Saturday, November 26, 2022

Some "anti-trust" academic resources

Anti-trust action across the world has gained traction and news due to action against Big Tech. India's recent Competition Commission of India case against Google is an example of a growing trend across the world. 

Found this course by Yale School of Management on Anti-trust in the 21st century to be quite a comprehensive guide to the issues on anti-trust.

The detailed course is here. A good source!

Thursday, November 24, 2022

Winners and Losers of trade - how does one assess the damage!

The impact of trade, trade policy and trade agreements on domestic economies has been a subject of debate for a long time. While the benefits of liberalisation are evident with the ability to export into hitherto protected markets, libealisation also leads to domestic economies being open to competition and imports. This leads to the now famous "Winners and Losers" paradigm in trade - while trade does lead to many winners in terms of increased exports and cheaper products to consumers, it does also lead to loss of jobs, lower wages as well as disruption of local industries.

Simon Lester, while analysing the USITC's Report on the distributional impact of trade policy in the US focussed on the protectionism versus liberalisation debate. The post made me curious about the USITC report itself. Rather long, I stuck to the Executive Summary. However, for those interested in stakeholder views and academic discussion on how trade policy can impact local economies and what distributional impact it can have, this report is a good read.

During negotiations of trade agreements, there is often an analysis made on how much tariff reduction or opening up of service sectors to foreign competition will impact local jobs. Trade agreements also have fervent supporters in exporters who view market access to be a positive outcome. While the impact on the economy as a whole may be positive in terms of the terms of trade, it undoubtedly leads to local losers. While consumers may benefit from more choice and lower costs, loss of jobs to local manufacturing units may be more pronounced and electorally unpalatable. Many times the latter are a political constituency while consumers lack the political unity across the country to seek lower costs.

The report highlights, again, like the last post, the importance of looking at data, modelling and analysis. Can specific instances of opening up of the economy in certain sectors post a free trade agreement be analysed in terms of losers and winners? How has foreign competition impacted local businesses? Has local manufacturing in those products reduced? Have the businesses been more agile and shifted to different products? Have the employees moved to greener shores? Or has it impacted their wages and employment.

The Report is a great read to anyone interested in understanding trade policy from the wider purview of distributional impact. What was striking was the methodology used in terms of stakeholders, literature analysis and academic discussions.


Tuesday, November 22, 2022

Assessing the impact of Free Trade Agreements - how does one deal with it?!

The Australia-India FTA was ratified by the Australian Parliament. News of it is here and here.

If wants to get a thorough understanding of the scale, impact and nuances of the FTA, this Joint Standing Committee  on Treaties Report of the Australian Parliament is a must read. It outlines the liberalisation in goods and services as well as what has not been done in this early harvest.

What I found interesting in this report is the debate about modelling the benefits of FTAs. The Report goes into the differing views on whether it is possible to assess the impacts of a free trade agreement - the gains, losses and overall economic benefit it has brought to the country. Is there data that can be attributed to the free trade agreement? Can we assess the benefits to a sector/business/people as a result of liberalisation? Is modelling possible at all?

One view expressed was one of doubt, as explained in the report:

By the time the Committee began considering the Trans-Pacific Partnership Agreement (TPP) in 2016, however, the Australian Government had stopped economic modelling of trade agreements, arguing: 

"We would note that modelling is one tool among many when you are assessing a free trade agreement of this sort of character and dimensions ... We also note in these models that there are some methodological limitations. Models do not provide every fix in the world. This is broadly recognised by economists. When we are modelling a dynamic, 12 party deal, there are some real challenges. Modelling the impact of liberalising preferential supply chains is very, very difficult to do. Modelling the value that traders and investors place on certainty is very difficult to do."

However, the Report counters it with a different view:

However, in the absence of an independent and thorough impact assessment, that identifies the expected benefits, the direct and indirect impacts, and the trade-offs inherent in any trade agreement, one is left to merely accept the proposition that liberalised trade is beneficial without being able to properly examine the detail of what are complex and carefully designed agreements that make numerous changes, including with respect to areas that are not always strictly concerned with trade and investment (for example, the movement of natural persons, the treatment of intellectual property, the capacity to regulate in the public interest). 

How does one do an impact assessment? What data points can one rely on? How easy is it in the services sector? Building a robust data base to analyse pre and post trade agreement scenarios is critical. Do all countries have that capacity? How does one assess in areas like intellectual property? Building trade capacity is not only about negotiating capacity - it also involves assessing the impact, benefits and pitfalls of what one has committed to!

 

 

Thursday, November 10, 2022

WTO Negotiations and their context!

I haven't blogged about the Intellectual Property waiver that was agreed to in the WTO. The waiver is here. However, I had blogged about the US decision to support the waiver here.

A recent piece in the Politico titled "Who killed the Covid vaccine waiver" was a fascinating account of the negotiations leading upto the waiver. Hat tip to Thiru Balasubramanian for this lead.

Whichever side of the debate on IP and access to health one is on, the complex relationship between business, trade, intellectual property, public interest and national interest is laid bare in this piece. Whether "lobbying" is actually advancing one's national business interest or intellectual property protection actually benefits access to health in a pandemic are debatable and subject to contrarian, heated often strongly-held views, the fact that negotiations at the WTO are an amalgam of national positions, business interests, negotiating strength, public sentiment, pragmatic endings and sustainable coalitions is evidenced in the waiver negotiations. Actually, it is evidenced in all negotiations!

The piece brings out a number of facets of international trade negotiations:

1. How trade policy positions are arrived at by members and what considerations influence WTO negotiating positions - a strong business interest vis a vis interest in getting cheap access to medicines for one's citizens

2. Role of business in crafting those positions or influencing them as well as the ability of civil society organisations to influence public policy. The ability to do so would also largely depend on where the business is located and how much of it contributes to the national economy.

3. The actual business interest that needs to be protected and the resultant negotiating position - for example, if a member did not have a strong IP manufacturing base, the likelihood of support for the waiver would be greater though not inevitable.

4. The importance of coalitions and fear of not being boxed into the corner in any negotiations.

5. The importance of text based negotiations and legalese apart from the broad declaration of intent to negotiate

6. The inevitability of arriving at pragmatic solutions midway - what the middle point is, is often determined by negotiating strength and ability to craft rules

7. The existence of two narratives of the role of IP in the debate on public health - one that firmly believes that it fosters innovation and thus is a key enabler of public access to medicines and the other that believes that patent protection is a barrier to access to cheap medicines worldwide. That debate, with statistics and research is bound to continue.

Negotiations at the WTO are about a mix of domestic business interests, national strategies of growth, access to markets, benefit to consumers as well as the growth in trade across sectors. This piece brought out that potent mix.

Sunday, October 16, 2022

Trade and Technology Council - the new forum for engagement?

Apart from engaging in the World Trade Organization, countries engage in a multitude of ways on trade and technology. A recent development is the formation of joint trade and technology councils (TTC) - the EU and US formed one in 2021. The EU and India formed one in 2022.

I was curious at the agenda and progress made in the EU-US TTC. One of the working groups in the TTC is on Technology Standards. The importance of setting global standards cannot be understated. Similarly, collaborating and co-operating on setting international standards assumes significance to benefit industry. Who participates in setting standards is important as well as how open the process is to different stakeholders and businesses.

The EU-US TTC have set up a public consultation process for each of the working groups. Under the Technology Standards Working group consultation, a joint representation by the US and EU semiconductor industry on the importance of the role of the private sector in setting standards, preferring global standards to national standards and reducing regulatory divergences in their markets.

What I found striking was the following:

1. EU-US TTC had not only brought the governments together on the same platform to collaborate and co-operate, it had encouraged private players to act together in this case the semiconductor associations of the US and EU. This takes the debate beyond national interest to shared business interests. It is not only about market access but common goals. 

2. The importance of sustained stakeholder consultation using technology - a digital platform for views from any interested business in the EU and the US to add to the conversation on trade and technology co-operation between the transatlantic partners.

On the trade front, this document by the Germany based Transatlantic Business Initiative, once again received in a public consultation, captured in a very simple, straightforward way the commonalities and differences between the US and EU on issues related to the WTO. The value of public consultation from varying levels of stakeholders is invaluable for governments to craft meaningful national policy. Most governments do engage in public consultation in varying degrees. There are perspectives that add value to public policy making. A range of business interests, from small to large conglomerates, need to be incorporated while crafting national strategies - while in some cases national interest may be to take a divergent stand from domestic business in the larger interest of the consumer.


Sunday, September 25, 2022

Get green, but locally!

About a decade ago I wrote a paper on renewable energy and local content requirements. It was in the context of compatibility with various provisions of WTO law. The paper is here - titled "Renewable Energy Programmes in the European Union, Japan and the United States - Compatibility with WTO Law".

Nearly a decade later, things don't seem to have changed. Came across this PIIE piece by Megan Hogan on the same theme. Writing in her piece "Local content requirements threaten renewable energy uptake" she has argued that such domestic content requirements lead to increase in cost, reduce quality and effects the end consumer and power producers the most in terms of increased cost. Two interesting illustrations that buttress her case:



She concludes: 

"In the end, for all their well-meaning intentions, LCRs tend to drive up cost,hamper international competition, and increase investment risk and uncertaint, inhibiting rather than encouraging local manufacturing. If the goal of renewable energy policy is to make solar PV and wind energy more affordable and widely used, local content requirements are an obstacle, not a solution."

The trend seems to indicate an increase in local content requirements in renewable energy programs across geographies - developed and developing. Get green, but locally!

Wednesday, May 11, 2022

What kind of globalization would prevail?

A sobering piece by Dani Rodrik on a "better globalization" replacing the era of hyper globalization is here in this Project Syndicate piece. 

He argues that the answer to the retreat to hyper-globalisation need not be autarky but a more equitable, distributive globalization that takes care of the losers of globalization.

"Yet, it is also possible to envisage a good scenario whereby we achieve a better balance between the prerogatives of the nation-state and the requirements of an open economy. Such a rebalancing might enable inclusive prosperity at home and peace and security abroad.

The first step is for policymakers to mend the damage done to economies and societies by hyper-globalization, along with other market-first policies. This will require reviving the spirit of the Bretton Woods era, when the global economy served domestic economic and social goals – full employment, prosperity, and equity – rather than the other way around. Under hyper-globalization, policymakers inverted this logic, with the global economy becoming the end and domestic society the means. International integration then led to domestic disintegration."

He also alludes to the importance of a multipolar world instead and new rule makers. Graham Allison has talked about the Thucydides Trap when a rising power threatens to displace a ruling power, war is inevitable. Dani Rodrik opines:

For great powers, and the US in particular, this means acknowledging multipolarity and abandoning the quest for global supremacy. The US tends to regard American predominance in global affairs as the natural state of affairs. In this view, China’s economic and technological advances are inherently and self-evidently a threat, and the bilateral relationship is reduced to a zero-sum game.

How globalization will play out in terms of international economic law rule making will depend on what approaches to trade major economies would take in the coming decade? Would it based more in the region rather than global? Would there be different trading blocs? Would domestic concerns and priorities shape trade policy leading to tensions at the WTO? Would trade increase but trade rules stagnate? 

I had the privilege of moderating a session recently with Prof.Dani Rodrik on avoiding one-size fits-all solutions. the video recording is here. We find some answers here.