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21. WTO 2025: Restoring binding dispute settlement

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Binding dispute settlement—the ability to obtain a final judgment of whether a member of the World Trade Organization (WTO) has acted inconsistently with its obligations—was the defining attribute of the WTO as created in 1995. Global commerce thrived on having the certainty provided by its taking place within this system. For well over a decade, the United States had complained that the dispute settlement system was undermining the trade remedies—antidumping, countervailing duties against subsidies, and safeguard actions against injurious imports—that were allowed under the WTO’s rules. When a populist US administration assumed office in 2017, it blocked appointments to the WTO’s Appellate Body. Today, the WTO dispute settlement system has become balkanized. The European Union and a number of other countries have banded together to put into place an alternative mechanism. Outside this system are the other two-thirds of the WTO members, including the United States. For most WTO members, no definitive result can be reached as to whether WTO obligations have been violated, as there is no assurance that WTO dispute settlement will be binding for them. This paper addresses how to reconstruct a system that the United States could join that would be broadly acceptable to others. It sets out a wide range of elements for negotiators to consider to rebuild the WTO dispute settlement system and make WTO agreements enforceable again.
Topic:
Economics, Trade, WTO, and Disputes
Political Geography:
Global Focus

22. WTO 2025: Enhancing global trade intelligence

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
International trade flows based on information. Is the foreign market open? What are the conditions for entry? Are there customs duties to be paid and other regulations that need to be satisfied? Businesses thrive on getting as much certainty as they can find, and this requires reliable information. Is the competition subsidized? Are the competitors favored state-owned companies? During the pandemic, governments needed to know if food and medical supplies were going to be available from foreign sources and, most importantly, how available vaccines would be as most of the world’s countries could not produce any. Effective public policy cannot be made in the dark. The World Trade Organization, and the General Agreement on Tariffs and Trade before it, were founded with the idea of providing transparency. But more is needed to understand why trade is taking place, and even more important, when it is not, why not?
Topic:
Economics, Markets, Trade, and WTO
Political Geography:
Global Focus

23. WTO 2025: Getting back to the negotiating table

Author:
Alan Wm. Wolff
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The negotiation of multilateral agreements has stalled at the World Trade Organization (WTO). The action is among groups of like-minded WTO Members, either regionally or in open plurilateral agreements (OPAs) in Geneva at the WTO. There is currently no consensus among WTO Members to include plurilateral agreements officially in the set of WTO agreements. Many additional challenges require multilateral—that is, global—agreements: the pandemic, food security, and climate change, among them. A breakthrough is needed to get WTO negotiations back on track.
Topic:
Climate Change, Treaties and Agreements, Food Security, Multilateralism, COVID-19, and WTO
Political Geography:
Global Focus

24. WTO 2025: Constructing an executive branch

Author:
Alan Wm. Wolff
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The World Trade Organization (WTO) as an institution accords much less of a role to its chief officer and her staff, namely the WTO Director-General and the Secretariat, than do any of its sister international organizations—the World Bank, the International Monetary Fund, the Organization for Economic Cooperation and Development—to their chief officers and staff. The WTO Secretariat is much smaller than its peer international organizations and underfunded. In considering WTO reform, this deficiency needs to be rectified if the WTO’s performance is to live up to its Members’ needs.
Topic:
Economics, World Bank, IMF, WTO, and OECD
Political Geography:
Global Focus

25. Prosperity and Resilience: Diverse Production and Comparative Advantage in Modern Economies

Author:
David Henig and Anna Guildea
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
A common version of trade theory suggests that countries will specialise in a limited number of products. Using the example of David Ricardo from 1817, England specialises in cloth and Portugal in producing wine – and then they trade with each other to mutual benefit. However, this is a crude version of comparative advantage that routinely leads to political concerns about trade. Today the prime concern is that Europe and other developed countries have become too dependent on China by allowing the logic of comparative advantage to work. In short, trade has made us vulnerable. The observed reality is different. Most advanced economies produce and export a broad range of goods and services. Their governments have similar aspirations to develop and support diverse manufacturing and services, including in the most traded global sectors such as pharmaceuticals, automotive, business services, and food and drink. Modern specialisation comes in countries producing various, but not all, products within global supply chains. Patterns of trade suggest such specialisation has allowed countries to both grow and become resilient to individual shocks. Knowledge and ownership of the whole supply chain is more important than producing everything.
Topic:
Globalization, Economy, Services, Resilience, WTO, and Production
Political Geography:
Europe and Global Focus

26. Difficult Debate on an Intellectual Property Protection Waiver to Fight COVID-19

Author:
Szymon Zaręba
Publication Date:
01-2022
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
The negotiations currently taking place at the WTO on the suspension of, among others, patent protection for vaccines and medicines against COVID-19, are at a standstill. This creates a risk of widening the rift between developing countries, which mostly support the idea, and some developed countries, which oppose it. It also makes it more difficult to increase the supply of patented items, particularly of vaccines, to an extent undermining other efforts by countries and international organisations to contain the pandemic. It is in the interest of Poland and the EU to overcome this impasse.
Topic:
Intellectual Property/Copyright, European Union, Vaccine, COVID-19, and WTO
Political Geography:
Europe, Poland, and Global Focus

27. Is the post-war trading system ending?

Author:
Uri Dadush
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
The world trading system is reeling from the trade war between China and the United States, the disabling of the World Trade Organisation Dispute Settlement Understanding and repeated rule-breaking by WTO members. This does not mean the end of the post-war system, but it is being transformed into a more complex, politicised and contentious set of trade relationships. The new framework is likely to evolve around a WTO in maintenance mode with weak and largely unenforceable rules, and three blocs built by regional hegemons. Trade within the blocs will be relatively free and predictable, but the blocs are far from cohesive, contributing to the politicisation of the system. Trade relations between the blocs, especially among the regional hegemons, will be tense and potentially unstable. Countries across the world need to rethink their trade and foreign policies to reflect the new reality. They need to continue to lend support to the WTO but also to accelerate work on regional and bilateral deals, while entering plurilateral agreements on specific issues – within the WTO if possible, or outside it if not. Beyond these general prescriptions, the priorities of different economies vary greatly. The trade hegemons of China, the European Union and the US face vastly different challenges. Middle powers on the periphery of the regional blocs, or outside them, such as Brazil, India and the United Kingdom, face an especially arduous struggle to adjust to a less predictable system. Small nations will be forced into asymmetrical deals with the hegemons or will play them off against each other, adding to the politicisation of trade relations.
Topic:
Foreign Policy, Economy, Trade, and WTO
Political Geography:
Global Focus

28. Unfair Trade or Unfair Protection? The Evolution and Abuse of Section 301

Author:
Scott Lincicome, Inu Manak, and Alfredo Carrillo Obregon
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Section 301 of the Trade Act of 1974 gives the U.S. trade representative (USTR) broad authority to investigate “unfair” foreign trade policies allegedly harming American companies and to impose tariffs or other trade restrictions to achieve the removal of those policies. The statute was a common tool of U.S. trade policy from the 1980s to the 1990s, authorizing the USTR to conduct almost 100 different investigations during that period. Since the World Trade Organization (WTO) was established in 1995, however, the USTR has used Section 301 infrequently and almost exclusively to initiate or implement WTO dispute settlement actions—actions that, per WTO rules, were supposed to supplant the kinds of unilateral trade actions once applied under the law. The Trump administration departed from this long‐​standing U.S. practice and took advantage of Section 301’s flaws to circumvent the WTO and enact unilateral tariffs against multiple U.S. trading partners, imposing significant economic and geopolitical costs along the way. This paper examines the Trump administration’s actions in historical context, evaluates how the law was stretched beyond its intended purpose in direct contravention of the United States’ WTO obligations, and offers practical reforms to prevent future abuse.
Topic:
Economics, Legislation, Trade, Protectionism, and WTO
Political Geography:
North America and United States of America

29. EU in Search of a WTO-Compatible Carbon Border Adjustment Mechanism

Author:
Cecilia Bellora and Lionel Fontagné
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
To meet the targets of the EU’s ”Fit for 55” package, the European Commission proposes to implement a Carbon Border Adjustment Mechanism (CBAM). The CBAM is firstly intended to avoid carbon leakages, but it also deals with the thorny issue of the compliance by European producers in carbon-intensive industries. In addition, its design, as voted by the European Council on March 15, 2022, questions the compatibility of the CBAM with World Trade Organization (WTO) rules. The CBAM puts a price on carbon contained in imported products whose production-related emissions have not been taxed (or not at the same level as in the European Union) by the exporter country, in order to offset the difference in carbon prices at the border. This paper aims to quantify the economic and environmental impacts of different CBAM design choices with the aim of complying with WTO rules. Different from the previous literature, we evaluate the various options with a dynamic general equilibrium model featuring imperfect competition, global value chains, green-house gas emissions and endogenous price of emission quotas. We show that CBAM is effective in reducing carbon leakages. But its design leads to an increase in the price of carbon quotas in the European Emission Trading System (ETS) market. Losses in competitiveness on export markets are expected, also for downstream sectors not covered by the EU ETS nor the CBAM. Eventually, offsetting the difference in carbon prices at the border comes at a cost to the enforcing jurisdiction, suggesting that the CBAM was not designed as a beggar-thy-neighbour policy.
Topic:
Energy Policy, International Trade and Finance, Regional Cooperation, European Union, Carbon Emissions, WTO, and Green Transition
Political Geography:
Europe

30. TRIPS-Past to TRIPS-Plus: Upholding the Balance between Exclusivity and Access

Author:
James Bacchus
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
A deadly global pandemic and other unique circumstances have combined to present the World Trade Organization (WTO) with an opportunity to modernize its rules for the trade-related aspects of intellectual property (IP) rights. The best place to begin is with a full realization of the negotiated balance between exclusivity and access in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). There is the need to turn the “TRIPS-past” of WTO IP rules agreed in 1995 into the “TRIPS-plus” of improved rules more fit to purpose for the twenty-first century. New rules are needed to help spark new innovations of all kinds and the rapid spread of those innovations worldwide, including rules relating to intangible assets and especially to digital expressions of IP. Continuing questions over the extent to which the TRIPS Agreement protects the exclusivity of IP rights in COVID-19 vaccines underscore how much uncertainty remains about where the line of this balance is in this multilateral trade agreement, and also how much doubt still exists about whether that line is in the right place.
Topic:
International Cooperation, International Trade and Finance, Intellectual Property/Copyright, Multilateralism, Pandemic, COVID-19, and WTO
Political Geography:
Global Focus