been an explosion in the number and importance of preferential trade agreements (PTAs), which vary dramatically in their design. Design elements include the treaty’s depth, scope, membership, rigidity, and institutionalization. This chapter examines (1) how the design of a PTA affects the behavior of its members and (2) what designs are optimal for a given political-economic context. While members benefit from international trade cooperation, they sometimes experience domestic political pressure to violate treaty obligations. The chapter shows how institutional design elements affect the likelihood that members will comply with treaty obligations and the long-term stability of the PTA. We show that countries’ equilibrium behavior changes with the rigidity of the PTA. As the number of PTAs has increased, an overlapping and complex network has emerged. Turning to the system level, the chapter examines how the PTA network can inhibit trade cooperation and identifies design elements that can mitigate this effect.
This article focuses on the use of digital technologies by diplomats in the discharge of their reporting, analytical, and problem-solving responsibilities, and in their efforts to connect digitally and collaborate with diverse audiences and online communities abroad through public diplomacy. The sophisticated use of new media by foreign ministries holds much promise, and the practice of digital diplomacy has already begun to make a demonstrable difference. To build on these gains, relentless innovation, sufficient resources, and a fundamental shift in international policy direction are required.
Geoffrey Allen Pigman
This article argues that large firms which operate across national borders function increasingly as diplomatic actors in ways analogous to governments of nation-states, multilateral institutions, and large civil society organizations. As such, firms must engage in the core diplomatic activities of representation and communication by means of standard diplomatic tools such as sending and receiving missions and using public diplomacy. They must negotiate with other diplomatic interlocutors to achieve objectives ranging from gaining access to markets to protecting assets to managing crises. Whilst transnational firms have long participated in diplomacy, the number of firms participating and the extent of their diplomatic engagement are growing steadily and are likely to continue to do so.
Marc Busch and Krzysztof Pelc
This chapter examines dispute settlement in the World Trade Organization (WTO), surveying some of the main themes in the literature and providing a brief outline of the stages of a typical dispute. It then considers decentralization as the defining feature of WTO dispute settlement, in contrast to domestic courts or supranational enforcement, whose prosecutorial functions are somewhat centralized. It also discusses specific trade concerns (STCs), participation, and the WTO’s words, paying particular attention to the WTO’s collection of data on STCs that are reported to the Technical Barriers to Trade Committee and Sanitary and Phytosanitary Committee. The chapter argues that part of the answer to why dispute settlement matters must be the words uttered in a panel or appellate body report, the calibration of legal arguments to key precedents, and the case law that influences the decision to file in the first place.
The World Trade Organization (WTO) dispute settlement mechanism has taken great strides towards establishing the rule of law in international trade, that is, a rule-oriented international trading system. In the old dispute settlement system under the General Agreement on Tariffs and Trade (GATT) 1947, which preceded the present dispute settlement system, the contracting parties established panels to resolve trade disputes when they arose among Contracting Parties regarding the interpretation and application of rules of the GATT 1947. This article looks at the role of the Appellate Body in the WTO, and provides an overview of the major principles of WTO jurisprudence that have been established by the Appellate Body. It also considers two sets of critique: for some the Appellate Body has been too literal in its interpretations; whereas, for others, the Appellate Body has overstepped its mandate by going beyond interpretation and into rule making.
Manfred Elsig, Joost Pauwelyn, and Thomas Bernauer
When the World Trade Organization (WTO) came into being in 1995, its dispute settlement mechanism (DSM) was widely heralded as the ‘jewel in the crown’. Sixteen years later, the DSM has moved further towards centre stage. Public attention has increasingly turned to the ways in which the WTO has dealt with trade disputes. Similarly, the academic study of the litigation mechanisms of the WTO has grown substantially. This article describes how the DSM works, notes the key differences from the older General Agreement on Tariffs and Trade dispute mechanism, and discusses some trends in WTO dispute settlement. After a brief overview of the workings of the DSM, it addresses major conceptual and theoretical issues associated with the DSM, including the fundamental question of why international trade agreements need dispute settlement provisions, and what shape might they take. The article also provides an overview of scholarship on major questions on the WTO's DSM, such as legalization, dispute initiation, and third party litigation.
Alan O'Neil Sykes
What is the purpose of the World Trade Organization (WTO) dispute settlement mechanism (DSM)? This seemingly simple question has become a source of considerable academic debate. All commentators agree that one purpose of the system is to encourage compliance with WTO obligations, at least some of the time. Beyond this point of partial agreement, however, lie a variety of additional perspectives. This article investigates the extent to which the purpose of the DSM is to ensure compliance, pointing to differing views on whether the system is meant to facilitate efficient breach (and hence the limits of retaliation) or if it is meant to rebalance concessions following breach of obligations. It looks at the legal debate on the purpose of the DSM and explains how it allows members the option to violate WTO obligations for a measured ‘price’ that is tied to the harm done by the violation to the complainants. The article argues that the logic of the system can be best understood ‘as a way to facilitate efficient adjustment of the bargain over time’.
This article argues that the complexity and political sensitivity of issues under negotiation do not sufficiently explain the persistence of deadlock in the Doha negotiations. The fundamental causes of delay and deadlock are products of an altered international context that has precipitated changes within the institution, and some parallel changes in international trade diplomacy in the Doha negotiations. The article is organized as follows. Section 1 presents a brief overview of the problems that the Doha Development Agenda has encountered over the past decade. Section 2 highlights changes in the internal workings of the World Trade Organization, which in turn are partly a response to systemic changes. Section 3 analyses the new features of the Doha diplomacy, which are prominent and central to understanding the malaise in the multilateral trading system, while Section 4 concludes.
Domestic political interests and institutions are important determinants of international trade dispute processes. Domestic politics affects the inclusion and design of dispute settlement procedures (DSPs) in trade agreements. In particular, DSPs enhance the flexibility of the trade regime, permitting leaders to offer temporary, tolerated protection for politically influential industries. Regime type, leader turnover, and other political phenomena affect the patterns of use of DSPs once in place, as well as the patterns of outcomes and likelihood of settlement of disputes. Finally, the information generated by the DSPs is shown to feed back and affect the domestic politics of the signatory states in ways not unanticipated by the leaders who negotiated these agreements in the first place.