Trade and payments arrangements in post-CMEA Eastern and Central Europe

A web of trade and payments arrangements binds countries of Eastern and Central Europe under the Council of Mutual Economic Assistance (CMEA) agreements. However, it is incompatible with these countries recent commitments to move toward liberalized trade and currency convertibility. The importance of trade with other CMEA members, and the apparent desire of the USSR and others to denominate all future mutual trade at international prices poses a number of problems of transition for the countries of Eastern and Central Europe. This paper identifies three broad problems in this connection: (1) the breakdown of the CMEA arrangements has led to a serious breakdown of trade relations and reduced trade volume among former CMEA members; (2) denominating international trade at international prices implies changes in the terms of trade for each country in the system; and (3) all countries may not reach full currency convertibility in the near term, but the continuation of the old CMEA arrangements is also impossible. The purpose of this paper is to discuss the possible interim institutional arrangements for trade of payments among previous CMEA members and how such arrangements can contribute to addressing the emerging payments imbalances.Economic Theory&Research,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Transport and Trade Logistics

The economics of customs unions in the Commonwealth of Independent States

In the aftermath of the breakup of the Soviet Union, trade among the new independent states collapsed. To help reestablish interstate trade, the 12 members of the Commonwealth of independent States (CIS) established a Free Trade Area. More recently, four members of the CIS -Belarus, Kazakstan, the Kyrgyz Republic, and Russia- agreed in principle to establish a Customs Union. The authors analyze the economic implications for potential members of establishing such a Customs Union. They conclude that the dynamic effects of the Union (and the Free Trade Area) are likely to be negative, because they would tend to be mixed but would be more harmful to countries that have already established relatively liberal trade regimes with lower average and less-differentiated tariffs than the common external tariff contemplated by the proposed Customs Union.Common Carriers Industry,Environmental Economics&Policies,Rules of Origin,Economic Theory&Research,Trade Policy,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade and Regional Integration,Environmental Economics&Policies,Economic Theory&Research,Trade Policy

The role of special differential treatment for developing countries in GATT and the World Trade Organization

The author analyzes how changes in thinking about the role trade plays in economic development have been reflected in provisions affecting developing countries in the GATT and the WTO. He focuses on the provisions calling for the special and differential treatment of developing countries. The WTO's special, and differential treatment has been extended to include measures of technical assistance, and extended transition periods to enable countries to meet their commitments in new areas agreed on in the Uruguay round of negotiations. At the same time, many WTO provisions encourage industrial countries to give developing countries preferential treatment, through a variety of measures, none of them legally enforceable. The author concludes that weaknesses in the institutional capacity of many developing countries, provide a conceptual basis for continuing special, and differential treatment in the WTO, but that the benefits should be targeted only to low-income developing countries, and those that need help becoming integrated with the international trading system. In addition, an effective system of graduation, should be put in place for higher-income developing countries. Developing countries find it politically easier to argue, that all should be treated the same, except for least developed countries, although their capacities, and need for assistance differ vastly. Industrial countries are expected to provide special, and differential treatment, but in practice, their commitments on market access, preferential treatment, and technical assistance, are not enforceable. Leaving it up to the industrial countries to decide which developing countries get preferential treatment, invites extraneous considerations in determining who gets how much special treatment. Unless higher-income developing countries accept some type of graduated differentiation in their treatment (beyond that granted the least developed countries), there is little prospect ofimplementing meaningful, legally enforceable special, and differential treatment favoring all developing countries under the WTO.Environmental Economics&Policies,Economic Theory&Research,Rules of Origin,Economic Conditions and Volatility,Trade Policy,Poverty Assessment,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Environmental Economics&Policies,Achieving Shared Growth

Trade policy and market access issues for developing countries : implications for the Millennium Round

The author analyzes 61 trade policy reviews prepared for the World Trade Organization (WTO) and its predecessor, GATT - reviews that document the progress developing countries have made in integration with the world trading system over the past decade. Based on an analysis of post-Uruguay Round tariff and nontariff barriers worldwide, he then recommends developing country positions on major issues inthe new round of WTO trade negotiations. His key conclusions and recommendations: 1) Agriculture. Developing countries should support the Cairns Group in its push for greater liberalization of industrial countries'agricultural trade policies; the revised Food Aid Convention is not a substitute for but a complement to worldwide liberalization of agriculture. 2) Manufactures. The existence of tariff peaks and escalation in industrial country markets and the limited bindings at relatively high levels of developing country tariffs on manufactures present opportunities for negotiations with good prospects for shared and balanced benefits. The remaining nontariff barriers in industrial countries that affect manufactures are concentrated in textiles and clothing. Developing countries should ensure that industrial countries implement their commitments to liberalize this sector and impose no new nontariff barriers in this or other sectors under the guise of other rules or arrangements. The remaining nontariff barriers in developing countries should be converted into tariffs and reduced over time as part of the negotiations. 3) Antidumping. The increased use of antidumping measures by high- and middle-income developing countries in recent periods offers an opportunity for balanced negotiations to restrict their use. Reduced use of antidumping measures would increase efficiency and benefit consumers in all countries. But it is unclear whether a supportive climate for such negotiations exists in either industrial or developing countries.Environmental Economics&Policies,Economic Theory&Research,Economic Conditions and Volatility,Trade Policy,Export Competitiveness,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Poverty Assessment,Environmental Economics&Policies,Trade Policy

The integration of transition economies into the world trading system

The author analyzes current trade policies and challenges faced by the transition economies - especially countries in the former soviet Union - as they are integrated into the world trading system. With few exceptions, transition economies in Central and Eastern Europe, including the Baltics, have been well integrated into the multilateral trading system. Their trade regimes differ - and the main challenges they face involve their integration into the European Union. Integration into the multilateral trading system, including progress toward membership in the World Trade Organization (WTO), varies significantly among the other countries of the former Soviet Union. Armenia, Georgia, the Kyrgyz Republic, and Moldova have adopted relatively liberal trade regimes and are either already members of the WTO or are close to it. These four countries need to strengthen the capacity of broad market-based (especially trade-related) institutions, including customs, the financial sector, and institutions to facilitate trade. The momentum for market and trade reform appearsto have stalled in some of the larger countries of the former Soviet Union: Kazakhstan, Russia, and Ukraine. Their trade regimes are not especially restrictive, but weak operations in fundamental market institutions inhibit their effective integration into the world trading system. These problems, together with persistent protective pressures, inhibit progress and accession to the WTO. The remaining countries in Central Asia, as well as Belarus, have far to go in introducing market-oriented reforms and institutions, and the kind of trade liberalization needed for integration into international trade. The countries of the former Soviet Union must make most of the reform and adjustment effort, but WTO members must make changes as well - especially the United States and the European Union. Both need to review their policies toward non-market economies on antidumping practices and (in the European Union) on safeguards. Countries where market decisions prevail should not be subjected to non-transparent and arbitrary procedures. In particular, countries that have been judged to be"market"economies in the process of gaining access to the WTO should be excluded from procedures applied for antidumping and safeguard measures in non-market economies.Economic Theory&Research,Trade Policy,Environmental Economics&Policies,Payment Systems&Infrastructure,Rules of Origin,Trade and Services,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Trade Policy

Developing countries'participation in the World Trade Organization

In the 1960s and 1970s developing countries viewed UNCTAD (United Nations Conference on Trade&Development) rather than the GATT (General Agreement on Tariffs&Trade) as the main institution through which to promote their interests in international trade. But beginning with the Uruguay Round in the mid-1980s, their attitude changed, many more of them became members of the GATT, and a significant number played an active role in negotiations. The author analyzes developing countries'representation and participation in the World Trade Organization (WTO) as of mid-1997 to determine how developing countries can effectively promote their interests and discharge their responsibilities under the rules and agreements of the new organization. He concludes that although many developing countries are actively participating in the new process, more than half of the developing countries that are members of the WTO participate little more than they did in the early 1980s and have not increased their staffing, despite the vastly greater complexity of issues and obligations. Institutional weaknesses at home are the main constraints to effective participation and representation of their interests at the WTO. To make their participation more effective, he recommends that the developing countries establish adequately staffed WTO missions based in Geneva; failing that, pooling their resources and representation in Geneva; and being sure to pay their dues, which are typically small. He also recommends that the international community place higher priority on programs of assistance in support of institutional development of poorer countries aimed at enhancing their capacity to participate in the international trading system and the WTO -- and that the WTO review its internal rules and procedures to ensure that inadvertently they do not make developing countries participation more difficult.Economic Theory&Research,Decentralization,Economic Conditions and Volatility,Country Strategy&Performance,Labor&Employment Law,Trade and Services,Poverty Assessment,Economic Theory&Research,World Trade Organization,Country Strategy&Performance

Payments and finance problems in the Commonwealth of Independent States

Payments problems constrained interstate trade among the Commonwealth of Independent States (CIS) countries in 1992-95, especially during the prolonged demise of the ruble zone. Two kinds of solutions should be sought: 1) more effective stabilization measures to improve the prospects of currency convertibility among CIS countries; and 2) strengthening of institutional arrangements to permit payments and settlements through correspondent bank accounts. Strengthening institutions will require not only strengthening commercial banks but liberalizing foreign exchange markets and promoting the use of letters of credit and other mechanisms to increase the security of trade transactions. A multilateral clearing arrangement operated among central banks would have been a useful alternative to the chaotic payments prevailing earlier, but such arrangements are no longer needed as considerable progress has been made toward convertibility. Nor is a payments union desirable. Trade deficits are likely to persist in such countries as Belarus and Ukraine. Surplus countries such as Russia and Turkmenistan must develop transparent means of trade financing that take into account the recipient countries'ability to pay. External financing will remain important for practically all CIS countries. The best way to mobilize private financing will be to establish macroeconomic stability and stable, transparent rules on private capital inflows. Improving the flow of public resources requires improving countries'capacity to quickly absorb the large amounts already committed. Donors need to expedite procurement and other procedures and recipient countries must address governance problems and institutional weaknesses that delay disbursements. Certain smaller CIS countries face significant debt servicing problems and often the creditors are other CIS countries that themselves need additional financing. The smaller countries need debt relief on concessional terms, which is possible only if external assistance allows local creditors to offer such relief.Environmental Economics&Policies,Payment Systems&Infrastructure,Economic Theory&Research,Trade Policy,Financial Intermediation,Economic Theory&Research,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Financial Intermediation

More favorable and differential treatment of developing countries : toward a new approach in the World Trade Organization

The authors discuss options that could be considered in the World Trade Organization (WTO) to provide more favorable treatment-so-called special and differential treatment (SDT)-to small and low-income countries. They argue that there is a need both for differentiation across WTO members and for steps that would benefit all developing countries. The authors suggest the following to make the Doha Round more supportive of development: 1) A binding commitment by industrial countries to abolish export subsidies and nontariff barriers (tariff quotas) and to reduce most-favored-nation tariffs on labor-intensive products of export interest to developing countries to no more than 5 percent in 2010, and to no more than 10 percent for agricultural products. All tariffs on manufactures should go to zero by 2015, the target date for the achievement of the Millennium Development Goals. Liberalization should also be undertaken by developing countries on the basis of a formula approach. 2) A binding commitment by industrial countries on services to expand temporary access for service providers by a specific amount-for example, equal to an additional 1 percent of the workforce-and not to restrict cross-border trade (for example, by telecom channels). 3) Unilateral action by all industrial countries to extend preferential market access for less developed countries, and to simplify eligibility criteria, especially rules of origin. 4) Affirmation by the WTO that core disciplines relating to the use of trade policy apply equally to all WTO members. 5) Acceptance of the principle that for small and low-income countries"one size does not fit all"when it comes to domestic regulation and to WTO agreements requiring substantial investment of resources. 6) Recognition that some WTO agreements need to be adapted to make them moresupportive of development, and a consequent willingness by industrial countries to modify them. 7) Expansion of development assistance to bolster trade capacity in poor countries and strengthening of the links between trade-related technical assistance and the mechanisms through which aid priorities are determined in developing countries. In practice, calls for specific types of SDT often appear to be motivated by a perception that a certain WTO rule is"anti-development"and that therefore developing countries should be exempted from the rule in question. The authors suggest that the appropriate solution to such problems is to change the rules rather than seek an opt-out. What should be up front changes in rules and what should be part of the negotiating agenda is a major issue which needs to be addressed at the Cancun Ministerial meeting. The suggestion that SDT should focus primarily on WTO rules and be limited to those countries that need it most-very small and poor economies-implies that criteria should be adopted to differentiate between countries. Leaving this to self-declaration-the current approach-is not feasible, while reliance on case-by-case, agreement-specific negotiation can generate excessive costs, discretion, and associated uncertainty. While the authors'preference is for a simple rule-of-thumb approach to determine eligibility, this is an issue that requires much more thought and discussion. They suggest that WTO members establish a high-level group to consider criteria that could be used for differentiation purposes and to determine the set of agreements to which differentiation will apply.Economic Theory&Research,Rules of Origin,Environmental Economics&Policies,Payment Systems&Infrastructure,Decentralization,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Environmental Economics&Policies,Poverty Assessment,World Trade Organization

Trade policy reform and poverty alleviation

In this paper, developed as part of the World Bank's Poverty Reduction Strategy Sourcebook, the authors examine how to implement trade liberalization as part of a strategy for alleviating poverty in developing countries. They discuss trade policy instruments, institutions, complementary policies, sector issues, adjustment policies, and safety nets in an integrated approach to trade policy as a tool for poverty alleviation. The authors examine the patterns or models of trade policy that have been successful in alleviating poverty. They discuss the role of tariffs, nontariff barriers, contingent protection (such as safeguards and antidumping), special import regimes (such as duty drawback), export taxes, export subsidies, and trade-related institutions (such as standards, marketing, export finance, customs clearance, and regional trade arrangements). The authors also discuss policies that complement successful trade reform, including macroeconomic stability, a competitive exchange rate, flexible labor markets, competitive product markets, and policies that do not discriminate against foreigners in investment. They suggest approaches to policies and institutions in services and agriculture, key sectors in poverty reduction. They explain the roles of retraining and safety nets in dealing with the adjustment costs of trade liberalization. Finally, the authors elaborate guidelines for implementing trade reform and explain tools for assessing whether trade reform will help or harm the poor in particular sectors in the short run.Environmental Economics&Policies,Payment Systems&Infrastructure,Economic Theory&Research,Trade Policy,Labor Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies,Economic Theory&Research,Trade Policy,Achieving Shared Growth

Wing Leading Edge RCC Rapid Response Damage Prediction Tool (IMPACT2)

This rapid response computer program predicts Orbiter Wing Leading Edge (WLE) damage caused by ice or foam impact during a Space Shuttle launch (Program "IMPACT2"). The program was developed after the Columbia accident in order to assess quickly WLE damage due to ice, foam, or metal impact (if any) during a Shuttle launch. IMPACT2 simulates an impact event in a few minutes for foam impactors, and in seconds for ice and metal impactors. The damage criterion is derived from results obtained from one sophisticated commercial program, which requires hours to carry out simulations of the same impact events. The program was designed to run much faster than the commercial program with prediction of projectile threshold velocities within 10 to 15% of commercial-program values. The mathematical model involves coupling of Orbiter wing normal modes of vibration to nonlinear or linear springmass models. IMPACT2 solves nonlinear or linear impact problems using classical normal modes of vibration of a target, and nonlinear/ linear time-domain equations for the projectile. Impact loads and stresses developed in the target are computed as functions of time. This model is novel because of its speed of execution. A typical model of foam, or other projectile characterized by material nonlinearities, impacting an RCC panel is executed in minutes instead of hours needed by the commercial programs. Target damage due to impact can be assessed quickly, provided that target vibration modes and allowable stress are known