Outsiders and regional trade agreements among small countries : the case of regional markets

Standard theory says that a country's welfare is unaffected by being excluded from a small regional trade agreement. But for most products,"small"countries and regional trade agreements do have some measure of market power. Such market power can arise if (1) supply is geographically concentrated; (2) tastes differ; (3) there is product differentiation (such as quality); (4) transport costs are high; (5) the principal importing countries impose quantitative restrictions; and (6) there is hysterisis because of irreversible costs. The authors show, based on two case studies, that regional trade agreements among small countries may have negative welfare implications for outside countries. In the first case, they find that Argentina's cattle and beef exports to Peru fell when Peru formed a regional trade agreement (the Andean Pact) with various countries, including Colombia, and exporter of the same products. Argentina also lost because of the higher unit price it received on its exports to Peru. Interestingly, Venezuela's entry into the Andean Pact (that is, the formation of a larger bloc) seems to have resulted in a welfare gain for the outside country (Argentina). In the second case, rather than examine whether formation of the Central American Common Market (CACM) had a negative impact on outside countries (for which they lacked data), they examine the impact of the CACM's breakdown on member countries. Although the CACM has essentially been trade-diverting for manufactures, it seems to have been trade-creating for white maize, with both importing and exporting member countries gaining from the regional trade agreement. So, one would expect that a breakdown of the CACM, which resulted in member countries becoming relatively more"outsiders"to the bloc, may have led to a decline in the welfare of both the exporting and importing member countries. This is supported by the data, and implies that if one of the five member countries had been left out of the CACM, it would have been worse off where white maize was concerned.Environmental Economics&Policies,Economic Theory&Research,Markets and Market Access,Trade Policy,Rules of Origin,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade and Regional Integration,Economic Theory&Research,Trade Policy,Environmental Economics&Policies

Challenging the pro-development role of trade agreements when remoteness counts: the Ecuadorian experience

The question whether global financial integration is beneficial for everyone remains highly disputed. It is often assumed that financial globalization involves threshold effects, where integration is worthwhile only when certain preconditions are met. However, it has also been noted that financial account liberalization also brings about considerable additional indirect benefits. These indirect benefits are often the same as the preconditions, such that there exists a complex two-way relationship between financial globalization and the preconditions/additional benefits. Such a relationship can lead to financial globalization traps, where some economies are trapped at a low level stable equilibrium, while others enjoy ever increasing financial integration. In this paper, we use de facto indicators of international financial integration to investigate if the dynamics of financial integration exhibit signs of such thresholds and traps. We present a parametric way of estimating these important parameters, based on recently developed sample splitting and threshold estimation methods. We find that there are indeed signs of multiple equilibriums if we look at the growth rates of total assets and liabilities. We also find that a group of countries are apparently caught in a high debt stock trap.

The Andean Tribunal of Justice and Its Interlocutors: Understanding Preliminary Reference Patterns in the Andean Community

In the European Union, national courts have been key intermediaries in helping to bolster and expand the authority of the European Court of Justice through its preliminary reference mechanism. This article analyzes the role of national judges in the Andean Community, a regional legal system whose judicial institution - the Andean Tribunal of Justice (ATJ) - was modeled directly on its European predecessor. Our analysis is based on an original coding of every publically available national court referral to the ATJ from 1987 to 2007 and interviews with over forty participants in the Andean legal system. We find that the relationship between the ATJ and national judges differs significantly from the relationship between the ECJ and its domestic judicial colleagues. As in Europe, references from national judges account for the vast majority of cases on the ATJ\u27s docket. But unlike in Europe, national courts are mostly passive intermediaries. Our coding reveals that national judges do not pose provocative questions to the ATJ, and that there is significant cross-national variation in referral patterns. Interviews corroborate what the data suggests: national judges have a circumscribed understanding of what Andean law requires of them. More than 90% of references involve technical issues of Andean intellectual property (IP) law and the registration decisions of domestic IP administrative agencies. National judges have embraced the ATJ\u27s active role in IP disputes because of the support of these agencies, which seek the Tribunal\u27s guidance to interpret vague areas of Andean law. Outside the area of IP, national judges are far more reluctant, contributing to the limited penetration of Andean law into national legal orders. We conclude by comparing the role of national judges in Europe to their role in the Andean context, extracting broader insights about the role of national judges in building international rules of law

Regional integration among developing countries : opportunities, obstacles and options.

Wirtschaftsunion; Entwicklungsländer;

Regional integration among developing countries, revisited

Economic integration among developing countries became an important policy issue in the 1960s and early 1970s. But although intraregional trade increased in some trading groups, it remained a modest share of total trade. However, dramatic changes in the world economy have affected the environment for regional integration and cooperation. The formation of new, powerful economic and trading blocs, such as the single market of the European Community, the US-Canada free trade area, initiatives in the Pacific basin, and the transition to market economies in Central and perhaps Eastern Europe, seems to have fostered a trend toward new regionalism in the world economy. The virtual failure of the GATT negotiations may speed this up. To minimize economic losses and avoid marginalization, regional groups of developing countries must increasingly work out common positions and join one of the influential groups. Both factors require the gradual yet rapid dismantling of barriers to the free flow of production factors within regional groups. Obviously, intraregional trade cannot become an alternative to trade flows that are basically oriented to the world market. But in the 1990s, intraregional trade and economic relations are likely to grow parallel to, or even at a higher rate than, extraregional contacts.TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Environmental Economics&Policies,Trade and Regional Integration,Trade Policy

An outline of the historical development of the education systems of Chile, Peru and Venezuela and some implications for their harmonization according to the guidelines of the Andrés Bello Agreement

In the Latin American context several economic integrationist processes have arisen during the last two decades, which seek to consolidate economic and political unity as well as search for a new international order. To this end the Latin American Free Trade Association, the Central American Common Market, the Caribbean Free Trade Association and the Andean Pact or Agreement of Cartagena signed by Bolivia, Colombia, Chile, Ecuador, Peru and Venezuela were instituted. On 30th June 1969 the Andres Bello Agreement (ABA) was signed. It resulted from wishes to reinforce the integrationist economic efforts of the Andean. Pact through culture, education and science. The ABA sees the integration of the educational systems of the signatory countries as a key element in pursuit of complete integration.Through the study of the historical development of the educational systems of Chile, Peru and Venezuela, this essay examines the extent to which it is possible to achieve educational integration and the steps taken towards the goal. The first chapter describes the Andres Bello Agreement, its origins, content and organization. Since it would not be possible to analyse and comment on the ABA without describing the economic integrationist efforts made at Latin American and Andean level, an attempt to do so is also included in this chapter. Chapters II, III and IV are devoted to Chile, Perú and Venezuela. Chile was selected because several issues make this nation different from other Andean countries. It has an apparently higher level of economic development and its education system appears to be more developed thanks to the liberal democracy established in the last century. Other factors peculiar to Chile are the introduction of educational reforms modelled on French, German and United States patterns, and its less severe bilingual educational problem.Most of the problems related to underdevelopment, poverty and deprivation are concentrated in Peru's socioeconomic and political life. There is a high rate of illiteracy, unbalanced economic development, poor sanitary and health conditions and so on. There are also over a million of "quechua" speakers most of whom are peasants still using Inca methods of irrigation and cultivation. In modern times Peril' has been characterized as a violent country, whose typical form of government has been military dictatorships and whose educational advance has been minimal. In 1968 the Armed Forces took control of the country once again. This time several social reforms were introduced, among them a Educational Reform that seeks to solve the Peruvian educational problems with a different approach. The setting of this reform and its possible influence in the Andean Region have motivated me to choose Peru.Chapter IV is devoted to Venezuela, whose oil wealth, the overthrow of the dictatorship and the establishment of a democracy have been the main features during the last fifty years of this country's socioeconomic life. The exploitation of oil and other raw materials have allowed Venezuela to experience a fast rate of economic growth. But despite this economic growth and its resultant higher income per capita, the more severe problems concerned with underdevelopment remain unsolved. A considerable number of illiterates, a low school average, as well as a considerable pupil drop out, made of Venezuela an example of the problems that face the educational systems attempted to be integrated by the ABA. Chapter V describes and analyses the actual feasibility of integration of the Andean Region educational systems. Finally, some conclusions and recommendations are made in Chapter VI

The Free Trade Agreement between Colombia and USA: What can happen to Colombia?

In order to assess the impact of a Free Trade Agreement (FTA) between Colombia and the United States of America, we describe the characteristics of the Colombian economy emphasizing its trade patterns and perspectives and identifying the sectors and regions that are likely to be the most sensitive to a FTA. We argue that the effects of a bilateral trade agreement between the USA and Colombia would be similar to those of past trade reforms. We first analyze the effect of past reforms over a diverse sample of countries such as Chile, Colombia and Mexico and then, using an applied general equilibrium model, simulate the effects over the Colombian economy of a bilateral agreement with USA. The simulations show that, although small, there is an increase in welfare and production of the Colombian consumers and firms.

Regional Trade Agreements and U.S. Agriculture

Regional trade agreements (RTA's) have become a fixture in the global trade arena. Their advocates contend that RTA's can serve as building blocks for multilateral trade liberalization. Their opponents argue that these trade pacts will divert trade from more efficient nonmember producing countries. U.S. agriculture can benefit from participating in RTA's and may lose when it does not. Agriculture is an important source of potential U.S. gains from RTA's. While the United States, as a global trader with diverse trade partners, can gain potentially more from global free trade than from RTA's, many recent RTA's have been more comprehensive in their liberalization of agricultural trade liberalization than the Uruguay Round. A strong multilateral process can help ensure that RTA's are trade creating, rather than protectionist.International Relations/Trade,