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!

Stakeholder consultations and FTA negotiations.

Stakeholder consultations in trade negotiations is a challenging task. Which interests constitute 'national interest', which diverse interests are to represented in the negotiations and how do we take stakeholder comments on board.

I found this webpage on consultations by the Canadian government on their FTA with ASEAN very interesting. It is titled 'Consulting Canadians on a possible Canada-ASEAN Free Trade Agreement', provides basic information on the need for the FTA and what they are looking for.

We want to hear from you. We need to hear your ideas, your experiences, and your priorities in relation to a possible FTA with ASEAN through these consultations.
These consultations will seek the views of Canadians to help define Canada’s interests in a possible free trade agreement, and identify opportunities for such an agreement to create wealth, innovation and jobs for Canadians.
The list of people invited to offer comments is also widespread from labour unions to indigenous people to students.

A good model to follow in complex, trade negotiations? 

Friday, August 24, 2018

Beginning or the End?

A detailed policy brief on what WTO Members must and must not do in the field of negotiations is found in the CATO website titled 'Was Buenos Aires the Beginning of the End of the End of the Beginning? The Future of the World Trade Organization'. 

James Bacchus talks about the relevance of the negotiating function and what should be done.
Members must begin to negotiate in new ways that will lead to new trade agreements— and soon. If WTO members wait, if they hesitate, if they simply talk without really negotiating, and if they fail to act immediately on their shared realization that new challenges necessitate a new way of doing things, then the next ministerial conference of the WTO in 2019 may be the last one that many involved in trade policymaking will bother to attend.
 Whether the negotiating function will regain its momentum, what issues will gain significance and which ones will lead to fruition will depend on a variety of factors including national alignments, alliances and priorities.

Wednesday, August 22, 2018

Is there a cycle to it?

For those following the trade war and its aftermaths at the WTO, Arvind Panagariya's piece on WTO being on the brink is a concise summation.
A Panglossian may still argue that the vast damage that a wider trade war would inflict would at last convince political leaderships that trade openness is not the enemy, protectionism is. If so, this would be a replay of history that saw the highly prosperous First Globalisation from 1870 to 1914 descend into escalating protection during inter-war years. Lessons learned from that phase of protectionism brought the global leadership together to build what came to be known as the GATT-WTO system.
Times are cyclical. So is trade and responses to the globalization debate, perhaps?

Monday, August 13, 2018

Asia and multilateral rules

More on the importance of a rules-based multilateral trading system and Asian economies vis a vis a growing emphasis on China setting the agenda is found in this piece in the East Asian Forum blog.

It summarises the situation thus:

Asia has more at stake in the global system than any other part of the world — its economies depend on the open rules-based system not only for their economic prosperity but also for their political security. The appeal to the rules-based system is a critically important dimension of protecting economic security and political security more broadly. Asian countries need to stand firm in the face of the threat to the global trade regime. The dynamic of Asian growth depends importantly upon remaining committed to the trade reform agenda and encouraging entrenchment and deepening — including by China, the Southeast Asian economies and India — of the open rules-based international trading system.
There is mention of investment facilitation and building a multilateral-based international digital economy regime in the above piece. The critical question is whether there is a common approach on these issues amongst Asian economies and how would multilateral and bilateral disciplines be framed in these arenas.With the challenges to the dispute settlement system at the WTO as well as the stagnation of the negotiation fora, it would need a renewed sense of purpose vis a vis national positions to revitalise the negotiation of multilateral rules.

Sunday, August 12, 2018

China and world trade rules

A piece on China, globalization and trade rules in the Project Syndicate makes for an interesting read. In Globalization with Chinese characteristics, Barry Eichengreen argues that trade rules influenced by China will be very different from the current ones. 
In sum, while a China-led global economy will remain open to trade, it will be less respectful of US intellectual property, less receptive to US foreign investment, and less accommodating of US exporters and multinationals seeking a level playing field.
Will China really shape future multilateral trade and investment rules? Will it do so in the WTO, regionally or in numerous bilateral agreements? 

We have blogged about China and trade rules here and here.

Sunday, May 6, 2018

ISDS and Carribean islands - a good result so far

For those who follow international investment disputes and love the Carribean, this blogpost in the Kluwer Arbitration Blog gives an account if ISDS disputes pertaining to the Carribean islands.

Interesting to note that out of the 17 disputes covering the Dominican Republic, Grenada and Jamaica, the 5 which were settled were in favour of the State. 

An alternative approach to viewing investor state relations - the Brazilian approach

My friend Felipe Hees piece on the Brazilian approach to the vexed question of investor state dispute settlement makes interesting reading. In this South Centre brief, he explains what prompted the approach and how different it is from the traditional model of Bilateral Investment Treaties - an approach that focuses on preventing disputes rather than offering a platform for private investors to sue governments.

I had written about this issue in this piece where the models of investment norm setting were seen through the prism of the tussle for policy space by governments.

India has its own model bilateral investment treaty.

Saturday, April 14, 2018

Currency manipulation anyone?

For those interested and following issues of currency manipulation, possible international norms on currency undervaluation, this report by the US Treasury titled 'Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States' in April 2018 provides an insight into what is being looked at.

No currency manipulators were announced in this report though.

For a more detailed study on this issue, I had a done a piece ages ago titled 'To Manipulate or Not - Currency Misalignment, trade law and the search for solutions'.

Friday, March 2, 2018

Crisis in the crown jewel

The WTO's dispute settlement mechanism is often referred to as the jewel in the crown of the WTO.However, of late, it has faced some challenges.

For those following the developments at the dispute settlement mechanism at the WTO, two recent pieces may be of interest - 

First, this detailed analysis of what needs to be done to set the system right is available in a March 2018 Peterson Institute for International Economics Policy Brief which argues that the impasse is too serious to ignore.

Second, this piece by Terence P. Stewart, sets out the rationale for some of the 'concerns' on the functioning of the dispute settlement system.

There indeed is a thin line, at times, between interpretation of existing rights and obligations as against creating new rights and obligations. How this is perceived and tackled differs depending on one's views the role of the judicial authority to be. 

There are no easy answers to this crisis.

Thursday, February 22, 2018

CPTPP and information overload

The TPP has given way to the CPTPP. A lot has been written about these agreements. The new text is out. 

This recent blogpost took me to the New Zealand website on CPTPP.

What is interesting is the information overload - the extent of information on the agreement, it's impact on domestic policies and what is in it for the country. There is a 'national interests' analysis including a Maori interest analysis too. The information is a good lesson in laying out the various aspects of a trade agreement transparently!

The agreement itself runs into pages but what would engage researchers in the coming days is the differences with the original TPP text - a number of original provisions have been suspended. An analysis of suspended provisions that impact New Zealand is laid out here. Exceptions prove the rule?

Sunday, February 18, 2018

ISDS and State to State dispute settlement

Investor State Dispute Settlement has been in the news for many reasons. It has received attention not only in the developing world but also the developed world, of late.

This recent piece on State to State dispute settlement as an alternative to ISDS in the Kluwer Arbitration Blog is an interesting read.

Can State to State dispute settlement, a la WTO dispute settlement, be the real answer?

We are back!

It has been a long hiatus from blogging - for various obvious reasons.

But, treadthemiddlepath is back and will be more regular now.