Tuesday, January 22, 2013

Limiting global trade governance - what should the contours be?

I have often blogged about domestic policy space and international trade rules on this blog. The intrusion of trade rules into legitimate regulatory spaces is often a source of tension and opposition by governments.What should the limits of trade rules, embodied in multilateral, plurilateral and bilateral trade agreements, be? Who defines their limits?

Simon Lester has this piece in Voxeu on the extent of global trade governance arguing that it should be minimilistic with a focus on combating protectionism rather than be a over-prescriptive regulatory regime.
"Global trade rules that focus on protectionist trade barriers are limited and targeted, addressing a specific problem: protectionism. In doing so, they maintain a balance between international oversight of domestic policies on the one hand, and domestic regulatory autonomy on the other. Countries are free to take whatever actions they want, as long as they are not being protectionist."
Countering Richard Baldwin's contention that global supply chains need more intervention by the WTO (about which I have blogged here and here) to remain relevant (in other words to be regulating many areas within the regulatory space of sovereign countries), he argues that the WTO should stick to addressing the issues of protectionism while the other issues of intellectual property rights must be left to national governments to regulate.
"But let me suggest an alternative interpretation. These bilateral and regional agreements have developed because that's where business groups want the rules to go. The rules in these new areas are in their interest and they would like to see them spread. Unfortunately, business demands do not necessarily lead to a sustainable vision of global trade governance. What business wants is not necessarily in the broader interests of society, although in some cases it may be. The push-back against these new rules has been very strong and it is not clear that the current regional trade agreements and bilateral investment treaties model can really work in the long run. It may be that the WTO as it stands now actually gets the balance between global trade governance and domestic regulatory autonomy about right. 
Under this interpretation, the WTO does not need to catch up. Rather, the WTO should focus on what it does best: that is, reducing protectionist trade barriers. Broader issues, such as intellectual property and regulatory expropriation, should be left to governments to deal with on their own. Those who handle these issues well will be the winners in the new world of supply-chain trade."
It is all about getting the balance right - a balance between national autonomy and global trade governance. Where does one draw a line in an area where definitions, perceptions and priorities are varied and often conflicting. It is easy to seek a middle path - to achieve it is an extremely demanding proposition.

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