South-South Trade

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South-South Trade
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The problems with preferences

• Preferences transmit to DCs the production
  distortions inherent in OECD countries' tariffs.
• Current GSP schemes are so hedged with exclusions
  quantitative limits thus have only limited
  coverage.
• The fact that preferences might be withdrawn at
  any time encourages a degree of short-termism on
  the part of entrepreneurs.
• The desire to keep and exploit the rents inherent
  in preferences detract from longer-term and
  ultimately more productive activities.

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More problems with preferences

• With the exception of a few of the larger
  developing countries, and in relation to a few
  products, the preference schemes have had limited
  success in generating significant export growth
  or improving the trade shares of beneficiaries.
• Rules of origin and other requirements can be
  costly to fulfil
• Preferences are inherently unstable and
  discriminatory

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The future of preferences is not promising

• Preferences have not been very effective as an
  instrument of development, except perhaps for a
  restricted group of high-income developing
  countries.
• Because a few, relatively well-off countries have
  enjoyed most of the benefits available, pressures
  for more far-reaching graduation are bound to
  increase.
• Multilateral trade liberalisation efforts, such
  as those underway in the context of the DDA will
  probably continue.
• Regional free trade initiatives are likely to
  increase, and where these involve OECD DCs,
  they wipe out unilateral preferences at a stroke.

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New approaches to SD

• Grant total flexibility to all countries whose
  non-compliance does not cause harm to other
  countries.
• Carry out assessment of the costs and the
  capacity of countries to implement WTO
  Agreements.
• Differentiate among developing countries using
  analytical criteria

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Environmentally harmful support

• Under the Doha mandate, the WTO negotiators are
  currently discussing ways to improve market
  access and to reduce subsidies particularly to
  agriculture and fisheries.
• These negotiations arise from the primary concern
  of the WTO to reduce trade distortions.
• But the negotiations are also being watched
  closely by the environment community.
• It is, I hope, now well recognized that many
  forms of support can have adverse environmental
  effects.
• Certainly, if official exhortatory statements
  (e.g. at the WSSD) offer any indication, there is
  also a concomitant interest in doing something
  about them.

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Typical recent estimate of environmentally
harmful support (billions of U.S. dollars a year,
late 1990s)
Sector OECD countries non-OECD countries Total

Agriculture 335 65 400
Water 15 45 60
Energy 80 160 240
Forestry 5 30 35
Fisheries 10 10 20
Other sectors 280 30 310

Total 725 340 1065
( GDP) (3.4) (6.3) (4)

Scope for a Grand Deal 445 310 755
Source C. van Beers and A. de Moor (2001),
Public Subsidies and Policy Failures How
Subsidies Distort the Natural Environment, Equity
and Trade, and how to Reform them, PowerPoint
presentation to the 2001 World Summit on
Sustainable Development. http//www.earth-summit.n
et/presentations/gabs_de_moor.ppt
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Sectoral support seen from both environmental and
trade perspectives
Trade Facilitating
Exempted environmental programme (lapsed in the
SCM)
Environmentally Harmful
Environmentally Beneficial
Actionable or amber subsidy disciplines
Prohibited subsidy disciplines
Ronald.Steenblik, 10 November 2003
Trade Distorting
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Temporary movement of service suppliers - Mode 4
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OECD work on Mode 4
Definition and measurement
GATS commitments and actual regimes
Labour mobility in RTAs
Mode 4
Economic Impact
Recognition
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Labour mobility in RTAs
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Recognition of qualifications