POLI 144AB Lecture 5

1. POLI 144AB – Lecture 5 Free Trade Agreements; Doha Trade Round

2. Regional Trade Agreements

3. Regional Trade Agreements: Building Blocks or Stumbling Blocks? Free Trade Areas and Custom Unions Trade Creation vs. Trade Diversion

4. Balkanization of the World Trading System?

5. European Union Members: Austria: Belgium: Cyprus; Czech Republic; Denmark; Estonia; Finland; France; Germany; Greece; Hungary; Ireland; Italy; Latvia; Lithuania; Luxembourg; Malta; Netherlands; Poland; Portugal; Slovakia; Slovenia; Spain; Sweden; United Kingdom

6. NAFTA Members: Canada; Mexico; United States The North American Free Trade Agreement

7. APEC Members: Australia; Brunei; Canada; Chile; China; Hong Kong; Indonesia; Japan; South Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; Philippines; Russia; Singapore; Taiwan; Thailand; United States; Vietnam The Asia Pacific Cooperation Forum

8. Mercosur Members: Argentina, Brazil, Paraguay, Uruguay, Venezuela Mercado Común del Sur

9. CAFTA Members: United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic The Central America Free Trade Agreement

10. 2006 DR-CAFTA House Roll Call

11. The Free Trade Area of the Americas Proposed agreement to eliminate or reduce trade barriers among all countries in the Americas. Over half of the current Mercosur member countries rejected FTAA proposal in 2005. Outlook: No developments likely in the recent future.

12. Korea-US Free Trade Agreement Largest US trade agreement since NAFTA. First US bilateral trade agreement with an Asian country. Sticking points: Rice and Beef

14. Evolution of the WTO During the last 20 years, WTO rules have extended far beyond the initial concern with tariffs. WTO rules have now extended to: Intellectual property Trade in services Trade-related investment measures Standards

15. “Affirmative Action” for Developing Countries? Should developing countries receive special treatment or discrimination in their favor? Part IV and “special and differential treatment” for developing countries. The Generalized System of Preferences (GSP) China’s claims developing country status, but is rebuffed

16. The Uruguay Round I The Northern--and particularly American-- agenda New issues that reflect shifting comparative advantage… Trade in services Intellectual property rights (Copyrights, including computer programs; patents; trademarks) …and the interests of multinationals in investment The Southern Agenda Textiles and apparel (and continued liberalization of manufactures more generally) Agriculture: subsidies and market access More standardized dispute settlement procedures

18. Uruguay Round Outcomes I Market access Tariff reductions Agriculture: some progress Textiles and apparel: unraveling the Multifibre Arrangement EU blocked large cuts in agricultural subsidies A new dispute settlement mechanism (DSM)

19. Uruguay Round Outcomes II The General Agreement on Trade in Services Trade-related Aspects of Intellectual Property Rights, TRIPs Trade-related Investment Measures, TRIMs And many more developing countries participating in the WTO

20. To the Doha Round The rocky start in Seattle Doha, the “development round,” November 2001 Cancun, September 2003 The “package deal” of July 2004 (and ongoing negotiations in Geneva) 6th ministerial, Hong Kong, December 2005

21. The Doha Round I (November 2001) The “standard” agenda: trade in goods and continuation of services negotiations Agriculture Market access, export subsidies and domestic supports… Confronts the European CAP and the 2002 US Farm Bill Cotton proposal TRIPs and Public Health (Doha and August 2003 compromise) The Singapore issues (1996): what the North wants in addition to services and IP (and doesn’t get) Competition policy: unfair business practices as a barrier to trade Investment Trade facilitation (“red-tape”: customs procedures and information on regulations [accepted]) Government procurement

22. The Collapse at Cancun II Developing countries press on agriculture US and EU propose a framework, but… The EU promises little on export subsidies The US passes a farm bill that appears to expand subsidies, including on cotton

23. The Current Situation Negotiations now appear completely stalled Fast Track Authority ended in July, 2007 What is still needed? US must agree to deeper cuts to its ceiling on trade-distorting farm subsidies; the EU, more agricultural market access; and developing countries, such as Brazil and India, to further reduce their industrial tariffs.

24. Quotes on Doha Stalemate WTO DIRECTOR GENERAL PASCAL LAMY "[The suspension] is a bit like in basketball, a time-out during which the teams talk to their trainers before coming back on to the court. I hope that all the different players realise the gravity of the situation and have changed their position and tactics when they come back out to play. "We're in a serious situation and people need to reflect on that. It would be even more serious if they didn't come back to the negotiating table. "The rules are not just. If the negotiations fail, they will stay unjust. If we want that to change, we must resume negotiations." - July, 2006

25. Quotes on Doha Stalemate EU TRADE COMMISSIONER PETER MANDELSON "The US was unwilling to accept, or indeed to acknowledge, the flexibility being shown by others in the room and as a result felt unable to show any flexibility on the issue of farm subsidies. "What they're saying is that for every dollar that they strip out of their trade-distorting farm subsidies, they want to be given a dollar's worth of market access in developing country markets. That is not acceptable to developing countries and it's a principle that I, on Europe's behalf, certainly couldn't sign up to either. - July, 2006

26. Quotes on Doha Stalemate US TRADE REPRESENTATIVE SUSAN SCHWAB "[Monday's] statement by the EU alleging that the US failed to show flexibility and attempting to divert the blame for the stalemate is false and misleading. The countries that have tended to be finger-pointing at this point are the ones that are reluctant to act in terms of market access. "We are deeply disappointed that the EU failed to exhibit similar restraint and hope this will not jeopardise the few chances we have left to save the Doha Round. "'Doha Lite' has never been an option for the United States; it is still not an option. There was no package on the table... that we could have recommended to the President or to the United States Congress. - July, 2006

27. Quotes on Doha Stalemate BRAZILIAN FOREIGN MINISTER CELSO AMORIM "There is no substitute for the WTO. There is no substitute for the multilateral trading system. For developing countries in particular, the WTO is irreplaceable. INDIAN TRADE MINISTER KAMAL NATH "The round is not dead. I would say that it is definitely between intensive care and the crematorium. "The US brought nothing to the table. They stuck to their old position. MARCUS WALLENBERG, INTERNATIONAL CHAMBER OF COMMERCE "The lack of political will on the part of WTO members to resolve differences on agricultural subsidies and market access has put the entire round and the multilateral trading system in peril." - July, 2006