Thursday, November 29, 2018

Soft law versus hard rule approaches - Investment Facilitation

Investment Facilitation is a much discussed topic in international trade and investment circles. While it conjures up the old debates on investment protection, trade and investment linkages, it also brings up the issue of enforceability and soft law approaches.

A detailed piece by Anuradha in the Commonwealth Library website on Investment Facilitation charts the existing legal landscape and lays down two possible approaches - soft law, non-enforceable guideline based rules or legally binding rules.

A crucial aspect for consideration for countries, therefore, is the nature of the legal approach and the consequences of the obligations undertaken. Some of the issues that arise for consideration are outlined below:  
1. Option 1: Should investment facilitation be addressed as a ‘covered agreement’ under the WTO, which is enforceable through the WTO’s dispute settlement mechanism? Or, 
2. Option 2: Should investment facilitation be addressed through a set of guidelines and recommendations, which are implemented with technical assistance and capacity-building programmes? What should be the institutional mechanism that administers such guidelines: the UNCTAD or WTO – or should it be both in conjunction and cooperation with each other?
Either way trade negotiators need to equip themselves with alternatives. 

Sunday, November 18, 2018

Of tariffs and protectionism

Came across this simple yet effective explanation of what tariffs are to understand the present debate on tariffs and protectionism in this piece titled "What is a tariff anyway?" in DevelopTradeLaw by Andrea

The three seemingly simple goals of tariffs - raising revenue, protecting domestic industry and social/health policy objectives - are implemented worldwide. Their extent and impact differ based on a country's developmental status and trade policy.

But is a tariff per se protectionist or tariffs beyond WTO commitments protectionist is a debatable question. Using policy space available under international trade agreements though intuitively protectionist may require a more nuanced understanding.

Wednesday, November 14, 2018

Public opinion, trace policy and surveys

Public opinion on international trade and trade agreements are generally not forthcoming or a priority. Trade negotiators sometimes give it more importance than what the public really perceive it to be.

An interesting piece on this by Scott Lincicome in the context of US trade policy and public opinion makes revealing reading. Titled "The Protectionist Moment that Wasn't" it explains public opinion in the US towards trade.

And the conclusion: a general lack of interest to trade policy issues!

Hat Tip: Cato website.

Tuesday, November 13, 2018

Disputes settlement information

Dispute settlement is integral to both the multilateral trading system as well as international investment. For those who follow disputes in both these arenas, the WTO website on dispute settlement and the UNCTAD website on ISDS cases is a rich source of information.

While WTO disputes touched 570 in 2018, known ISDS cases touched 904.

Saturday, October 13, 2018

Manipulating currencies - Trade agreements to your rescue?

Currency manipulation, trade agreements and solutions are in the news again. I have blogged a lot about this here, here, here, here, here and here. Also managed to write a small piece a few years ago here.

Image result for currency wars

The latest trade agreement that brings alive the question whether currency manipulation issues are appropriately placed in trade deals is the USMCA. The United States-Mexico-Canada Trade Agreement has a CHAPTER on currency manipulation. This is a step forward from the Joint Declaration in the erstwhile TPP.

This CSIS piece summarizes the new chapter and the impact. This CRS short note also throws light on the issues involved. The chapter is an integral part of the agreement and not a side agreement. It has provisions relating to transparency, prior consultation as well as an undertaking not to manipulate currency for competitive advantage. It also protects legitimate monetary policy space. Well, where one does draw the line there?

Is this a positive move for trade agreement negotiations, as suggested by this Peterson Institute piece? Will this increasingly become the norm in bilateral trade deals? It has been reported that the US is considering these provisions in all its future trade deals.

I thought it was 2013 that was the year of currency manipulation in trade agreements. Five years later, the knock seems louder. 

Trade Agreements 2.0?

Monday, October 8, 2018

NAFTA rewired - USMCA

A very enlightening talk on the new US-Mexico-Canada Trade Agreement in a series called Trade Talks by Soumaya Keynes and Chad Bown.

An interesting point was that the thing that has changed vis a vis NAFTA is a whole set of new rules in the new agreement. So market access was not the defining narrative of the new agreement since most of trade was already liberalised amongst the three partners under NAFTA. 

The new dimension was new rules of the game that covered inter alia the following:

1. Dispute settlement - Very interesting changes n the ISDS mechanism - limited scope vis a vis U-Mexico disputes and phase out for US-Canada disputes.
2. Labour standards - requires Members to maintain certain standards and some specific obligations on Mexico. Current NAFTA apparently has a side agreement on labour standards.
3. Rules of Origin for Motor vehicles - 62.5% car's value increased to 75% needs to be North American content and worker's wages condition.
4. Currency manipulation - not the gold standard, but some obligations that sets a precedent.

Well, this goes to show the legal complexity of obligations and the scope that trade agreements can cover.

@Hat tip - Peterson Institute Blog

Wednesday, September 19, 2018

Diversity of thought - Always welcome

This piece in Bloomberg is not about international economic law directly but the logic applies to it too. 

It talks about the need for diversity in thought in Universities, in the context of the US.
Nonetheless, the current numbers make two points unmistakably clear. 
First, those who teach in departments lacking ideological diversity have an obligation to offer competing views and to present them fairly and with respect. A political philosopher who leans left should be willing and able to ask students to think about the force of the argument for free markets, even if they produce a lot of inequality. 
Second, those who run departments lacking ideological diversity have an obligation to find people who will represent competing views — visiting speakers, visiting professors and new hires. Faculties need not be expected to mirror their societies, but students and teachers ought not live in information cocoons. 
John Stuart Mill put it well: “It is hardly possible to overrate the value ... of placing human beings in contact with persons dissimilar to themselves, and with modes of thought and action unlike those with which they are familiar. Such communication has always been, and is peculiarly in the present age, one of the primary sources of progress.” 
I was trying to draw a parallel with diversity of thought on international trade law and policy, on approaches of free markets and protectionism and of staggered liberalisation and full-fledged opening up. A diversity of opinions and debate is always good!