Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 RTAs: Threat or Opportunity for the WTO? - The Economists View - Dipl.-Vw. Jürgen Matthes Head International Economic Policy Department.

Similar presentations


Presentation on theme: "1 RTAs: Threat or Opportunity for the WTO? - The Economists View - Dipl.-Vw. Jürgen Matthes Head International Economic Policy Department."— Presentation transcript:

1 1 RTAs: Threat or Opportunity for the WTO? - The Economists View - Dipl.-Vw. Jürgen Matthes Head International Economic Policy Department

2 Jürgen Matthes: RTAs - Threat or Opportunity for the WTO? WTO Public Forum, September 25, 20062 Bilateralism – Facts and Evaluation New Bilateralism since 2000 – Unprecedented Boom: 16 RTAs per year Now clear evidence: Stumbling Bloc for the WTO and for the Doha-Round Preference Erosion Less Pressure on Protectionsts when Exporters have Bilaterals as an alternative Concessions may be held back for Bilaterals Threat to global welfare Empirical evidence: Global effects of RTAs unclear, could even be harmful South-South bilaterals (vast numbers) are more trade diverting than North-South deals Sand in the wheels of Globalisation and efficient Production Networks (esp. in Asia) Spaghetti Bowl, Transaction Cost increase, especially due to pref. Rules of Origin

3 Jürgen Matthes: RTAs - Threat or Opportunity for the WTO? WTO Public Forum, September 25, 20063 Evaluation (2): Race for Markets Important reason for surge in Bilaterals: Race for Markets Anecdotal evidence: Asia currently with the strongest activity in bilaterals (China, Japan, ASEAN etc.) Competition among US and EU (Mexico, Chile – now Asia) Game Theory: Bilateralism is a dominant strategy No matter what the US does, for the EU an RTA with (say) India is the best choice Self-reinforcing Race for Markets – largely explains Boom in Bilaterals since 2000 Problem: Social Dilemma For individual countries Bilateralism is rational For global welfare Bilateralism and the Race for Markets is likely to be detrimental Stopping Bilateralism is a kind of Public Good, but government intervention not feasible

4 Jürgen Matthes: RTAs - Threat or Opportunity for the WTO? WTO Public Forum, September 25, 20064 Renaissance of the WTO? Failure of Bilateralism as a Catalyst for a Return to the WTO in 10 to 15 years? Do we have to go Per Aspera ad Astra? For DCs (particularly in Asia): Bilateralism will likely prove a dead-end Poor DCs are left out South-South RTAs with Welfare Losses due to Trade Diversion Transaction costs (esp. relevant for DC-companies and in Intermediates) North-South RTAs less attractive than hoped for Asymmetric Power Balance – Unwanted Issues (IP, Capital controls) RTAs are Positional Goods which lose value with increasing membership Problem: For IC Bilateralism has fewer Disadvantages Power Wielding, New Issues, Hub-and-Spoke-Structure (but Transaction Costs) This could bring DCs back to the WTO – may be even sooner than later

5 Jürgen Matthes: RTAs - Threat or Opportunity for the WTO? WTO Public Forum, September 25, 20065 In the Meantime: Mitigation Bilateralism is unstoppable for the moment How can its detrimental effects be mitigated GATT Art. 24: Clearer interpretation of vague rules, e.g. substantially all trade Additional Demand: Lower barriers to outsiders to avoid trade diversion Reform of Enabling Clause: less Leeway for DC to avoid Trade Diversion Harmonisation of preferential RoO would reduce transation costs Templates for RTAs Avoid dead-ends in new issues such as standards, investment, etc. Problem: Reform unlikely, but all the more necessary

6 6 RTAs: Threat or Opportunity for the WTO? - The Economists View – Thank you for your attention Dipl.-Vw. Jürgen Matthes Head International Economic Policy Department


Download ppt "1 RTAs: Threat or Opportunity for the WTO? - The Economists View - Dipl.-Vw. Jürgen Matthes Head International Economic Policy Department."

Similar presentations


Ads by Google