REGIONAL COOPERATION AND ECONOMIC INTEGRATION
REGIONAL COOPERATION AND ECONOMIC INTEGRATION REGIONAL COOPERATION AND ECONOMIC INTEGRATION
REGIONAL TRADE AGREEMENTS AND REGIONAL COOPERATION Chart 2: Overlapping RTAs structure in the Western Hemisphere – “Spaghetti bowl effects” Source: Richard Baldwin, “Multilateralising regionalism: The WTO’s next challenge,” VoxEU, February 29, 2008. Creation of market niches and efforts to size the market with the uniqueness of trade marks in such segments of productions and trade are not really securing longer term market success whish should provide needed coverage of the associated costs. With the second effect (need for large markets) which supports creating a number of new RTAs we have to be observable in the present situation of global financial and economic recession environment. It could be that era of enthusiastic RTAs creation is approaching to its end following the present global financial and economic crises impacts. Negative national economic effects which at list short term accompany creation of a new FTA potentially threaten present and future process of multilateral and regional (FTA’s) trade opening. Such sentiments, decisions and potential future developments are evidenced even in today’s EU practices. As The wall Street Journal reported in March (Forelle, 2009) that older EU members leaded by German Chancellor rejected plead of a number of new Eastern Europe EU member countries leaded by Hungary, for a bailout package of up to 190 billion €. Eastern EU members face decrease in their sails to “old Europe”, and are troubled by external over indebtedness. They suggest that within EU already some protectionist developments could be sensed. Old EU members as GB, France or Germany have little desire to persuade their populations to add East European problems to their own. Signs of taking care only of own problems, creating threats of evoking protectionism, are increasing around the glob. If in close future there will be no coordinated political global scale activity leading to agreements similar to those reached in Bretton Woods in 1944, the world might easily repeat the behaviour of the years between the two World Wars. 5
PART I: Nowadays such actions will create similar negative economic effects for all countries as were created during the Great Depression years. If we could expect such developments than for foreseeable future the interest for different formations of RTAs will no doubt be substantially decreased and forgotten. But let us try to be optimistic and explain why even today openness created within the RTAs framework or by multilateral trade negotiations could be beneficial for the partners included. Up to recently beside expansion of regional trade liberalization connected to creation of growing number of RTAs the world had experienced rather successful general trade liberalization too. 6 Table 1: History of World Multilateral Trade Liberalization GATT and WTO trade rounds Name Start Duration Countries Subjects covered Achievements Signing of GATT, 45,000 tariff Geneva April 1947 7 months 23 Tariffs concessions affecting $10 billion of trade Annecy April 1949 5 months 13 Tariffs Countries exchanged some 5,000 tariff concessions Countries exchanged some 8,700 Torquay tariff concessions, cutting the 1948 tariff levels by 25% Geneva II Dillon September 8 months 1950 38 Tariffs January 1956 September 11 months 1960 26 Tariffs 5 months 26 Tariffs, admission of Japan $2.5 billion in tariff reductions Kennedy May 1964 37 months 62 Tariffs, Antidumping Tokyo Uruguay Doha September 74 months 102 1973 September 87 months 123 1986 November 2001 Source: WTO – adjusted 141 Tariffs, non-tariff measures, “framework” agreements Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc Tariffs, non-tariff measures, agriculture, labor standards, environment, competition, investment, transparency, patents etc Tariff concessions worth $4.9 billion of world trade Tariff concessions worth $40 billion of world trade Tariff reductions worth more than $300 billion dollars achieved The round led to the creation of WTO, and extended the range of trade negotiations, leading to major reductions in tariffs (about 40%) and agricultural subsidies, an agreement to allow full access for textiles and clothing from developing countries, and an extension of intellectual property rights. The round is not yet concluded. A new data set on openness indicators and trade liberalization dates allows the 1995 Sachs and Warner study on the relationship between trade openness and economic growth to be
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- Page 5 and 6: Skopje, 15.10.2009 Dear Colleagues,
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<strong>REGIONAL</strong> TRADE AGREEMENTS <strong>AND</strong> <strong>REGIONAL</strong> <strong>COOPERATION</strong><br />
Chart 2: Overlapping RTAs structure in the Western Hemisphere –<br />
“Spaghetti bowl effects”<br />
Source: Richard Baldwin, “Multilateralising regionalism: The WTO’s next challenge,”<br />
VoxEU, February 29, 2008.<br />
Creation of market niches and efforts to size the market with the uniqueness of trade marks<br />
in such segments of productions and trade are not really securing longer term market<br />
success whish should provide needed coverage of the associated costs.<br />
With the second effect (need for large markets) which supports creating a number of new<br />
RTAs we have to be observable in the present situation of global financial and economic<br />
recession environment. It could be that era of enthusiastic RTAs creation is approaching<br />
to its end following the present global financial and economic crises impacts. Negative<br />
national economic effects which at list short term accompany creation of a new FTA<br />
potentially threaten present and future process of multilateral and regional (FTA’s) trade<br />
opening. Such sentiments, decisions and potential future developments are evidenced even<br />
in today’s EU practices. As The wall Street Journal reported in March (Forelle, 2009)<br />
that older EU members leaded by German Chancellor rejected plead of a number of new<br />
Eastern Europe EU member countries leaded by Hungary, for a bailout package of up<br />
to 190 billion €. Eastern EU members face decrease in their sails to “old Europe”, and<br />
are troubled by external over indebtedness. They suggest that within EU already some<br />
protectionist developments could be sensed. Old EU members as GB, France or Germany<br />
have little desire to persuade their populations to add East European problems to their own.<br />
Signs of taking care only of own problems, creating threats of evoking protectionism, are<br />
increasing around the glob. If in close future there will be no coordinated political global<br />
scale activity leading to agreements similar to those reached in Bretton Woods in 1944,<br />
the world might easily repeat the behaviour of the years between the two World Wars.<br />
5
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