Session I: Regional agreements
South American perspectives on trade, environment and sustainable development: WTO and beyond
by Hernan Blanco, Chile
Trade and global governance have great importance when it comes to South American sustainable development. The opening of the economies is now being consolidated through major regional free trade agreements such as MERCOSUR-European Union, Andean Countries-US, MERCOSUR-Andean Countries, and the Free Trade Agreement of the Americas (FTAA); a number of bilateral free trade agreements have also contributed to this trend, notably the Chile-US and Chile-European Union free trade agreements.
So far, South American countries have generally been either passive or reactive to environmental issues, as presented by developed countries at the multilateral, regional and bilateral level. This is illustrated for instance in the absence -or poor consideration- of environmental-related elements in the free trade agreements subscribed among countries of the region (consider for instance the MERCOSUR-Andean Countries trade agreement). This reactive position changes when a broader perspective -a sustainable development perspective- is assumed.
Drawing information from recent multi-stakeholder initiatives on trade, environment and sustainable development, such as the RING's "Southern Agenda" and "South American Perspectives on the EU Sustainable Development" projects, as well as from the author's interaction with environmental and trade ministries of the region, this paper identifies and analyses some of the main trade-related environmental and sustainable development issues. For each of these issues, avenues to tackle them -at the WTO and elsewhere- are explored and discussed.
Is the global trading system disintegrating: Is that good or bad?
by Adil Najam, USA
Over the last fifty years, and especially during the last thirty, the edifice of a multilateral global trading regime has been set up. Ten years ago, the project called GATT resulted in the WTO in what might have been the high point of trade multilateralism. It seems, however, that there has been a steady rise in trade regionalism exactly since then. Some have argued (or wanted to believe) that the two are not only compatible but also mutually reinforcing. This presentation will explore whether, and to what extent, this is true. It will also explore how, since Doha, the increasing appetite of the USA for bilateral arrangements might be creating a shadow multilateralism to WTO- which, ironically, was also an invention of US trade preferences. While many have very legitimate and serious concerns about the directions that WTO (and before it GATT) have taken, it is also not clear whether the demise of the current system will lead to the creation of a system that will be any better for developing countries, or for the poorest in these developing countries. Indeed, things could become worse.
Regional Approaches to Trade and Investment: What Prospects for Sustainable Development?
by Aaron Cosbey, Canada
The presentation will center on the rush to regionalism in trade and investment liberalization. Drawing on empirical evidence that trade liberalization does not achieve sustainable development without the presence of strong domestic institutions (environmental management, judiciary, bureaucracy, banking, telecommunications, transportation, energy and others), the paper asks whether regional approaches offer any advantage over a multilateral approach if the explicit objective is sustainable development. It will explore the tensions between national/regional interests and global interests. It will conclude by recommending how regional approaches might best be used to achieve sustainable development.
The analysis will draw on an extensive survey of the provisions in existing trade and investment liberalization agreements, and of pending agreements where details are available. It will also draw heavily on empirical evidence of the economic impacts of various permutations of regional approaches. A key focus will be the implications for developing and least developed countries, at the multilateral and regional levels.
An Economic and Legal Benefit Analysis of Regional Trade Agreements
by Huma Fakhar, Pakistan
This presentation will attempt to conduct an economic and legal benefit analysis of the Regional Trade Agreements (RTAs) that South Asia has entered into, primarily the focus will be on South Asian Free Trade Area (SAFTA). It involves an analytical review of both the SAARC Preferential Trading Arrangement and the Agreement on South Asian Free Trade Area. The paper will be divided into two parts: economic analysis and legal analysis with policy recommendations for the future. The economic analysis evaluates South Asia’s current and potential trade opportunities with her trading partners in the region. Whereas, the legal analysis provides an in-depth evaluation and review of the provisions of the Agreement on SAFTA in order to identify what has been or could be permitted, under existing WTO legal provisions. The study examines the legal framework and the economic impact of the existing South Asian RTA regime with policy suggestions for expanding intra regional trade and opportunities for human development. For this purpose, it also draws upon relevant provisions from other RTAs across the world.
Session II: Trade and sustainable development: A Southern agenda
Trade liberalization and economic development: Evidence from Pakistan (1960 - 2003)
by Ms. Bushra Yasmin and Zainab Jehan, Pakistan
Unrestricted trade regime is favored with the perception of stimulating economic growth and bridging the socio-economic gaps among countries of the world. Pakistan adopted trade liberalization policies in late 1980s with the same expectations. This study aims to empirically analyze the effect of trade liberalization on four measures of economic development, namely per capita GDP, income inequality, poverty and employment, as suggested by Dudley Seers (1972), covering the time period from 1960-2003. Keeping in view the simultaneity of development measures, the estimation technique of 2SLS is applied through a well-defined simultaneous equation model. The data was collected from various sources including Yearbook of Central Board of Revenue (various issues), Economic Survey (various issues) and Pakistan Labor Force Survey (various issues). Overall findings reveal that over the time, trade liberalization has contributed positively in employment generation, negatively in GDP per capita and distribution of income whereas no effect is observed on poverty in Pakistan. Hence, this is apparent that trade liberalization has not fulfilled all the conditions in which development takes place in any economy. The major policy implications flow out from the results is to cautiously moving towards liberalization with improving the performance of its mediating factors, adopting productivity-oriented and development-centered approach to trade and taking initiatives with the labor-intensive products by achieving self-sufficiency in such products.
Trade liberalization and Wage movements of unskilled labor in the South
by Dawood Mamoon, The Netherlands
The main objective of the paper is to discover how international trade affects the wages of unskilled labor relative to skilled labor in developing countries. Contrary to the new classical paradigm of international trade, recent literature suggests that trade favors skilled labor over unskilled labor and by doing so causes unequal and welfare distorting outcomes in developing countries. To this effect, the paper employed the wage inequality 'THEIL" measure recently calculated by the University of Texas Inequality Project (UTIP) along with more than 30 different concepts for 100 developing countries and ran OLS and IV regression analysis under multiple specifications. For IV regression analysis, the paper employs some novel instruments recently identified by the latest literature on international trade. The results show that processes of international trade are negatively biased towards the wages of unskilled labor as opposed to the wages of skilled labor.
As a next step, the paper tries to discover how international trade can be tailored to promote equality in the developing country perspective. As mentioned, the literature suggests that trade favors skilled labor over unskilled in developing countries. This means that international trade benefits the educated segments of the society where as the illiterate who are largely poor and unskilled are excluded. If this is true, then human capital which is accrued through the processes of trade is guilty of inequality. In order to determine the link between trade, human capital and wage inequality, the paper intends to endogenise human capital over the processes of trade by utilizing the trade instrument recently used by the likes of David Dollar (World Bank) and Dani Rodrik (Harvard University) and then interact it with openness. Any such exercise will enable us to come up with policy suggestions to minimize the harmful effects of trade that result in inequality.
All the data for the paper is secondary data taken from international data sets.
Trade, Telecom and sustainable development
Are current telecom market trends leading us towards sustainable development?
by Yousaf Haroon, Pakistan
Keeping in view the MDGs, a number of ICT initiatives have taken place to address the issues of poverty, health, education and governance. Under the WTO accords, Pakistan started the program of liberalizing the telecom sector by curtailing PTCL's monopoly, providing people with choice and affordability. Yet the issue of the "Digital Divide" remains a bottleneck for "access" to all necessary means of governance and necessity. But then we have also made a public policy choice of reducing "tariffs" by rebalancing the domestic tax regime, putting more burden on domestic industry and people. With new WTO agreements like ITA (IT Agreement), there is a need to look beyond the "Digital Divide" towards the Sustainable Path of trade paradigm.
The WTO, Trade and Sustainable Development: A Southern Agenda
by Shaheen Rafi Khan, Pakistan
The momentum of WTO negotiations stalled post the Cancun ministerial. Bolstered by China’s joining their ranks, the increasing assertiveness of the South ground the Northern juggernaut to a halt. As a consequence of the deadlock, the US continued to push its alternative track trade policy, that is to engage in bilateral and regional trade agreements. However, while current US and EU trade policies may be cause for concern, an element of posturing is built into its recent moves. The message quite clearly is that the Doha Round needs to be put back on track and that multilateralism in trade negotiations suits both the North and the South.
Doha fundamentally changed the rules of the game on trade and environment. The issue is no longer whether trade and environment are linked. This is now a given. The challenge is how best to address environmental problems within a rules-based multilateral trading system. The challenge for the South in this changed scenario is to craft a Southern agenda which can counterbalance – as well as benefit from – asymmetries related to affluence, bargaining power, science, technology and institutional capacity. Among others, the paper identifies two negotiating premises for the south:
• Persisting with sustainable development.
• Dealing with multinational corporations and market realities.
Clearly, the South needs to persist with its stance that the environment cannot be divorced from its broader context of sustainable development. In the exclusive focus on inter-generational justice, the environmental movement has left out intra-generational justice that sustainable development reintroduced. To attain sustainable development, or more specifically to eradicate poverty, a goal endorsed by the preamble to the WTO treaty, poor countries need resources. Trade must serve this end via the agency of measures within the WTO, such as SDT and market access, and also by ensuring that trade is not immiserizing.
The South also needs to understand in assuming its negotiating positions that the North more often than not negotiates on behalf of multinational corporations (MNCs). Understanding that they are negotiating with “the profit motive” should inject a dose of realism into the positions adopted. Also, the South has little room for maneuver when it comes to dealing with the private sector. Increasingly, businesses in the North are being required by their boards/shareholders to do businesses with firms that meet certain ‘voluntary’ environmental and quality standards. The only option Southern exporters have is to conform or lose markets.
The paper will relate these negotiating premises in four areas of concern to South Asia within the WTO negotiating framework. These are:
- The Agreement on Agriculture (AoA)
- Trade and Environment (T&E)
- General Agreement on Trade in Services (GATS)
- Trade in Intellectual Property Rights (TRIPS)
Session III: The WTO Agreement on Agriculture Market Access Barriers on Select Agricultural Exports of Nepal
by Ratnakar Adhikari, Nepal
Background
On 23 April 2004, Nepal became the 147 th member of the World Trade Organisation (WTO). One of the stated objectives of the His Majesty's Government of Nepal (HMG/N) is to gain increased and predictable access to developed countries market. At present Nepal's export trade is highly concentrated - both product wise and destination wise. While carpet, textiles and agricultural produce represent three major items exported by Nepal covering more than 70 percent of total exports, three markets, namely the USA, Germany and India are the major destination for Nepal market covering more than 80 percent of Nepalese exports. Clearly, Nepalese exports are extremely vulnerable.
Problem statement
Nepal is predominantly an agricultural economy, with almost 80 percent of its population dependent on farming professional for eking out their living and this sector contributing 40 percent to the GDP. While high dependence on agricultural sector is a characteristic feature of most under-developed economy, due to heavy dependence of its population on agriculture, it should make utmost use of opportunity made available by WTO membership to enhance competitiveness as well as exportability of agricultural products. While in theory Nepal has received increased access to the developed countries' market after WTO membership, it still faces several barriers when it comes to converting market access opportunity into commercial meaningful market entry. It is possible to dissect such barriers into two major categories.
- Tariff barriers: Most stakeholders complain that majority of the products of export interest to Nepal face tariff peaks in the developed countries. This is further compounded by the prevalent of tariff escalation, which prevents developing countries in general and Nepal in particular to export the agricultural products in processed forms.
- Non-tariff barriers (NTB): As per most stakeholders, due to higher quality threshold for the entry of agricultural products into the developed countries market under the guise of protecting human, plant and animal health, consumer protection and environmental protection, developing countries in general and Nepal in particular are being subjected to ever increasing NTBs.
However, before jumping to conclusion, it is necessary to conduct an in-depth study on the nature of problems mentioned above. It is equally necessary to identify the problems and probe deeper and investigative further, to bring out in open the real state of problem. Finally, it is necessary to propose some measures - both at the national as well as international level - so as to minimize, if not eliminate these barriers.
Potential Impact on Southern farmers of reducing Northern subsides: Reflections From Pakistan
by Shaheen Rafi Khan and Moeed Yusuf, Pakistan
The debate
The premise for reducing northern agricultural subsidies is that they hurt developing countries' rural poor in two ways. First they undermine producers, especially small farmers. Dumping subsidized agricultural goods at prices below production costs, muscles out small farmers, peasant families and sharecroppers, who rely on the advantage of low-cost labor to sell their crops. Rural women are specially affected; in Pakistan, 62% of economically active women are employed in agriculture, and their nutritional status has a direct bearing on their families' health. Second, subsidies reduce the ability of developing countries to export to the north, with adverse impacts on their foreign exchange earnings.
The European Union trading bloc leads the north in addressing the WTO liberalization mandate. It has instituted reforms to lower prices of agricultural products, eliminate environmentally destructive practices and make support to farmers more equitable. Some of the reform elements are: a) decoupling subsidies from production; b) linking environmental and quality requirements with CAP benefits; c) redirecting subsidies to rural development schemes, and; d) putting a cap on subsidy payments to individual farmers.
However, such concessions notwithstanding, the southern view, supported by many northern NGOs, is that the reforms merely scratch the surface of policy biases that tilt the playing field of global trade against developing countries still struggling to realize the benefits of trade liberalization. The view is that numerous qualifiers, such as approved delays in implementation, outright exemptions and limited coupled payments, dilute the cap reforms with respect to export subsidies and agricultural tariffs.
Further, in contrast to the protective and subsidy-intensive nature of EU trade policies, South Asian trade policies are comparatively more liberal. Agricultural export prices were traditionally below border prices, reflecting adverse domestic terms of trade against agriculture: Domestic policies tended to keep prices low for consumers and processors. However, IMF/World Bank driven reforms have, over time, reduced input subsidies and raised the cap on output prices. While export biases still continue to persist these are on a much smaller scale. Also, Nepal, Bhutan and Pakistan are in the process of liberalizing their agricultural import policies.
The debate has primarily a north-south dimension and an equity focus. It tends to ignore intra-south equity questions. Our thesis is that in the trade context, domestic policy lapses raise three sustainable development concerns pertaining to equity, efficiency and sustainability. Further, efficiency and sustainability concerns are rooted in domestic policy biases against small farmers.
Eliminating northern agricultural subsidies and tariffs will exacerbate inequity in the south. Specifically, trade liberalization combined with the anti-small farmer biases in agricultural policies in the south will generate incentives favoring large farm concentration, corporatization, and intensive use of chemicals and use of seed harmful to indigenous varieties. The gender impacts of these trends are also likely to be adverse.
Scope of study
We will test our hypothesis by gathering evidence on three crops - wheat, rice, and cotton. Pakistan imports wheat while it produces surpluses in rice and cotton, the latter being an exportable cash crop. We also posit that the affect of domestic policies and northern subsidies on small farmers producing wheat (deficit) will be different from those producing rice and cotton (surplus).
Background on domestic policies
The agriculture sector in Pakistan has traditionally been taxed, rather than subsidized. The terms-of-trade between agriculture and industry have always favored the latter; both via depressed prices of agricultural produce and tariff protection. In recent years this bias has decreased thanks to IMF/World Bank driven reforms. The government has instituted a combination of productivity enhancing, subsidy reduction and price support measures to reverse the traditional anti-agricultural biases.
However, these reforms are premised on a policy implementation architecture that ignores small farmers. This trend has continued despite considerable intervention by development agencies that profess to concern themselves primarily with poor farmers.
With regard to input subsidies, the issue is one of access and technical know-how (on best practice) rather than prices. The input distribution and extension network fails to reach small farmers. Small farmers do not have installed tube wells to benefit from the flat electricity rates and end up purchasing water from large landowners. Further, water rates have risen sharply affecting canal water users. Also, farmers at the tail end of canals tend to be small farmers and despite their willingness to pay existing water rates, the water does not reach them, due to both canal infrastructure degradation and illegal water appropriations by the large/medium farmers in the middle reaches. Even the government's price-support policies do not help small farmers as they lack storage space and are impacted by seasonality in production and demand which creates a supply glut and lowers prices. They are often forced to sell their produce at distress prices immediately after harvest in order to satisfy cash flow needs. Also, certain standards have now been attached to agricultural produce destined for the market. Small farmers do not have the technology to ensure that they meet the set standards. Often, they have to rent graders from public sources at hefty fees. By and large, agricultural policies are tilted towards large farmers who, at the outset, have the resources and the capacity to absorb external shocks better than small farmers.
Issue of Northern subsidies
As mentioned, Northern subsidies hurt developing countries' farmers by undermining southern producers through dumping and by reducing their potential to export indigenous and domestic farm products. However, Northern agricultural subsidies do result in lower prices for southern residential consumers.
Conventional wisdom would suggest that elimination of Northern subsidies would benefit Southern farmers, both large and small scale. However, exploring the internal dynamic-namely the question of poor (small) versus rich (large) farmers within southern countries calls for a rethink of the presumed effects of northern agricultural subsidies on the South. A number of case studies and surveys have linked trade liberalization to negative growth of small farmers, and increased migration to urban centers (Madeley, 2002). Trade analysts and economists have expressed pessimism regarding the ability of peasant farmers and small landholders to take advantage of export markets. It is in the light of the above that we contend that small farmers will be adversely affected, were northern subsidies to disappear.
Producer-consumer linkage: The case of Indian seafood sector
by Bipul Chattopadhyay, India
The global seafood market is entwined in a complex web of trade and sustainability issues such as over-fishing, environmentally harmful fishing practises, capacity management, international fishery resources management, trade in endangered species as well as non-tariff barriers, interlinking the domains of the World Trade Organisation, the Food and Agriculture Organisation, domestic regulations and UN and other international treaties.
Indian seafood exports have faced several hurdles that have emerged due to changes in import regulations in key markets. EU standards, which are higher than internationally accepted standards have led to rejection of Indian consignments on grounds of microbial contamination and more recently anti-microbial chemical residues. Additionally, the U.S. Food and Drug Administration (USFDA) in a move to guard its citizens from any possible bio-terrorism attack by protecting the food supply, required that the owners, operators or agents in-charge of domestic or foreign facilities that manufacture, process, pack, or hold food for human or animal consumption in the U.S. be registered with the FDA. This affected a large number of exporters especially from Kerala on account of delays in registration and lack of warning.
Due to lower margins and drop in global prices in 2004, small Indian exporters are facing immense competition from their huge global counterparts, often over 100 times their size. Iceland with over 150 small units faced a similar situation nearly two decades ago in the backdrop of globalisation and the resultant crisis. But it succeeded in outliving the crisis by amalgamation. Ten small units merged to become one unit, large enough in size and capacity to match the big ones in the developed world. Taking a cue from Iceland, eight of the 68 seafood-processing units in Kerala have decided to merge into a single large forceful public limited company.
Motivation for this study
Approximately 50 million people depend on fishing for all or most of their family earnings, while another 150 million depend on the fish processing and fleet servicing industries. More than 10 million people who work on 2.5 million small-scale fishing vehicles account for 50 percent of the world’s catch. Increase in the number of such artisanal fishermen along with activities of industrial vessels in coastal waters, are primarily responsible for the depletion in fish stocks, since coastal over-fishing is a leading problem in developing countries.
Further to keep increasing the supply of fish, aquaculture is becoming an important occupation. However the environmental risks of aquaculture include water pollution, wetland losses and mangrove destruction.
In 1982 the United Nations Convention established that each country was permitted a 200 mile exclusive economic zone conserve fish stocks. In 1992 the UN established a treaty that put a ban on long drift nets on open seas. Subsequently in 1995, it strengthened the monitoring of harvesting of migratory fish.
Sustainability is a big concern in the global fishing industry. As much as 70 percent of the world’s commercially important marine fish stocks are fully fished, over exploited or depleted. Further 30 percent of fishing is estimated to be illegal and unregulated.
In this research we will try to understand:
- Means by which countries are trying to make fishing more sustainable
- International certifications available for a seafood exporting company to be certified as environmentally friendly e.g. Marine Stewardship Council
- Whether obtaining such certification will result in improving market access.
Market Access Issues: EU-Bangladesh Trade Regimes
A Case Study on Market Access - Myths and Realities
by A. K. Enamul Haque, Bangladesh
Market access is a key concern of developing countries within the WTO and this has been discussed extensively during WTO negotiations. Key concerns related to market access emanate from the fact that a majority of the developing countries are vulnerable in terms of dealing with the growing demand from developed countries to match health, environment and social 'standards' during production, processing and management of industrial and agricultural operations.
In the case of Bangladesh, its major export items are Ready Made Garments, Jute products, Fish, Hides and Skins, Fertilizer, and Tea. In terms of its consumers, 39.2 percent (1998 data) go to the USA, 41.4% goes to EU countries and the remaining to the rest of the world. Except for Fertilizer, exporters in product categories in
Bangladesh belong to the SME sector.
In this study, we focus on the 5 major exporters in readymade garments, knit ware, jute products, fish, hides and skins and tea industries to understand the market access issue at length. The objective of the study is to use micro or firm level information to determine the practical barriers to trade for producers in Bangladesh.
NTBs for the purpose of this study is divided into four broad categories:
- government participation in trade and restrictive practices tolerated by governments (e.g. state aid, countervailing duties, state trading enterprises, government monopoly practices), customs and administrative entry procedures (e.g. anti-dumping duties, customs evaluation, classification, formalities, rules of origin),
- technical barriers to trade (e.g. technical regulations, standards, testing, certification arrangement),
- specific limitations (e.g. quantitative restrictions, import licensing, embargoes, exchange control, discriminatory sourcing, export restraints, measures to regulate domestic prices, export taxes, requirements concerning marking, labeling and packaging),
- import charges (prior import deposits, surcharges, port taxes, statistical taxes, border tax adjustments, safeguard measures).
Trends in exports and imports between EU and Bangladesh show that the pace of growth in exports to EU is much faster than that of imports from EU. This shows that over the past three years Bangladeshi producers are slowly gaining access in EU markets, whereas our imports are being diverted out of EU to other Asian countries like China and India.
This study would ultimately rank the market access issues for SME exporters from
Bangladesh to suggest policy changes in future rounds of negotiation to provide better prospects for expanding trade from least developed to developed countries.
Session I: Regional agreements
South American perspectives on trade, environment and sustainable development: WTO and beyond
by Hernan Blanco, Chile
Trade and global governance have great importance when it comes to South American sustainable development. The opening of the economies is now being consolidated through major regional free trade agreements such as MERCOSUR-European Union, Andean Countries-US, MERCOSUR-Andean Countries, and the Free Trade Agreement of the Americas (FTAA); a number of bilateral free trade agreements have also contributed to this trend, notably the Chile-US and Chile-European Union free trade agreements.
So far, South American countries have generally been either passive or reactive to environmental issues, as presented by developed countries at the multilateral, regional and bilateral level. This is illustrated for instance in the absence -or poor consideration- of environmental-related elements in the free trade agreements subscribed among countries of the region (consider for instance the MERCOSUR-Andean Countries trade agreement). This reactive position changes when a broader perspective -a sustainable development perspective- is assumed.
Drawing information from recent multi-stakeholder initiatives on trade, environment and sustainable development, such as the RING's "Southern Agenda" and "South American Perspectives on the EU Sustainable Development" projects, as well as from the author's interaction with environmental and trade ministries of the region, this paper identifies and analyses some of the main trade-related environmental and sustainable development issues. For each of these issues, avenues to tackle them -at the WTO and elsewhere- are explored and discussed.
Is the global trading system disintegrating: Is that good or bad?
by Adil Najam, USA
Over the last fifty years, and especially during the last thirty, the edifice of a multilateral global trading regime has been set up. Ten years ago, the project called GATT resulted in the WTO in what might have been the high point of trade multilateralism. It seems, however, that there has been a steady rise in trade regionalism exactly since then. Some have argued (or wanted to believe) that the two are not only compatible but also mutually reinforcing. This presentation will explore whether, and to what extent, this is true. It will also explore how, since Doha, the increasing appetite of the USA for bilateral arrangements might be creating a shadow multilateralism to WTO- which, ironically, was also an invention of US trade preferences. While many have very legitimate and serious concerns about the directions that WTO (and before it GATT) have taken, it is also not clear whether the demise of the current system will lead to the creation of a system that will be any better for developing countries, or for the poorest in these developing countries. Indeed, things could become worse.
Regional Approaches to Trade and Investment: What Prospects for Sustainable Development?
by Aaron Cosbey, Canada
The presentation will center on the rush to regionalism in trade and investment liberalization. Drawing on empirical evidence that trade liberalization does not achieve sustainable development without the presence of strong domestic institutions (environmental management, judiciary, bureaucracy, banking, telecommunications, transportation, energy and others), the paper asks whether regional approaches offer any advantage over a multilateral approach if the explicit objective is sustainable development. It will explore the tensions between national/regional interests and global interests. It will conclude by recommending how regional approaches might best be used to achieve sustainable development.
The analysis will draw on an extensive survey of the provisions in existing trade and investment liberalization agreements, and of pending agreements where details are available. It will also draw heavily on empirical evidence of the economic impacts of various permutations of regional approaches. A key focus will be the implications for developing and least developed countries, at the multilateral and regional levels.
An Economic and Legal Benefit Analysis of Regional Trade Agreements
by Huma Fakhar, Pakistan
This presentation will attempt to conduct an economic and legal benefit analysis of the Regional Trade Agreements (RTAs) that South Asia has entered into, primarily the focus will be on South Asian Free Trade Area (SAFTA). It involves an analytical review of both the SAARC Preferential Trading Arrangement and the Agreement on South Asian Free Trade Area. The paper will be divided into two parts: economic analysis and legal analysis with policy recommendations for the future. The economic analysis evaluates South Asia’s current and potential trade opportunities with her trading partners in the region. Whereas, the legal analysis provides an in-depth evaluation and review of the provisions of the Agreement on SAFTA in order to identify what has been or could be permitted, under existing WTO legal provisions. The study examines the legal framework and the economic impact of the existing South Asian RTA regime with policy suggestions for expanding intra regional trade and opportunities for human development. For this purpose, it also draws upon relevant provisions from other RTAs across the world.
Session II: Trade and sustainable development: A Southern agenda
Trade liberalization and economic development: Evidence from Pakistan (1960 - 2003)
by Ms. Bushra Yasmin and Zainab Jehan, Pakistan
Unrestricted trade regime is favored with the perception of stimulating economic growth and bridging the socio-economic gaps among countries of the world. Pakistan adopted trade liberalization policies in late 1980s with the same expectations. This study aims to empirically analyze the effect of trade liberalization on four measures of economic development, namely per capita GDP, income inequality, poverty and employment, as suggested by Dudley Seers (1972), covering the time period from 1960-2003. Keeping in view the simultaneity of development measures, the estimation technique of 2SLS is applied through a well-defined simultaneous equation model. The data was collected from various sources including Yearbook of Central Board of Revenue (various issues), Economic Survey (various issues) and Pakistan Labor Force Survey (various issues). Overall findings reveal that over the time, trade liberalization has contributed positively in employment generation, negatively in GDP per capita and distribution of income whereas no effect is observed on poverty in Pakistan. Hence, this is apparent that trade liberalization has not fulfilled all the conditions in which development takes place in any economy. The major policy implications flow out from the results is to cautiously moving towards liberalization with improving the performance of its mediating factors, adopting productivity-oriented and development-centered approach to trade and taking initiatives with the labor-intensive products by achieving self-sufficiency in such products.
Trade liberalization and Wage movements of unskilled labor in the South
by Dawood Mamoon, The Netherlands
The main objective of the paper is to discover how international trade affects the wages of unskilled labor relative to skilled labor in developing countries. Contrary to the new classical paradigm of international trade, recent literature suggests that trade favors skilled labor over unskilled labor and by doing so causes unequal and welfare distorting outcomes in developing countries. To this effect, the paper employed the wage inequality 'THEIL" measure recently calculated by the University of Texas Inequality Project (UTIP) along with more than 30 different concepts for 100 developing countries and ran OLS and IV regression analysis under multiple specifications. For IV regression analysis, the paper employs some novel instruments recently identified by the latest literature on international trade. The results show that processes of international trade are negatively biased towards the wages of unskilled labor as opposed to the wages of skilled labor.
As a next step, the paper tries to discover how international trade can be tailored to promote equality in the developing country perspective. As mentioned, the literature suggests that trade favors skilled labor over unskilled in developing countries. This means that international trade benefits the educated segments of the society where as the illiterate who are largely poor and unskilled are excluded. If this is true, then human capital which is accrued through the processes of trade is guilty of inequality. In order to determine the link between trade, human capital and wage inequality, the paper intends to endogenise human capital over the processes of trade by utilizing the trade instrument recently used by the likes of David Dollar (World Bank) and Dani Rodrik (Harvard University) and then interact it with openness. Any such exercise will enable us to come up with policy suggestions to minimize the harmful effects of trade that result in inequality.
All the data for the paper is secondary data taken from international data sets.
Trade, Telecom and sustainable development
Are current telecom market trends leading us towards sustainable development?
by Yousaf Haroon, Pakistan
Keeping in view the MDGs, a number of ICT initiatives have taken place to address the issues of poverty, health, education and governance. Under the WTO accords, Pakistan started the program of liberalizing the telecom sector by curtailing PTCL's monopoly, providing people with choice and affordability. Yet the issue of the "Digital Divide" remains a bottleneck for "access" to all necessary means of governance and necessity. But then we have also made a public policy choice of reducing "tariffs" by rebalancing the domestic tax regime, putting more burden on domestic industry and people. With new WTO agreements like ITA (IT Agreement), there is a need to look beyond the "Digital Divide" towards the Sustainable Path of trade paradigm.
The WTO, Trade and Sustainable Development: A Southern Agenda
by Shaheen Rafi Khan, Pakistan
The momentum of WTO negotiations stalled post the Cancun ministerial. Bolstered by China’s joining their ranks, the increasing assertiveness of the South ground the Northern juggernaut to a halt. As a consequence of the deadlock, the US continued to push its alternative track trade policy, that is to engage in bilateral and regional trade agreements. However, while current US and EU trade policies may be cause for concern, an element of posturing is built into its recent moves. The message quite clearly is that the Doha Round needs to be put back on track and that multilateralism in trade negotiations suits both the North and the South.
Doha fundamentally changed the rules of the game on trade and environment. The issue is no longer whether trade and environment are linked. This is now a given. The challenge is how best to address environmental problems within a rules-based multilateral trading system. The challenge for the South in this changed scenario is to craft a Southern agenda which can counterbalance – as well as benefit from – asymmetries related to affluence, bargaining power, science, technology and institutional capacity. Among others, the paper identifies two negotiating premises for the south:
• Persisting with sustainable development.
• Dealing with multinational corporations and market realities.
Clearly, the South needs to persist with its stance that the environment cannot be divorced from its broader context of sustainable development. In the exclusive focus on inter-generational justice, the environmental movement has left out intra-generational justice that sustainable development reintroduced. To attain sustainable development, or more specifically to eradicate poverty, a goal endorsed by the preamble to the WTO treaty, poor countries need resources. Trade must serve this end via the agency of measures within the WTO, such as SDT and market access, and also by ensuring that trade is not immiserizing.
The South also needs to understand in assuming its negotiating positions that the North more often than not negotiates on behalf of multinational corporations (MNCs). Understanding that they are negotiating with “the profit motive” should inject a dose of realism into the positions adopted. Also, the South has little room for maneuver when it comes to dealing with the private sector. Increasingly, businesses in the North are being required by their boards/shareholders to do businesses with firms that meet certain ‘voluntary’ environmental and quality standards. The only option Southern exporters have is to conform or lose markets.
The paper will relate these negotiating premises in four areas of concern to South Asia within the WTO negotiating framework. These are:
- The Agreement on Agriculture (AoA)
- Trade and Environment (T&E)
- General Agreement on Trade in Services (GATS)
- Trade in Intellectual Property Rights (TRIPS)
