East Asian Economic Integration and its Impact on Future Growth

Two propositions appear to be gaining wide currency, given the revealed preference for preferential trade agreements (PTAs) in the East Asian region and elsewhere. The first is that economic integration is a good way to promote economic growth. The second is that PTAs, particularly ones that go beyond goods trade, are an effective way to promote economic integration. Yet both propositions are empirical questions. In this paper, a partial evaluation of the evidence suggests caution is called for. Current PTAs appear to be doing little to remove the important impediments to growth in the region. Far greater income gains would come from comprehensive reform of nondiscriminatory impediments to competition, as part of a thorough-going program of unilateral domestic regulatory reform. It may be time to rethink East Asian economic integration as a policy priority, or at least review the way in which it might be pursued.East Asia, economic integration, trade, Growth

Conditionality, separation, and open rules in multilateral institutions

We examine the implications for the viability of multilateral cooperation of different legal principles governing how separate international agreements relate to each other. We contrast three alternative legal regimes: conditionality - making cooperation in one area a condition for cooperation in another - separation - forbidding sanctions in one area to be used to enforce cooperation in others - and open rules, i.e. absence of any restriction on the patterns of cross-issue cooperation arrangements and sanctions. As an example, we focus on a scenario where countries can enter into selective and separate binding trade and environmental agreements with different partners. Our analysis suggests that conditionality is more likely to facilitate multilateral, multi-issue cooperation in situations where the environmental policy stakes are small relative to the welfare effects of trade policies; when the costs of environmental compliance are high, a conditionality rule can hinder multilateral cooperation. Separation can undermine cooperation by limiting punishment, but can also promote broad cooperation by making partial cooperation more diffcult to sustain. Thus, how different linkage regimes affect multilateral negotiations depends on the structure of cooperation incentives for the countries involved

Egypt and the Uruguay Round

The Uruguay Round will generally have a limited impact on Egyptian policies affecting goods, investment, and services. It will have a more significant impact on intellectual property, although this will take up to a decade to materialize fully. Insofar as this reflects a continuing defensiveness against liberalization, it does not bode well for a country that will be facing growing competitive pressures as the world economy becomes more integrated. But Egypt's Uruguay Round commitments do, to a large extent, lock in the policy changes pursued by the government since the late 1980s. In this respect, they are quite significant. Maximum tariffs have been established for almost all tariff lines, and the gap between these"bindings"and the level of applied tariffs is in most cases relatively small. This constitutes a level of commitment that substantially exceeds that developing country average. The government is negotiating a more far-reaching agreement with the European Union to liberalize trade on a reciprocal basis. Commitments by Egypt in the Uruguay Round can be seen as facilitating implementation of a Euro-Mediterranean Agreement. Such an agreement could facilitate further nondiscriminatory liberalization of Egypt's trade regime. Of particular importance in this connection is opening service markets to greater competition, where much remains to be done.Rules of Origin,Environmental Economics&Policies,Economic Theory&Research,Payment Systems&Infrastructure,Labor Policies,Economic Theory&Research,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Rules of Origin,Environmental Economics&Policies,Trade and Regional Integration

Regional agreements and trade services - policy issues

Every major regional trade agreement now has a services dimension. Is trade in services so different that there is need to modify the conclusions on preferential agreements pertaining to goods reached so far? The authors first examine the implications of unilateral policy choices in a particular services market. They then explore the economics of international cooperation and identify the circumstances in which a country is more likely to benefit from cooperation in a regional rather than multilateral forum.Health Economics&Finance,Environmental Economics&Policies,Decentralization,Economic Theory&Research,Payment Systems&Infrastructure,Economic Theory&Research,Environmental Economics&Policies,Trade and Services,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade and Regional Integration

China and the world trading system

The World Trade Organization has been until recently an effective framework for cooperation because it has continually adapted to changing economic realities. The current Doha Agenda is an aberration because it does not reflect one of the largest shifts in the international economic and trading system: the rise of China. Although China will have a stake in maintaining trade openness, an initiative that builds on but redefines the Doha Agenda would anchor China more fully in the multilateral trading system. Such an initiative would have two pillars. The first is a new negotiating agenda that would include the major issues of interest to China and its trading partners, and thus unleash the powerful reciprocal liberalization mechanism that has driven the World Trade Organization process to previous successes. The second is new restraints on bilateralism and regionalism that would help preserve incentives for maintaining the current broadly non-discriminatory trading order.Emerging Markets,Economic Theory&Research,Free Trade,Debt Markets,Trade Law