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Institution-BUILDING IN RTAs: Transparency, INTEGRITY and PARTICIPATIVE DECISION-MAKING

Institution-BUILDING IN RTAs: Transparency, INTEGRITY and PARTICIPATIVE DECISION-MAKING. Iza Lejárraga OECD Trade and Agriculture Directorate Expert Group Meeting on Preferential Trade Agreements and Regional Integration Tunis, 5-6 December 2012. Presentation.

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Institution-BUILDING IN RTAs: Transparency, INTEGRITY and PARTICIPATIVE DECISION-MAKING

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  1. Institution-BUILDING IN RTAs: Transparency, INTEGRITY and PARTICIPATIVE DECISION-MAKING IzaLejárraga OECD Trade and Agriculture Directorate Expert Group Meeting on Preferential Trade Agreements and Regional Integration Tunis, 5-6 December 2012

  2. Presentation • Overview of OECD work on RTAs • Importance of transparency in trade • Emerging best practices in RTAs • Quantitative impact

  3. OECD work on “Multilateralising Regionalism”: What can be multilatrealised – and how?

  4. Presentation • Overview of OECD work on RTAs • Importance of transparency in trade • Best practices in regional transparency • Quantitative impact

  5. Institution-building in RTAs • ‘Positive integration’ (Tinbergen 1954): the creation of inter-governmental public goods in regional integration schemes is also welfare-enhancing • Beyond liberalization, countries are deploying RTAs to build trust and develop mechanisms for informational exchanges and predictability: market opacity • Greif (1993) 11-th century Mediterranean trade was facilitated by informal reputation and information mechanisms within the ‘Maghribi trading coalition.’ OECD Trade and Agriculture Directorate

  6. Effects of transparency in regional trade

  7. From shallow to deep integration: Behind-the border agenda requires greater transparency • Along with NT and MFN, transparency is one of the key pillars of the global trading system (Art X GATT 1947) • In recent years, has migrated from the periphery to the core of WTO jurisprudence: from ‘dormant provisions,’ “subsidiary” to “substantive“ commitments • Remains narrow in scope and undefined. • Quest for ‘deep integration’ in RTAs has gone hand in-hand with greater demands for transparency • Behind-the-border agenda call for more sophisticated mechanisms for information and for influence • Non-tariff barriers require greater information and predictability in domestic rule-making & enforcement OECD Trade and Agriculture Directorate

  8. Transparency goes a long way in making NTMs less trade-restrictive OECD Trade and Agriculture Directorate

  9. Transparency: Public Goods in RTAs

  10. Presentation • Overview of OECD work on RTAs • Importance of transparency in trade • Best practices in regional transparency • Quantitative impact

  11. Transparency features as a core objective of an RTA: an end in itself, rather than a means • 56% of RTAs cite transparency as a coreobjective in preambles Resolved to promote transparency as regards all relevant interested parties, including the private sector and civil society organisations… EU-Korea FTA 2010 • Resolved • The objective of this chapter is to establish a mechanism to strengthen transparency... • SPS Chapter, AANZFTA 2010

  12. WTO-plus definition of transparency • 30% of RTAssignedby OECD and keyemergingeconomies endorse thesefourelements. • Crimininalization • Sanctions • Whistleblower • Peer review • Dispute settlement • Cooperation • Foreign party • Publish comments • Consideration • E-Publication • Rationale • Explanations

  13. RTAs horizontalize transparency: harmonizing and streamlining procedures for all sectors & measures Rules SPS TBT GATS Transparency Chapter • Over 40% (52 RTAs) have a horizontal transparencychapter • In mostjurisdictions, regulatedhorizontally in administrativelaw • Recent APEC Ministerial endorsedinclusion of transparencychapters.

  14. ...while deepening WTO-plus area-specific transparency in corresponding chapters

  15. Level of enforceability of WTO-plus transparency WTO-plus Regulatory Transparency in Services & Investment WTO-plus Regulatory Transparency in Agriculture & non-Agricultural Goods CB MP • 78% of WTO-plus SPS transparencyobligations are enforceable,, whilelessthan 7% in TBTs are subjectto DSU • 80% of services and 92% investmenttransparencyprovisions are enforceable, while 59% of transparencymeasuresformovement of persons are mandatory.

  16. RTAs provide transparency procedures with greater operational specificity

  17. RTAs introduce more precision and specificity: Example of Prior Publication

  18. Private sectors is a direct receiver, and often supplier, of transparency “contracting party applying the restrictions shall provide, upon the request of any contracting party , information concerning ..”. GATT Member A (Exporter) Enquiry Point A Enquiry Point B Member B (Importer)

  19. Creating incentives: Aid-for-Transparency • Aid-for-transparency • Technical assistance to help administrations coordinate and collect information • Support to SMEs on foreign market information • Cooperation chapters address transparency • Contextualization: • Adapting procedures to administrative culture and regime • Making transparency safe • De-linking transparency from litigation

  20. New Frontiers: Combating corruption and bribery in regional arrangements Anti-corruption Measures in US FTAs Number of anti-corruption obligations in RTAs signed by United States No. of Anti-corruption Measures

  21. Presentation • Overview of OECD work on RTAs • Importance of transparency in trade • Best practices in regional transparency • Quantitative impact

  22. Can countries stand to gain from negotiating transparency disciplines in their RTAs? • Transparency provisions in RTAs are associated with trade-boosting effects: • A marginal improvement in transparency (additional transparency obligation) is associated with an increase in trade of over 1 percent. • Sensitivity of trade flows to transparency can vary by specific sectors and products: • The elasticity of trade with regards to RTAs transparency provisions is slightly higher in agricultural than in industrial goods. OECD Trade and Agriculture Directorate

  23. Transparency is not free: where is the biggest bang for the buck of transparency obligation? • Horizontal measures on transparency are more impactful than area-specific procedures • Ag: horizontal transparency chapters are more important that WTO-plus SPS/TBT transparency • Among area-specific transparency, rules of origin emerges as the most significant. • Transparency related to the implementation of obligations in the RTA, including dispute settlement, are also important. OECD Trade and Agriculture Directorate

  24. What factors could contribute to a wider diffusion of WTO-plus transparency norms? • Countries with good governance negotiate more transparency-friendly treaties • North-South RTAshave more comprehensivetransparency • provisions Factorsfacilitating WTO-plus transparency OECD Trade and Agriculture Directorate

  25. Reflections for multilateralsing regionalism In someareas, WTO-plus transparencyprovisions are “regionalisingmultilateralism”

  26. Thank you for your attention. Chokranjasilan! Visit our websitewww.oecd.org/trade Follow us on Twitter: @OECDtrade Contact:iza.lejarraga@oecd.org

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