Setting the Trade Policy Agenda: What Roles for Economists?

Economists have influenced the trade policy agenda for establishing multilateral trade rules, disciplines and procedures and for negotiating MFN and preferential reductions in trade barriers and subsidies, in addition to affecting the agenda for unilateral policy reform. These roles are considered in turn, before focusing on the economists' contribution though quantifying the extent and effects of existing trade distortions and alternative reform initiatives. Many trade distortions remain, however, so the paper then looks at where trade economists' efforts in agenda-setting need to be focused in the years ahead.International Relations/Trade,

Measuring Effects of Trade Policy Distortions: How far have we come?

After a brief review of the literature to the early 1970s, this paper assesses the contributions during the past three decades to measuring the distortionary effects of trade policies. It does not pretend to be comprehensive, but draws on selections from the literature that give a sense of the distance the profession has travelled from a trade policy practitionerÂ’s viewpoint since CordenÂ’s first paper on the subject in 1957. Phenomenal though that progress has been, there is ample room for further improvement in computing the economic (and other) effects of trade-related policies and their reform. The paper concludes with suggestions of where the priorities should be in global modelling of trade policy reform, as the world moves into the next round of multilateral trade negotiations.Trade policy distortions, Effective protection, Cost of protection, Empirical modelling of effects of trade policies

SCOPE FOR DOHA TO REDUCE DISCRIMINATION IN AGRICULTURAL MARKETS

The vast majority of the world’s poorest households depend on farming for their livelihood, as would many of the rest had prospects in agriculture not been so bleak as to force them into non-farm activities in search of a higher income. Earnings from farming have been depressed in low-income countries partly because own-country policies typically have had a pro-urban, anti-agricultural bias, and partly because richer countries (including some developing countries) assist and protect their farmers with import barriers and subsidies. Numerous developing country governments have made considerable progress over the past two decades in reducing their own sectoral and trade policy distortions, and many of them now believe high-income countries should reduce their remaining protectionism that harms developing country exports of farm (and textile) products. Indeed one of the key difficulties in the World Trade Organization’s (‘WTO’)1 current round of multilateral trade negotiations (known as the ‘the Doha Development Agenda’) is the fact that developing countries are calling for such commitments on farm policies before they will consider offering any further reform commitments of their own.

On the Virtues of Multilateral Trade Negotiations

Phasing out distortionary government subsidies and barriers to international trade will yield extraordinarily high benefits relative to any adjustment costs, notwithstanding the considerable reforms that have already taken place over the past two decades. This paper surveys recent estimates, using global economy-wide simulation models, of the benefits of reducing remaining distortions via unilateral reform, multilateral trade negotiations, and preferential trading arrangements. Distortionary trade policies harm most the economies imposing them, but the worst of them (in agriculture and clothing) are particularly harmful to the worldÂ’s poorest people. Opportunities to reduce remaining distortions, including via the WTOÂ’s Doha Development Agenda as compared with sub-global preferential reform, are examined, before drawing out the implications of liberalization for poverty and the environment.Trade policy reform, subsidy reduction, Doha Development Agenda.

Terroir rising? Varietal and quality distinctiveness of Australia’s wine regions

It has been argued that part of the reason Australia was able to contribute to and respond so successfully in the 1990s to the growth in demand for commercial bottled wine was because of its freedom (relative to European producers) to blend wines across the full range of varieties and geographic regions, so as to be able to reproduce year after year a consistent style for each label. Over time, however, that has led some buyers in the ‘Old World’ to believe Australian and other ‘New World’ winemakers do not respect or exploit regional differences in terroir or, worse still, that the ‘New World’ is incapable of making high-quality, regionally distinct wines. This paper examines the changing extent to which Australian wine regions do in fact vary in their choice of winegrape varieties and in the average quality of those winegrapes. In doing so the study provides some new quantitative indexes that may be helpful for other purposes too, such as providing a base for simulating the potential impacts on different regions of climate change and of adaptive responses to it. The study focuses on 30 of Australia’s winegrape regions and on the top 12 red and 10 white winegrape varieties that together accounted in 2006 for all but 7 percent of Australia’s wine. It compares 2006 with 2001, the first year for which price and quantity data were compiled nationally by grape variety for the country’s newly defined Geographical Indication regions.

The New Global Economy: Opportunities and Challenges for Small Open Economies

This paper examines the strengthening forces behind the latest wave of globalization and draws out its consequences for the policy strategies of small open economies such as Singapore. The digital revolutionÂ’s contributions to globalization have been substantial, but so too have the policy reforms by national governments over the past two decades, both unilateral and regional. In addition, the GATT/WTO has been important in encouraging economies to open up more and to commit to staying open to international trade and investment during the past half century for rich countries and especially over the past decade for developing countries. Greater openness of and interdependence between national economies provides wonderful opportunities for small open economies, but it is not without its challenges. Globalization is raising the rewards to economies choosing good economic governance, but is also raising the cost to economies with poor economic governance. Crucial to good economic governance is a permanent commitment to a liberal international trade and payments regime, for services as well as goods, in addition to sound macroeconomic, sectoral and factor market policies.Globalization, Trade and investment liberalization, Small open economies

Distortions to Global Agricultural Markets: What Next?

A decline in governmental distortions to agricultural and other trade since the 1980s has contributed to economic growth and poverty alleviation globally. But new modeling results suggest that has taken the world only three-fifths of the way towards freeing merchandise trade, and that farm policies are responsible for 70 percent of the global welfare cost of remaining distortions to goods markets as of 2004. Meanwhile, new drivers are affecting the mean and variance of world prices of farm products, including biofuel mandates and subsidies, climate change mitigation policies and adaptation, water institution and policy developments, difficulties in concluding a multilateral Doha Round agricultural agreement at the WTO, and policies relating to transgenic foods. This paper reviews trends and fluctuations in past distortions to agricultural incentives, speculates on how they might evolve in coming decades alongside other market developments, and draws out implications for Australia.Distorted incentives, agricultural and trade policy reforms, Asia-Pacific region, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

Agricultural trade reform and poverty reduction in developing countries

This paper offers an economic assessment of the opportunities and challenges provided by the WTO’s Doha Development Agenda, particularly through agricultural trade liberalization, for low-income countries seeking to trade their way out of poverty. After discussing links between poverty, economic growth and trade, it reports modelling results showing that farm product markets remain the most costly of all goods market distortions in world trade. It focuses on what such reform might mean for developing countries both without and with their involvement in the multilateral trade negotiations. What becomes clear is that if those countries want to maximize their benefits from the Doha round, they need also to free up their own domestic product and factor markets so their farmers are better able to take advantage of new market-opening opportunities abroad. Other concerns of low-income countries about farm trade reform also are addressed: whether there would be losses associated with tariff preference erosion, whether food-importing countries would suffer from higher food prices in international markets, whether China’s WTO accession will provide an example of trade reform aggravating poverty via cuts to prices received by Chinese farmers, and the impact on food security and poverty alleviation.WTO, agricultural protection, trade liberalization, poverty alleviation

Pecularities of Retaliation in WTO Dispute Settlement

The dispute resolution procedures of the World Trade Organization allow sanctions to be imposed when a country is unwilling to bring a WTO-inconsistent trade measure into conformity. Apart from the fact that the procedure for triggering the retaliation process has ambiguities that need to be removed, the retaliation itself has some undesirable economic features. This paper looks at why compensation is not preferred to retaliation and then examines five economic features of the temporary trade retaliation that WTO may permit under certain conditions. Both efficiency and equity concerns are raised. The paper concludes with some suggestions for reforming this part of WTO dispute resolution during the review of the Dispute Settlement Understanding that is due to be completed by May 2003.WTO, Dispute settlement, Compensation, Retaliation