Alfred E. Eckes
This article deals with the administration of trade policy. It examines the individuals, ideas, and institutions that shape the trade regulation process. It focuses on the rules-based global trading system (World Trade Organization) and how the United States and other leading nations implement their obligations. It also provides readers with extensive bibliographical information, so that they can learn more about technical aspects of this broad subject.
This article attempts to provide in a succinct way a road map for those wandering into the territory of agricultural policy and trade. It begins with a brief discussion of the linkages between domestic farm policies and trade policies and the implications of those linkages for world markets. The second section deals explicitly with the treatment of agriculture within the GATT and later the WTO, and considers the significance of the current Doha Round for improving trade rules and lowering protection. A third section considers the situation with respect to regional and bilateral trade agreements, where agriculture has been a reluctant player but has over time been influenced significantly by this trend toward regional solutions to trade problems. A final section gives some indication of where the trade policies and trade rules in agriculture may be heading.
Hal Hill and Jayant Menon
This article aims to provide a stand-alone introduction to the Association of Southeast Asian Nations (ASEAN) economies, and traces ASEAN's evolution with a focus on its programs of economic integration. It also evaluates its past performance and, based on this, examines prospects for its future. The article is organized as follows. Section 2 provides an overview of the ten economies and the development of ASEAN as an institution. Section 3 examines ASEAN economic cooperation and integration with reference to merchandise trade, which was the principal focus of initiatives for the first quarter century. Section 4 then investigates a range of “trade plus” measures, including efforts to develop a broader range of closer economic relations both within and beyond the region, against the backdrop of expanded membership, the Asian financial crisis, the rise of China, and rapidly evolving regional commercial architecture. Concluding observations are presented in Section 5.
This article reviews commercial policies in Australia, examining both long-term trends and recent developments. Australia is fortunate in having time series that are long and of excellent quality. Indeed, they are probably as good as those available in any other country. These enable analysists to track changes in commercial policies in detail and to describe the distribution of the rates of assistance across industries. The review given in this article covers trade in services as well as trade in goods and the international movement of capital and labor, and considers the style of policy-making.
Masahiro Kawai and Shujiro Urata
This article examines the changing nature of Japan's commercial policy over the last twenty-five years. The article is organized as follows. Section 2 reviews the changing structures of trade, foreign direct investment, and the economy in Japan that underlay policy changes. Section 3 focuses on Japan's commercial policy between 1985 and 1999, when policy-makers adopted a two-track approach of relying on multilateral liberalization under the GATT/WTO and open regionalism under Asia-Pacific Economic Cooperation on the one hand and on the bilateral trade relationship with the United States on the other. Section 4 examines Japan's more recent commercial policy since the turn of the century as the country increasingly began to rely on bilateral and plurilateral economic partnership agreements, particularly with—but not limited to—East Asian economies. It is argued that agricultural sector liberalization is key to the further integration of Japan with the Asian and global economies. Section 5 concludes.
This article explores the link between commercial policies and export performance through a comparative analysis of China and India. The article is organized as follows. Section I looks at initial conditions influencing trade and trade performance. It examines the giants' export record by describing the evolution of trade flows at the aggregate and sectoral levels (focusing on growth and structural change in manufactured and services exports). Section II explores the link between shifts in key commercial policies (e.g., import liberalization, export promotion, and FDI policies) and trade flows. Section III examines the impact of free trade agreements (FTAs) on exporting. It evaluates FTA quality in terms of some simple criteria and provides evidence on the use of FTAs at the firm level. Section IV explores emerging commercial policy challenges in the post-global financial crisis era, while Section V concludes.
This article studies the political economy of East Asia in Latin America. It examines what some consider the current Chinese threat in light of the Japanese experience in Latin America two decades earlier. It argues that China, like Japan, has economic interests in the region, but that both have limited their activities for two main reasons. First, their bilateral relationships with the United States are far more important to them than their links with Latin America. Second, Latin America is a less significant partner than other developing regions. As a consequence, for better or worse, the United States remains the dominant power in the region even if the main U.S. actors—both the government and the private sector—have neglected their southern neighbors in recent times. The article is organized as follows. The first section analyzes Japanese political-economic relations with Latin America, focusing on the 1970s and 1980s. The second section turns to China's more recent experience in comparison with that of Japan. The third section identifies winners and losers from the East Asian countries' activities in the region.
This chapter examines the effects on growth, employment, and wages of the trade-liberalization policies pursued in Latin America between the late 1980s and the late 1990s, starting with a short description of trade-liberalization measures, followed by a discussion of their expected results, both by the reformers and their opponents. The two central sections of the chapter present a survey of the empirical literature that has assessed the effects of trade liberalization on growth and employment, with an emphasis on Latin America. The chapter holds the following: trade liberalization did increase productivity and economic growth, but modestly and perhaps temporarily; while trade liberalization did increase productivity, it did not have the expected effect on wages, which fell in the sectors most subject to competition; trade liberalization may have contributed to widening wage gaps, although to a lesser extent than is generally believed.
Patrick A. Messerlin
The European Community (EC) is still a recent and ongoing process. Fifty years is a short time span for such an endeavor. It is strictly an economic process because a straightforward political unification of Europe was out of reach, then, now, and for the decades to come. This ambiguous relation between economics and politics explains why the EC commercial policy often was given the status of a foreign policy instrument. Economic analysis shows that the trade policy of a country reflects domestic conflicts between consumers, import-competing producers, and exporters of the country more than its international relation. This article begins by examining the EC domestic scene—the balance between “the EC and its Member States,” the sacrosanct expression used in the trade treaties signed by the EC. It then describes the level of protection of the EC in the early 2000s, before examining the EC approach to the Doha Round of the WTO during the last decade, and the possible return to trade preferences most recently. A final section concludes.
Torbjörn Becker and Anders Fredriksson
This article discusses trade policy in the European Transition Economies. The countries covered are the Eastern European countries that became independent in 1989, the new nations formed by the breakup of former Yugoslavia, the countries west of the Ural that formerly were part of the Soviet Union, and Russia. It adds up to twenty-one countries covered over a time period that involves a fundamental transition from planned to market economies. Trade policies have certainly been one of the key reform areas in the transition process. But for many of the countries discussed, it has to be viewed in a broader light of integration with the EU. The article covers historical developments in the region over the past two decades, tariffs, and trade in the region.
Roberto Frenkel and Martín Rapetti
This chapter looks at how Latin American governments chose their exchange rate regimes given specific domestic and external conditions. The second section provides a historical overview of the main trends of exchange rate arrangements in Latin America, focusing on Argentina, Brazil, Chile, Colombia, Mexico, and Peru. This narrative goes from the post world war period up until the unfolding of the subprime crisis in the US and its effects on Latin America. The third section closes with the main conclusions derived from the analysis. The discussion follows the Latin American convention defining the exchange rate as the domestic price of a foreign currency (i.e. units of domestic currency per unit of US dollar). A rise in the nominal exchange rate implies a nominal depreciation and a fall an appreciation. The same logic applies for the real exchange rate.
Sven W. Arndt
This article begins by reviewing the basic case for free trade in terms of the workhorse factor-proportions model. The conclusions of this “benchmark” model are then stress-tested by removing each of the key assumptions in turn. Not surprisingly, the case for free trade becomes less airtight, as a variety of specific market situations arises in which trade-based barriers such as tariffs or nontrade interventions such as production and other subsidies can produce superior welfare outcomes. But these theoretical findings of superiority do not necessarily translate into interventionist policy prescriptions, because in many cases the costs associated with practical implementation may exceed the expected benefits.
Juan Blyde, Antoni Estevadeordal, and Mauricio Mesquita Moreira
This article takes a close look at the policy challenges related to closing Latin America and the Caribbean's (LAC) integration gap, with a focus on regional integration. The article is organized as follows. Section 2 presents a brief summary of the region's integration steps, including the various integration strategies that have been followed over time as well as their rationale. Section 3 provides a general diagnostic of the state of integration of LAC, highlighting the most salient problems. Based on this diagnosis, Section 4 summarizes the main policies' actions, discussing some of the initiatives that are currently in place and underscoring the main challenges and opportunities ahead.
This article discusses the international trading system. Section 1 begins by describing the evolution and structure of the General Agreement on Tariffs and Trade/World Trade Organization (GATT/WTO) system. Section 2 deals with the tension between the fundamental GATT/WTO principle of most-favored-nation treatment, that is, nondiscrimination among trading partners, and the trend toward discriminatory trading arrangements, including the proliferation of regional agreements, as well as new versions of special and differential treatment of low-income countries. Section 3 focuses on participation of developing countries in the system and the effort to use special treatment to promote development objectives. Section 4 discusses the pressure to use the enforcement power of the GATT/WTO system to achieve member compliance with social norms in the areas of environment and labor. Section 5 assesses some significant challenges that currently face the international trading system. Section 6 concludes by considering possible directions of the system's evolution in response to these challenges.
This chapter notes that a strong focus of the development literature has been on the role of the trade policy regime in growth, and more broadly on the link between liberalization and growth. Country performance in relation to these issues has been the subject of controversy for well over a century. The chapter reviews the path taken in a stylized fashion, aiming to show interconnectedness as well as the most significant ways in which the region participates in the trade system. It considers import substitution to liberalization; regional integration; and the global trade regime.
Paolo Giordano and Robert Devlin
This chapter schematically presents the origin, development, and future perspectives of regional integration in Latin America, placing emphasis on regional integration agreements, mainly free-trade areas and customs unions involving regional partners, as opposed to other forms of preferential trade agreements. The second section presents the main driving forces that explain the continued quest for regional integration in the region, with emphasis on their transformation over time. The third section describes the main initiatives at play under the old regionalism. The fourth section highlights the many novelties of the new regionalism, with emphasis on the policy background, the strategic objectives, and the policy instruments. The fifth section compares the performance of the old and the new regionalism. The sixth section presents the state of play of integration today after a failed attempt at hemispheric integration and the proliferation of bilateralism.
Cristiane Carneiro and Gary Clyde Hufbauer
Since times immemorial, international commerce has been celebrated as a fountain of prosperity. Trade flourished long before trade regulations ever came into being. The subsequent creation of trade regulations did not preclude trade in unregulated goods, services, and property, nor has it eliminated smuggling and contraband. Evidently trade and regulations often exist independent from each other. But over the course of history, trade has become increasingly regulated. This article focuses on the evolution of trade regulations and the development of a rules-based system.
This article traces the fifty-year process of trade liberalization in a small open economy, Israel. By the year 2000, that process was completed, and the country is free of trade restrictions. A special section is devoted to policies regulating transactions with the Palestinian territories.
Michael G. Plummer and Alissa Tafti
This chapter focuses on transparency in the context of trade policy. It begins by considering the issue of “policy transparency” and the implications of improved transparency on uncertainty. It then examines “regulatory transparency” as well as issues related to transparency in the context of free trade agreements. It also highlights the net effects of transparency on trade and income and introduces the concept of “conveyance,” which stresses the importance of “advocacy.” Next, it discusses the potential effects of greater transparency in regional trading arrangements. In spite of the inherent difficulties in quantifying transparency measures and estimating their economic effects, improvements in transparency appear to have the potential to increase trade and economic welfare significantly.
Robert E. Baldwin
This article describes various U.S. legislative and executive branch actions over the last 75 years that have produced the reduction in protectionism and explores the underlying economic and political conditions that have influenced these events. It covers trade liberalization under the Reciprocal Trade Agreements Program, 1934–1962; significant multilateral reductions in tariffs and nontariff trade barriers but with selective protectionism, 1962–1994; and the post-Uruguay Round period.