Friday, May 31, 2013

Currency manipulation and trade agreements

In trade policy circles currency manipulation, undervaluation as well as exchange rate mismanagement are not strictly seen as issues that are to be dealt by the multilateral trading system, especially the WTO.I have blogged about it here, here and here

I was struck by this Reuters report of currency manipulation issues making its way into regional trade agreement negotiations.
"Nearly 200 U.S. lawmakers have signed a letter urging President Barack Obama to insist on new rules against currency manipulation in a proposed trade agreement with Japan and 10 other countries in the Asia-Pacific region. 
"As the United States continues to negotiate the Trans-Pacific Partnership, it is imperative that the agreement address currency manipulation," the letter said, according to a copy obtained by Reuters on Thursday."
Currency issues gradually making their way into international trade law and policy?

Thursday, May 30, 2013

Is this compliance cool?

The COOL dispute (DS384) is back again. I had blogged about it here, here and here. New regulations by the US in order to comply with the WTO ruling have been issued. They are found here. has a detailed account of the latest compliance issues here.

Canada states that it does not amount to compliance of the WTO decision.

A long battle over what constitutes compliance? A la the Airbus Boeing dispute?

Wednesday, May 29, 2013

Time for a re-think?

A piece in the WSJ by Razeen Sally highlights how the present round of multilateral trade negotiatons as well as the plethora of regional trade agreements across the world do not address the realities of 21st century trade.
"The Doha Round and the overwhelming majority of FTAs are wedded to an old vision of one country producing a good from beginning to end for export to another country. Most FTAs focus mainly on reducing tariff barriers. That makes these deals less relevant for a world in which a single good and its inputs can travel through multiple countries during assembly, in which tariff barriers are generally not the only or the most significant obstructions to trade, and in which trade in goods is only part of the overall trade picture."
Time for a rethink? Does trade in the real world happen inspite of trade agreements? Do trade agreements really facilitate 21st century trade realities?   

Tuesday, May 28, 2013

Of law review articles

An interesting take on the varying use of law review articles in decisions of US Courts is found here. I had earlier blogged about law review articles quoting blogs of law professors here.


The Courts as indicated in these cases rely more on law review articles in areas of privacy, due process as compared to federal taxation or judicial power.

I was just wondering what the trend would be in the case of dispute settlement proceedings (both Panel and Appellate Body) and reliance on law review articles? An area of potential research?

Monday, May 27, 2013

South south co-operation

The selection of the new DG of the WTO generated a little bit of news in the past months. Now that things have settled, we have opinions on how the WTO needs to be revived, revitalised and re-energized. The challenges before the new DG are said to be immense and the way forward is said to be riddled with complexity.

One such piece offered a way forward to the new chief to undertake more consultation amongst private businesses across continents to revitalise and reaffirm the relevance of the multilateral institution. Jean-Pierre Lehman in his piece "How the WTO can stay relevant" brought out the various pressures in the context of running the international institution. The point about South-South co-operation caught my attention:
"However, more importantly, there is also a South-South division, which is less obvious but equally hindering. The agriculture policies of India are very different from those of Brazil for example, and even though five key leading emerging nations (Brazil, Russia, India, China and South Africa) are classified as the BRICS, I see very little in common within these countries. We have the emerging power and economic strength of Brazil, China and India, but they need to lay aside their differences in order to progress and benefit from their combined assets."
While south-south co-operation is a phrase commonly used to emphasise the importance of developing country camaraderie, in actuality national interest does play a defining role in way country's implement trade policy. While negotiations and international economic law and policy making is more amenable to a South-South co-operation paradigm, dispute settlement cases indicate that this cohesion is easily disproved. May be it is a mix of both worlds.

Sunday, May 26, 2013

Of negotiated settlements and international economic law

As reports of China, US and EU apparently reaching a settlement on the solar panels trade dispute trickled in, another dispute seems to be making an entry - EU initiating a suo moto anti-dumping and anti-subsidy enquiry into imports of telecommunication equipment from China. 

The EU statement is here:
""The European Commission has today taken a decision in principle to open an ex officio anti-dumping and an anti-subsidy investigation concerning imports of mobile telecommunications networks and their essential elements from China. This decision will not be activated for the time being to allow for negotiations towards an amicable solution with the Chinese authorities. I will revert to the College of Commissioners in due course."
Will this dispute go the negotiated settlement way too? Consultations and negotiations are an integral part of the international trade setting. However, this CATO piece was critical of a negotiated settlement. It highlights the multiplicity of stakeholders - consumers, industry invoked in downstream activities like installation as well as institutional users of these equipments, apart from the producers of these panels ofcourse.

I was just struck by the CATO piece of the usage of the term "un-trade agreement". Can negotiated settlements be contrary to principles of international law? In other words, can there be a settlement that violates the provisions of an Agreement? I am sure countries do it all the time - but strictly in legal terms, isn't it still a violation?

Saturday, May 25, 2013

Currency wars - When will the bell toll?

Currency manipulation has been a subject of this blog for sometime. I have written about it here, here and here.

For those following the currency wars debate in international economic law and policy, this lecture by Fred Bergsten is quite illuminating. Giving an exhaustive account of an US perception of the currency undervaluation issue "Currency Wars, the Economy of the United States and reform of the International Monetary Systemoffers, inter alia, some approaches to address the issue:
"Two changes should also be made in the rules of the WTO. The simpler would be to explicitly add “manipulated currency undervaluation” to the list of proscribed export subsidies against which countervailing duties can be levied by member countries. This could be quite potent if a “coalition of the injured” then used the new authorization to countervail in a variety of their sectors that are injured by the manipulation. 
The second, and potentially even more significant, change would be to amend or re- interpret Article 15(4) to clarify that manipulated undervaluation by individual countries justifies the erection of across-the-board barriers against their exports by all members of the organization that choose to do so (Mattoo and Subramanian 2008). As under its current rules, the WTO would under both remedies first ask the IMF for a judgment as to whether a currency is “undervalued” and “manipulated” and then apply its own standards to the trade measures that were proposed in response.  
These changes could be made either through amendment of the charter or (more likely) via developing a consensus on the issue.The latter approach, following standard WTO practice, could be achieved initially by a plurilateral group that fell short of the full membership of the organization as laid out in detail by my colleagues Gary Hufbauer and Jeffrey Schott. Another tactic would be to begin including such mechanisms in bilateral or regional trade agreements, rather than or in addition to the WTO itself, that would suspend the benefits of the agreement to countries that were found to be manipulating their currencies; the United States should seek to add such chapters to the TransPacific Partnership, which already includes several current and former manipulators, and the Transatlantic Trade and Investment Partnership, where the negotiating agenda is still to be determined and the participating countries are more like- minded."
Are we seeing a trend of increasing calls to address the currency issue within the WTO framework? Are we going to see this discussion more in bilateral or regional trade agreement negotiations?

Thank you Vera Thorstensen for bringing this piece to my notice.

Monday, May 20, 2013

Developing countries, livelihood and public health

I have blogged about the plain packaging dispute here, here and here. Amongst the many issues arising in the dispute, the one that is linked to the developing country development policy space debate is the impact it has on employment and livelihoods of those in the developing world that are dependent on tobacco production.Cuba's recent entry into the dispute has made this issue come to the forefront again.

Tania Voon and Andrew Mitchell do not agree with the stand that it is in developing countries interest. They have a summary of their arguments here.

The Trade, Investment and Health blog picked this up and has reiterated the position that it is actually not in the interests of the poor of the developing world.

Some observations:

1. How strong or legally tenable is the developing country employment and livelihood stand in a WTO dispute? Is there jurisprudence to support it? Or is it just a ideological argument not supported by specific GATT/TRIPS rules?

2. Who decides what is in the interests of the citizens of a country impacted by such a measure? Is it an objective analysis? Or is national policy will in determining that livelihoods are impacted the best judge? Or is it an international arbiter like a WTO panel?

Just these two questions for now.

Saturday, May 18, 2013

Trade war on biofuels again

I have earlier blogged about biofuels and WTO disputes here, here and here. Argentina formally filed a WTO dispute against the EU in DS 459 requesting for consultation against the EU. For those following the dispute across the Atlantic here is an update.
"Argentina notified the WTO Secretariat, on 15 May 2013, of a request for consultations with the European Union on measures imposed by the EU and/or its member states that affect the importation and marketing of biodiesel as well as measures supporting the biodiesel industry. 
Argentina refers to measures applied by the EU for the promotion of the use of energy from renewable sources and the introduction of a mechanism to control and reduce greenhouse gas emissions as well as measures for their implementation at the level of the member states of the EU. It also refers to the establishment of support schemes for the biodiesel sector in the EU. 
According to Argentina, the measures violate, among other things, several provisions of GATT 1994 regarding non-discrimination, the Agreement on Subsidies and Countervailing Measures, the Trade Related Investment Measures Agreement, and the Agreement on Technical Barriers to Trade."
More biofuel disputes on the cards. 

Thursday, May 16, 2013

Who are the stakeholders in a trade negotiation?

We often debate about the need for stakeholder consultation. Found this interesting (but rather critical) take on what it could mean in the context of trade policy consultation.
"But at least the administration granted public interest groups like us some time to offer input.  As in, a half hour.  Total.  For all consumer groups.  In a 1.5-day-long forum otherwise filled almost exclusively by industry representatives.  If relative allotment of time is indicative of the relative importance the administration attributes to industry views on TAFTA vs. the views of everyone else, big business "stakeholders" hold 76% of the administration's attention, technical standards organizations hold 11%, and the opinions of the rest of us are worth 13%."
Varied stakeholders - industry, business interests, sectoral experts, civil society organisations and of course the consumers. How one hears their views, balances them and articulates them in policy making is the real challenge. Finally the articulation of national interest may be an amalgam of these views. How one arrives at this amalgam becomes crucial.

 It is easier said than done - stakeholder consultation is one of the most complex aspects of policy making.

Wednesday, May 15, 2013

US Cloves Cigarettes case and its implications

For those interested in the implications of the US Cloves Cigarettes case (DS406) on domestic regulatory policy space, tobacco control and control of non-communicable diseases, Benn McGrady has co-authored a piece titled "Tobacco Control and Beyond: The Broader Implications of United States-Clove Cigarettes for Non-Communicable Diseases". It is found on SSRN here. I had earlier blogged about the Cloves Cigarette case here, here and here.

The article has brought out the complex relationship between domestic regulatory space and the standard of proof required to justify its applicability in the context of the TBT and GATT provisions. 

Tuesday, May 14, 2013

An Open Letter

For those who want a basic lesson in international trade concerning whether exports are better than imports, this blogpost by Cafe Hayek is a must read. 

Hardhitting and nuanced.

Monday, May 13, 2013

"Made in California" labelling - Protectionism?

We are familiar with the Buy American provisions. Now a proposed Bill in California that encourages "Made in California" labelling is making the news. News about it is found here. The Bill is found here.

The purpose of the Bill is stated here:
"The Made in California Program, a public and private collaboration, is hereby created within the Governor’s Office of Business and Economic Development. The purposes of the program are to encourage consumer product awareness and to foster purchases of high-quality products manufactured in this state."
Private businesses can participate in the program on a voluntary basis. I am not sure if there is a GATT violation here but the Canada-US Blog termed it as State Protectionism.
"Canadian manufacturers and exporters should be concerned about the proliferation of State Buy America initiatives. This is just one example of a developing problem for cross-border trade."
It may just be a labelling program without any international trade law implications. Or who knows - a Canada-Us dispute at the WTO?

Sunday, May 12, 2013

Oil tar sands gets sticky

I had blogged about the issue of oil tar sands more than a year ago here, here and here. It is essentialy related to a potential dispute between Canada and the EU over labelling of oil extracted from the tar sands of Canada as more polluting than other conventional fuels.

I thought the controversy had died down but it seems to have erupted once again with this recent report that Canada is considering taking EU to the dispute settlement mechanism as the measure is allegedly discriminatory.

An interesting comparison with beer consumption in the EU is brought out here by Friends of Science who argue that the labelling is discriminatory:
“In Canada we create useful fuel products from the Alberta oil sands that drive world industry,” says Maier. “We also don’t come to the EU with a “Stop the Beer-maggedon” campaign trying to destabilize your economy.” 
According to calculations by Friends of Science, EU beer production accounts for 0.4% of EU carbon emissions. That means carbon dioxide emissions attributed to total EU beer production is more than half of the emissions from the oil sands – all just for entertainment and getting drunk, while oil sands provides the energy for value-added industrial development and jobs."
So, less of beer and oil from tar sands in the coming years? 

Will watch this space for a potential WTO challenge...

Saturday, May 11, 2013

A lac and more

A big thank you to everyone for the 1 lakh mark. No more celebration of numbers, I promise!

Friday, May 10, 2013

The next DG officially announced

It is official. The likely selection of Roberto Azevedo as the next DG of the WTO was made yesterday by the Chairman of the Trade Negotiations Committee:

On the basis of all of the above, and in keeping with the Procedures, our assessment of the preferences provided to us by you during this third round of consultations is that the candidate from Brazil, Mr. Roberto Carvalho de Azevêdo is the candidate most likely of the two to attract consensus, on the following basis:
  • Mr. Azevêdo carried the largest support by Members in the final round and has consistently done so in each round; and,
  • he enjoyed support from Members from all levels of development and from all geographic regions and has done so throughout the process.
The next step would be convening of a special meeting of the General Council on Tuesday 14 May 2013 where the sole item on the agenda will be the appointment of the next Director-General of the WTO. At that meeting, and in accordance with the provisions of paragraph 19 of the 2002 Procedures,the name of Mr. Azevêdo as the candidate shall be submitted as the most likely to attract consensus and recommend his appointment by the General Council as the next Director-General of the WTO for a period of 4 years starting 1 September 2013.

This brings to an end the selection process of the next chief of the multilateral trading institution.

Thursday, May 9, 2013

The Winner is...

Though not officially announced on the WTO website, reports of the next WTO chief are coming in - It would be Roberto Azevedo from Brazil. Reuters confirmed it here. IELP reiterated it here.

Lot of hopes of reviving Doha, to tackling politically sensitive issues in international trade to a greater involvement of developing countries in the multilateral system are pinned on this new selection of the chief.

An interesting aspect in the Reuters report about the currency undervaluation issue that Brazil has raised at the WTO:
"Azevedo has led an effort to get the WTO to discuss the impact of exchange rates on global trade, which many members do not consider a relevant issue for the trade body and one that should be dealt with at the International Monetary Fund. 
The currency debate is unlikely to gain traction under Azevedo's tenure as head of the WTO because it would need member countries to take it forward."
Whether it will receive any traction at the multilateral trading body is anybody's guess.

Over to the next DG of the WTO in September.

The Economist on the next DG, WTO

The Economist could not have been far behind with the selection of the DG of the WTO reaching the final stages. 

It had this to say:

"Where there are differences between them is in the way the countries sponsoring them, Brazil and Mexico, see trade liberalisation. Brazil, with a large domestic market that is enshrined in the country’s constitution as part of the national patrimony, has been a less-than-fervent advocate of free trade. Mexico has become one of the most open manufacturing economies in the world since joining NAFTA, even if it is overdependent on the United States. In some ways this divergence represents a rift that runs down the centre of Latin America, as well as through the WTO.

A decision on the WTO leadership is expected in May. Whoever wins, both Mr Blanco and Mr Azevêdo insist they will act independently of their governments. But their nationalities mean that the choice will inevitably send a wider signal."
And the winner is...

Wednesday, May 8, 2013

Cuba joins the battle

Cuba is the latest entrant to the Tobacco Plain Packaging dispute with reports that it has sought consultations with Australia on the measure trickling in. Cuba had already reserved third party rights in a WTO dispute that was initiated by Ukraine against Australia. I have blogged about this here, here and here. NYT covered this news recently here.

Interesting facts about the Cuban challenge:

1. It is Cuba's first WTO dispute settlement case - either as a complainant or a respondent

2. Cuba, a developing economy, is challenging a developed economy (Australia) on the grounds that it's intellectual property rights have been allegedly infringed - the use of TRIPS by a developing country against a developed economy (The allegation is that it is normally the other way round)

3. With the Dominican Republic and Cuba joining the challenge, it seems to be a Caribbean battle against plain packaging of tobacco.

While on the one side pubic policy imperatives of public health drive the legislative moves of tobacco plain packaging, impact on local employment in developing economies and its impact on trade and jobs is forcing a legal challenge at the international forum. 

Just another example to show that trade measures are not just about trade - it has a far reaching impact on employment and growth.

Tuesday, May 7, 2013

FiT ruling, government purchase and some interesting findings

The much awaited Canada FiT Appellate Body report is out. For those interested in a  quick look at the findings, here it is. The detailed 145 page decision for those die hard WTO fans is here. The IELP blog bringing out the aspect of the domestic policy space available for countries to implement renewable energy schemes had this initial reaction.

The implications of the decision for FiT programs based on local content requirements worldwide is important. One would also wait and see how the province of Ontario and Canada would respond in terms of compliance.

My initial reading of the summary and quick read of the decision indicates:

1. The mandatory local content requirements violate Article III:4 GATT and Article 2.1 of TRIMS.

2. They are not saved by the government procurement exception in Article III:8 GATT exception since there is no governmental purchase of renewable energy equipment. perhaps the striking feature of this decision is the distinction made between the electricity produced and the renewable energy equipment. The link that the Panel had found was over ruled.
"5.79. We have found above that the conditions for derogation under Article III:8(a) must be understood in relation to the obligations stipulated in the other paragraphs of Article III. This means that the product of foreign origin allegedly being discriminated against must be in a competitive relationship with the product purchased. In the case before us, the product being procured is electricity, whereas the product discriminated against for reason of its origin is generation equipment. These two products are not in a competitive relationship. None of the participants has suggested otherwise, much less offered evidence to substantiate such proposition. Accordingly, the discrimination relating to generation equipment contained in the FIT Programme and Contracts is not covered by the derogation of Article III:8(a) of the GATT 1994.530 We therefore reverse the Panel's findings, in paragraphs 7.127, 7.128, and 7.152 of the Panel Reports, that the Minimum Required Domestic Content Levels of the FIT Programme and related FIT and microFIT Contracts are laws, regulations, or requirements governing the procurement by governmental agencies of electricity within the meaning of Article III:8(a) of the GATT 1994. Instead, we find that the Minimum Required Domestic Content Levels cannot be characterized as "laws, regulations or requirements governing the procurement by governmental agencies" of electricity within the meaning of Article III:8(a) of the GATT 1994."
3. The Appellate Body did not come to the conclusion that the measure was a prohibited subsidy under Article 3.1 (b) of the ASCM.

Hence, though the program mandating local content was found to be in violation of GATT provisions it was not held to be a prohibited subsidy under the ASCM.

Monday, May 6, 2013

Development rights and Doha

An interesting article by Stephen Kim Park on contextulaizing developments rights in the overall debate of international economic law is found here.

Titled "Talking the Talk and Walking the Walk" in the Virginia Journal of International Law, it discusses the failure of the Doha round as well as proposes a new theoretical framework to address the complexities of issues on trade, development and equity.
"From Geneva to Beijing, Brasilia, Brussels, and Washington, D.C., there exists a modicum of consensus on the promise of trade as an engine of economic growth. Nonetheless, gross economic inequality— both between wealthy and poor countries and within individual countries — persists, and various social harms associated with liberalized trade garner significant attention. The collapse of the Doha Round presents new opportunities to consider anew the legal framework and process by which development objectives are identified and addressed in the global trade regime. The increasingly brighter spotlight placed on the WTO is testament both to the growth of cross-border commerce in the developing world and the important role of international trade law in defining the terms of these commercial relationships. 
Based on a model of development rights as institutional communication, this Article raises procedural questions that suggest the value of institutional reforms to the WTO. Turning inward, such reforms may involve a re-thinking of the WTO’s Trade Policy Review Mechanism to promote best practices and the direct participation of NGOs and other representatives of civil society. Enhanced technical assistance and measures to facilitate coalition building among developing countries in all phases of the negotiating process would broaden stakeholder participation and lower information barriers among WTO members. Turning outward, greater use of mechanisms for inter-regime coordination, such as between the WTO and other international organizations (including the World Bank, the WHO, and the development agencies of the United Nations), would enhance the capacity of developing countries to meaningfully participate in discourse regarding trade and development and benefit from decisions that result. Finally, the promulgation of metarights or non-derogable rules, which would replace the aspirational principles of development in WTO agreements, could be considered as a prerequisite to a new round of WTO negotiations. The political viability and economic impact of these prescriptive measures constitute potential testable hypotheses for future empirical inquiry. Likewise, the principles of development rights, from which potential reforms may be derived, could be applied to the regulation of international finance and foreign investment law."
For all those trade negotiators involved in Doha... 

Sunday, May 5, 2013

More imports - Why not?

Conventional wisdom is that exports are good for the domestic economy while imports are to be minimized. Apart from encouraging local manufacturing capacity, exports lead to a better balance of trade position.

Some thinking on why imports are good for the economy and the need to unilaterally cut tariffs is found in this piece titled "Tariff reform needed to boost the US Economy" by Bryan Riley.
"Economists were right in 1930, and they are right today. Although eliminating all remaining tariffs and quotas might sound like a radical idea to lobbyists for the sugar industry and other special interests, it is the consensus recommendation from U.S. economists. In 2006, 87.5 percent of respondents to a survey of 210 PhD members of the American Economic Association agreed that the United States should eliminate remaining tariffs and other barriers to trade.[35] More recently, a 2012 survey of prominent economists found that 85 percent agreed with the following statement: “Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.”[36] Congress should listen to the economists, not the special interests, and engage in broad-based, permanent tariff reform."
This suggestion, similar to an earlier study,  is contrary to conventional wisdom of higher imports impacting local domestic industry. I had blogged about it here earlier. What about the policy objectives of creating a local manufacturing capacity, local industrialization, local employment, tariffs as a domestic policy tool, revenue generation as well as the current account deficit? Is the policy of import liberalisation to ve viewed differently in developed and developing economies? No one size fits all?

Hat tip to Scott Lincicome for referring to this issue in his blogpost here.

Saturday, May 4, 2013

Bio-Ethanol - The next big dispute at the WTO?

A dispute between EU and the US over anti-dumping duties on US Ethanol seems to be brewing. In a letter to the USTR some US Senators have raised the issue of this move by the EU imposing a 5 year duty on ethanol produced in the US. More news about the $83.03 per metric ton tariff on US produced ethanol is found here and here.The EU has essentially determined that US produced ethanol has been dumped in the EU - the average normal price is less that the average export price.

The EU notification imposing the definitive anti-dumping duty on US produced bio-ethanol is found here.

Would this be the next big WTO dispute between the US and the EU?

Friday, May 3, 2013

IPR protection, Special 301 Report - 2013 Annual Report out

For those interested in intellectual property protection issues around the world and the US view on enforcement of these rights the 2013 Special 301 Report was released yesterday. It is found here. I had blogged about the previous year's report here.

As usual I am not commenting on the details of the report but confining myself to the aspects of dispute settlement that were referred to here. The report stated:
"The United States continues to monitor the resolution of disputes announced in previous Special 301 reviews. The most efficient and preferred manner of resolving concerns is through bilateral dialogue. Where these efforts are unsuccessful, the United States will not hesitate to use the WTO dispute settlement procedures, as appropriate."
No surprises here in the use of dispute settlement at the WTO to pursue perceived national interest. I was curious to know if any reference to the the proposed measures by Antigua in relation to the US Gambling case (DS285) would be referred to in terms of cross retaliation in the intellectual property space. Reference to this, though not directly related to that dispute, made interesting reading:
"Also of concern is the distribution over the Internet of software that allows for the circumvention of technological protection measures used by rights holders to protect their content. A particularly troubling example is that of SlySoft, a company headquartered and operating in Antigua, which developed and sells a program called “Any DVD HD” enabling the user to defeat the encryption technology embedded in Blu-ray Discs that prevents unauthorized reproduction and distribution. Antigua’s Copyright Act makes it illegal to manufacture or import for sale or rental any such circumvention device. The consortium of electronic manufacturers, software companies, and motion picture studios that developed these technological protection measures has worked with the criminal enforcement authorities in Antigua for over 5 years to enforce this statute and have this case prosecuted. However this case has proceeded very slowly."
I was just trying to envision the implication of this technology for Antigua's next moves on the cross retaliation issue in the US Gambling case. No bets on this issue!

Thursday, May 2, 2013

Local jeans, tariffs and WTO disputes

Reports of an EU tariff on US made jeans was in the news recently. This is a result of a longstanding dispute which has reached the compliance stage - the EU measures are in relation to non-compliance by the US of the WTO decision in DS217 (United States — Continued Dumping and Subsidy Offset Act of 2000) in relation to the Byrd Amendment.The dispute itself had many other complainants (9 of them).Would the impact be much more if all these complainants imposed retaliatory tariffs?

I had blogged months ago about the urge to "but local". 

Some lessons from this dispute:

1. Compliance in WTO disputes need not always result in doing away with the challenged measure.the measure can continue but the country must be prepared to face the trade consequences.

2. WTO disputes, at times, are lengthy propositions - compliance and retaliation can take years. We have seen many disputes that are pending for ages.

3. The WTO dispute settlement system does have teeth - non-compliance can lead to retaliatory tariff. One can ignore implementing a WTO decision. But retaliation can be a consequence.

Wednesday, May 1, 2013

Krugman on protectionism

While there are allegations that the protectionist trend across the world is increasing due to sluggish global economy recovery, Paul Krugman believes that as compared to the Great Depression in 1929 countries have not shown a protectionist surge this time around. The chief reason for this, he opines in his NYT op-ed, is the fact that an institutional framework perhaps exists to deal with protectionism:
"So why, exactly, aren’t we seeing more protection? Why aren’t politicians — even conservative politicians — looking at the situation and saying, hmm, a tariff won’t increase the deficit, it won’t involve debasing the currency, but it could clearly help create jobs? 
One answer might be the “Smoot-Hawley caused the Depression” thing; this isn’t true at all, but it might be serving the purpose of a noble lie. 
Or maybe it’s the structure of trade agreements. The countries that arguably could really, really use some protection right now are inside the European Union, so no go. Countries outside still know that any protection they impose will lead to big problems at the WTO; the United States has to know that a protectionist response would break up the whole world trading system we’ve spent almost 80 years building."
I am not so sure that the protectionist trend has subsided. A look at the WTO disputes and proceedings of the various Committee meetings, especially the ASCM, at the WTO indicate that countries continue to impose tariff and non-tariff barriers as well as prohibited subsidies, inconsistent with WTO rules, to protect domestic industry. Perhaps the extent and scope of these measures have lessened over the years.It may be a matter of degree rather than fact.It also depends on what you define "protectionism" as.