Short courses on key international economic issues for delegates from permanent missions in Geneva

Trade agreements between developed and developing countries

16 April 2010Luisa Rodriguez

The proliferation of RTAs and other trading agreements between developing and

developed countries in today’s trading environment

Outline of presentation

1. The context1. Today’s trading environment2. The proliferation of N-S RTAs

2. Trends with respect to trade agreements between developed and developing countries

3. Problem areas

Today’s trading environment

• Current state of play with respect to multilateral trade negotiations– Frustration pace of reform in the WTO

• Current context of global economic crisis– Interest in maintaining policy space

and access to certain instruments

The proliferation of N-S RTAs

• Why?– Binding unilateral preferences– Competitive liberalization theory– Domino theory– Upgrading the regulatory environment to

raise the trade and investment profile– Testing ground for future multilateral

trade negotiations and harmonization of rules

The US

• The promotion of RTAs and FTAs in US trade policy.

• Interested in:– Latin America (Chile, Peru, Colombia,

and Panama– Asia (Korea, Singapore, Malaysia and

Thailand)– Middle East (Jordan, United Arab

Emirates and Bahrein)

The EU

• The promotion of RTAs and FTAs in EU trade policy

• Interested in:– Africa, Caribbean and the Pacific

(EPAs)– Latin America (Central America and

Andean)

Asia

• Increased RTA negotiations in the region– Intra-Asia (ASEAN)– With other trading partners (New

Zealand, Europe)

• Role of China

“New regionalism”

• Beyond neighboring countries• Deeper integration

– Trade liberalization for goods:• Minimization of exclusion lists + sunset

clauses• Transitional periods of 10 years, more

under exceptional circumstances (max. 20)

• Cross-referencing to WTO treaties

The expanding “behind the border” trade agenda

• Environment• Labour standards• Competition• Investment• Financial regulation• Intellectual Property Rights• Services• Social issues• Tax regimes• Exchange rates

Problematic issues

• Scope of agreements– Exclusion of agriculture

• Regional integration• Development aspects of RTAs

– Asymmetric provisions with respect to liberalization

– Cooperation

Example: EPAs

• Purpose: bind existing market access opportunities

• Securing additional market access in services

• Upgrading production and export composition and value addition (through increased investment)

• Capacity building (SPS and TBT)

Controversial issuesCommercial interests

• Are interests of the ACP = LDCs?• Benefitted already from 100% DFQF access (Everything

but Arms)

• Erosion of preferential margins will happen– EU negotiating with other countries

• Competition with export goods from Central America and Andean countries

– Elimination of commodity protocols + European agricultural reform

– Reduced offer of goods– Confronts technical barriers and sanitary and

phytosanitary measures– Rules of origin don’t favor regional cumulation

Controversial issuesCompatibility with WTO Rules

• Interpreting what is necessary to deem an RTA compatible with WTO Rules– Liberalization of “substantially all trade”

• Less than full reciprocity– Transitional/implementation period should be “a

reasonable length of time”• Provisions that are not required to ensure

compatibility– Services, competition policy, government

procurement, intellectual property• Restricted policy space

– MFN Clause• Interim agreements not notified to the WTO

Controversial issuesImpact on regional

integration• Reinforcement of dependency on imports

from Europe = danger– For local production– For intraregional and interregional trade flows– For export diversification efforts

• Regions who negotiated EPAs are not the same where regional initiatives already exist:– Case of Eastern and Southern Africa

Conclusions