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Assessing and Addressing the Effects of Trade on Employment Multilateral Trading System and Trade Negotiations Indonesia 12 - 16 July 2010 Ralf Peters.

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Presentation on theme: "Assessing and Addressing the Effects of Trade on Employment Multilateral Trading System and Trade Negotiations Indonesia 12 - 16 July 2010 Ralf Peters."— Presentation transcript:

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2 Assessing and Addressing the Effects of Trade on Employment Multilateral Trading System and Trade Negotiations Indonesia 12 - 16 July 2010 Ralf Peters Chief Technical Advisor ILO Trade and Employment Programme peters@ilo.org International Labour Organization

3 2 The Liberalisation Game

4 3 Trade Negotiations because of Prisoners Dilemma

5 Applied Tariffs Changes

6 Trade Agreements Three Levels Regional Trade Agreements (Free Trade Agreements) Preferences EU, NAFTA ASEAN GSP, AGOA Multilateral Trading System All countries (all WTO members) WTO agreements (Plurilateral agreements) Bilateral Trade Agreements Indonesia – Japan EU – Mercusor Accession to WTO Belarus - WTO

7 Outline The Multilateral Trading System The Doha Round Regional Trade Agreements

8 WTO and GATT Source: WTO

9 Main Objectives of the WTO Trade without discrimination Freer trade: gradually, through negotiation Predictability: through binding and transparent commitments Promoting fair competition Encouraging development and economic reform

10 GATT Basic Principles: Trade without Discrimination MFN-clause (Most-Favoured-Nation): Art. I Countries cannot (normally) discriminate between their trading partners. E.g. give the same tariff to all trading partners (between foreign suppliers) National treatment: Art. III Once goods have cleared customs, imported goods must be treated equally to domestically-produced goods (between domestic and foreign supplier) 9

11 Other Key GATT Articles II: Schedule of Concessions (Bound rates: maximum ceiling level) XVIII bis: Tariff negotiations (GATT to sponsor negotiations time to time) XI: Elimination of quantitative restrictions (Export restrictions allowed for food security) XIX: Safeguard (emergency action on imports if quantity increased AND causes or threatens to cause serious injury) XX: General exceptions (protect human, animal or plant life or health) XIV: Free-trade Agreements (only under conditions) XVIII: Modification of schedules (negotiate change but pay compensation) 10

12 Similar Provisions for Services Trade Most Favoured Nation Treatment: Article II (1) of the GATS: …each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country. 11

13 Country Schedules (specific commitments by service sector and mode of supply) 12 Country X - Schedule of Specific Commitments Modes of supply:1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons

14 Outline The Multilateral Trading System The Doha Round Regional Trade Agreements

15 subscribing members and subjects covered by the international trade rounds yearplace/namesubject coveredcountries 1947Genevatariffs23 1949Annecytariffs13 1951Torquaytariffs38 1956Genevatariffs26 1960-1961 Geneva (Dillon Round) tariffs,26 1964-1967 Geneva (Kennedy Round) tariffs, anti dumping measures62 1973-1979 Geneva (Tokyo-Round) tariffs, non tariff measures, framework agreements, codes Bovine Meat Agreement International Dairy Agreement 102 1986-1994 Geneva (Uruguay Round) tariffs, non tariff measures, rules services, intellectual property, dispute settlement textiles, agriculture, creation of the WTO, etc 123

16 15 Market Access: Current Tariffs Source: UNCTAD TRAINS and UNCTAD calculations based on WTO CTS Specific Problems: Tariff escalation Tariff peaks

17 European Union: bound and applied tariff rates, agriculture Note: New AVEs (Paris), Five products with tariffs above 500% not plotted. Olive oil, refined Sugar, raw Tea

18 Developing countries: bound and applied tariff rates, agriculture Number of tariff lines Tariffs in per cent Bound at ceiling level Lower applied rates

19 Developing countries: bound and applied tariff rates, agriculture 18 Number of tariff lines Tariffs in per cent

20 SUPPORT TO PRODUCERS % of the total farm receipt Source: OCDE, Politiques agricoles des pays de lOCDE, 2001

21 AMS Final bound AMS of OECD countries for the year 2000 = US$158 billion 97 % OCDE

22 Initial Tariffs Source: WITS/TRAINS *Final Uruguay Round, **Last available year, mostly 2001 Trade Weighted Averages Developing countries have higher tariffs

23 Bilateral average applied tariffs Trade weighted applied tariffs, Source: UN COMTRADE and UNCTAD TRAINS 22 DevelopedDevelopingLeast developed Source%% Developed2.19.211.1 Developing3.97.214.4 Least developed 3.17.28.3 Total2.98.113.6

24 Initial tariff peaks Source: WITS/TRAINS Peaks: Tariffs above three times national average Percentage of Items with Peaks in all Tariff Universe Developed countries have lower average tariffs but more peaks => Harmonizing approach

25 24 Raw silkSilk yarn Woven silk Finished silk Silk tariff escalation (weighted average tariffs)

26 Doha Round Overview 1999SeattleFailed launching of a new round 2001Doha MDDoha round launched 2002--Missed deadlines (SDT, implementation) 2003CancunMid-term agreement failed 2004July PackageFramework agreement 2005Hong Kong MDModest progress 2006--Suspension in June 2007--Resumption (February) AG & NAMA Draft Modalities (July) 2008 … --Revised DMs (Feb, May, July, …) July Mini-Ministerial : almost an agreement? 25

27 Doha: Negotiating Mandate Single undertaking –Impl. Issues and SDT review –Agriculture –Services Market access (reduction of trade barriers) –NAMA –Rules (AD, SCM & RTAs) –TRIPS –Trade and Environment Singapore issues –Trade Facilitation (part of single undertaking) Non single undertaking –DSU Review 26 AD = Anti Dumping SCM = Subsidies Countervailing Measures RTA = Regional Trade agreements TRIPS = Trade Related Interlectual Property DSU = Dispute Settlement Understanding

28 Outline of the Agreement on Agriculture Three Pillars Domestic Support AMS reduction Green Box de minimis Market Access Tariffication Tariff reduction Minimum access Special Safeguard Export Subsidies Reduction Prohibition of new subsidies Special and Differential (S&D) Treatment for DCs and LDCs Related Agreements, e.g. Marrakesh Decision Establishment of a Committee on Agriculture Continuation of the reform process

29 Outline of the Negotiations on Market Access for Non-Agricultural Products Tariff Binding Coverage Level Formula Preferences Sectorial Approach Sectors Participation Flexibilities for DCs and SDT for LDCs NTBs Specific groups Recently acceded members SVE Issues Special and differential treatment

30 Formulae

31 Conclusion Trade Negotiations Doha Round Negotiations are ongoing Very sensitive in most countries What is a « good » level of commitments? How much policy space do developing countries need? What is the impact on employers and workers?

32 Change in producer surplus Cancun and Harbinson 31 Source: ATPSM, only agriculture

33 Change in consumer surplus Cancun and Harbinson 32 Source: ATPSM, only agriculture

34 Change in welfare: Cancun and Harbinson 33 Source: ATPSM, only agriculture

35 RISKS: Sectoral Unemployment 34 Percent Changes in Labour Usage Relate to Base, by Sector Swiss Formula, Ambitious Scenario Source: GTAP, NAMA

36 Outline The Multilateral Trading System The Doha Round Regional Trade Agreements

37 Number of Notified RTAs by Year of Entry into Force: 1948-2009 36 Source: WTO

38 RTA proliferation means increased share (%) of world trade under RTAs 37 Note: Estimate based on 113 RTAs in force in 2000 with trade data of 1999. Source: WTO, World Trade Report 2003. 43.2% 51.2%

39 38 Bahamas Haiti USA Canada Uruguay Paraguay ArgentinaBrazil Chile BoliviaEcuador Peru Venezuela Colombia Panama Nicaragua Costa Rica El Salvador Guatemala Honduras Dominican Republic Dominica, Suriname, Jamaica, St. Lucia, Belize, St. Kitts & Nevis, Grenada, Barbados, Guyana, St. Vincent & the Grenadines, Antigua & Barbuda, Trinidad & Tobago Korea Philippines New Zealand Indonesia Australia Brunei Darussalam Chinese Taipei Malaysia Japan Peoples Rep. of China Hong Kong, China India Russia Singapore ThailandBangladesh Papua New Guinea Laos Fed. States of Micronesia, Marshall Islands, Kiribati, Palau, W. Samoa,Tonga, Vanuatu, E. Timor, Cook Islands, Nauru, Niue, Tuvalu Bhutan, Maldives, Nepal, Pakistan Mexico Viet Nam Fiji, Solomon Islands, Vanuatu Myanmar Cambodia Sri Lanka ASIA AMERICAS FUTURE PROSPECTS Source: Estevadeordal (2004)

40 Welfare Effects of an RTA Positive –RTAs creates trade (static trade creation) –RTAs generates dynamic gains from scale economy, greater competition, FDI inflows & technology transfer Negative –RTAs diverge trade from more efficient third countries to less efficient RTA partners 39


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