The future of Global Trade and the WTO Jean-Pierre Cling 1

The global governance of trade is in a deadlock and the WTO is suffering from a long standing crisis of legitimacy. This is confirmed by the eventual failure of the Doha Round of multilateral trade negotiations in 2011. This paper shows the connection between this crisis and the restructuring of world trade which has been going on for the last few decades, and which is set to continue. New emerging powers (China, India, etc.) are increasing their share of world trade which corresponds to new forms of globalization. This process calls for a reform of world trade governance, especially of the missions of WTO within a renovated economic world order. In order to identify the key channels through which international trade integration will impact the world economy, this paper presents four scenarios of world trade governance from now until 2030

The paradox of “preferences”: regional trade agreements and trade costs in services

Abstract This paper analyzes the relationship between regional trade integration and trade costs in services industries. The empirical analysis relies, on the one hand, on a dataset of theory-consistent bilateral trade costs calculated for 55 countries over the period 1999-2009 and, on the other hand, on an analysis of services commitments in 66 regional trade agreements to which these countries are parties. Despite the proliferation of services RTAs in the past decade, we find that trade costs are only slightly lower due to the impact of these agreements. In addition, we find that the trade cost reductions that do take place tend to happen before the agreement is signed. This mechanism is consistent with countries using services RTAs as a way of “locking in” reforms. Finally, we find that the preferential margin of services RTAs is quite thin: members and non-members both see slightly lower trade costs when an RTA is signed. We discuss the possible explanations for these findings in terms of the nature of services RTAs and their relationship with regulatory reform in signatory countries. Based on these results, we argue that regionalism in the case of services seems relatively non-discriminatory and does not lead to substantial trade preferences

The paradox of “preferences”: regional trade agreements and trade costs in services

Abstract This paper analyzes the relationship between regional trade integration and trade costs in services industries. The empirical analysis relies, on the one hand, on a dataset of theory-consistent bilateral trade costs calculated for 55 countries over the period 1999-2009 and, on the other hand, on an analysis of services commitments in 66 regional trade agreements to which these countries are parties. Despite the proliferation of services RTAs in the past decade, we find that trade costs are only slightly lower due to the impact of these agreements. In addition, we find that the trade cost reductions that do take place tend to happen before the agreement is signed. This mechanism is consistent with countries using services RTAs as a way of “locking in” reforms. Finally, we find that the preferential margin of services RTAs is quite thin: members and non-members both see slightly lower trade costs when an RTA is signed. We discuss the possible explanations for these findings in terms of the nature of services RTAs and their relationship with regulatory reform in signatory countries. Based on these results, we argue that regionalism in the case of services seems relatively non-discriminatory and does not lead to substantial trade preferences

Supply chain myths in the resilience and deglobalization narrative: consequences for policy

The economic disruptions experienced during the COVID-19 pandemic and Russia's invasion of Ukraine have generated a narrative of resilience and deglobalization that brings the old world order into question. Heightened public attention on perceived supply chain failures has exerted pressure on governments to intervene in firm-level operations to assure supply of essential or strategic goods. This paper argues that the narrative is founded on false premises. In particular, three supply chain myths have emerged in public and academic discourse: (i) lean management has gone too far and exacerbated disruptions in global supply chains; (ii) efficient supply chains are less resilient; and (iii) foreign supply makes supply chains less resilient. We argue that these beliefs are not adequately supported by evidence. They can displace analysis to negatively impact policy and actually diminish resilience. Drawing upon IB and supply chain management research, we investigate the root causes of perceived market failures. Recommendations are for an evidence-based debate on current events and policies.ISSN:2522-0691ISSN:2522-070

Entry barriers and the extensive margin: Estimating trade restrictiveness from trade flows and lack thereof

This paper provides a first attempt to estimate services trade costs directly from trade data. It builds on two recent papers, the first by Helpman, Melitz and Rubinstein (2008) (HMR), and the second by Novy (2008). Both papers provide innovative ways of assessing overall trade restrictiveness. The beauty of the HMR paper is that the only trade data needed is information on whether or not a country pair trades with each other in the sector in question. In a situation where bilateral services trade data are not as readily available as one might wish for, this seems like a great advantage. In order to check whether it is the methodology or the data that creates problems, the HMR probit methodology is applied to goods trade as well. Here the results are more plausible and it thus appears that the problem is mainly on the data side. The Novy methodology is both simple and produces plausible results. Here trade costs can be estimated based on information on two-way bilateral trade and internal trade in the sector of interest. The paper concludes that at this stage the Novy methodology can be used as a supplement to other sources of information on trade costs

Entry barriers and the extensive margin: Estimating trade restrictiveness from trade flows and lack thereof

This paper provides a first attempt to estimate services trade costs directly from trade data. It builds on two recent papers, the first by Helpman, Melitz and Rubinstein (2008) (HMR), and the second by Novy (2008). Both papers provide innovative ways of assessing overall trade restrictiveness. The beauty of the HMR paper is that the only trade data needed is information on whether or not a country pair trades with each other in the sector in question. In a situation where bilateral services trade data are not as readily available as one might wish for, this seems like a great advantage. In order to check whether it is the methodology or the data that creates problems, the HMR probit methodology is applied to goods trade as well. Here the results are more plausible and it thus appears that the problem is mainly on the data side. The Novy methodology is both simple and produces plausible results. Here trade costs can be estimated based on information on two-way bilateral trade and internal trade in the sector of interest. The paper concludes that at this stage the Novy methodology can be used as a supplement to other sources of information on trade costs