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Focuses on the costs of market fragmentation in Europe. It reviews the economic impact of removing barriers to trade as a result of divergent national standards, testing, and certification requirements. Ranked by business as the most important barrier to trade, these domestic regulations can prevent firms from engaging in cross‐border competition and hinder market access. Like other forms of trade protection, such non‐tariff barriers impact the importing country through higher domestic prices, higher cost margins and productive inefficiencies. This chapter also highlights the impact of trade barriers on firm strategies, and provides some empirical evidence of the benefits expected to accrue from market integration.

Focuses on early efforts in the 1960s and 1970s by the European Community to address trade barriers through the harmonization of national regulatory policies and practices. The push for harmonization of national policies in Europe was driven by the understanding that, without regulatory intervention at the regional level, there would be no single market and that trade conflicts would escalate. This chapter illustrates the tremendous difficulties that this (old approach) policy of harmonization encountered, despite a strong legal basis in the treaty to eliminate disparities in national regulatory systems. Since this policy reflected a regulatory mismatch, as the instruments chosen were ill‐suited to dealing with the problem, the chapter concludes by focusing on how political and economic constraints forced the EU to undertake regulatory reform to achieve a better match between its policy objective and outcomes.

This chapter examines Japanese trade policy to promote market access for exports. It considers how the delegation of authority to the bureaucracy influences the choice of trade strategies by Japan. The Japanese legislature grants considerable autonomy to the bureaucracy for management of foreign trade policy. As a result, there should be lower demand for adjudication and less politicization of case selection. Compared to the United States, the chapter shows that Japan follows a more selective adjudication strategy and initiates only a few cases for large industries with less obvious political influence on selection. Analysis of a number of case studies reveal the absence of political pressure on the country's foreign economic policy. The chapter also looks at a dataset of trade barriers that represent potential trade disputes.

Provides a case‐study analysis of the operation of this new regulatory policy, with particular attention paid to the difficulties of reaching collective agreement on common European standards. Case studies of the toy, machinery, construction, and medical device sectors illustrate the tension between collaboration and competition among the firms and other actors involved in standardization. Given the scarcity of information on European standard setting, the case studies provide crucial empirical evidence about the conditions under which standardization is successful by providing comparable analysis of economic production and trends, past legislative history and efforts to address trade barriers, and subsequent standards negotiations across each sector. This provides important insights into the assessment and evaluation of the new regulatory process and its attendant benefits in realizing a single market.

This chapter reviews trade policy in services, which serves to introduce the reader not only to the peculiar role of domestic regulations in services trade, but also to the need to tackle the adverse trade effects of non-discriminatory domestic policy instruments when seeking to establish a framework of rules for the liberalization of services trade. It reviews the intricacy and ubiquity of the remaining barriers to trade in services, and demonstrates that in services, domestic regulations constitute the most onerous trade barriers in the absence of any trade impediments at the borders. Theoretically, there is a bundle of genuine reasons that may lead governments to regulate services, depending on the services sector involved. While inherent in services trade, regulatory diversity can be trade-distortive if it is not the result of legitimate regulatory intervention, but rather an attempt to protect few domestic interests.

This chapter presents a theory of the domestic political conditions that lead countries to enter into formal trade agreements. More specifically, it attempts to explain the establishment of preferential trading arrangements (PTAs), institutions in which member-states reciprocally lower their trade barriers on each other's products and thereby grant each member preferential market access. The focus is on why and when countries have chosen to enter such agreements, understanding that there is substantial variability in the spread of PTAs over time and the countries that join them. Why have some countries joined many PTAs, while others have joined very few, and what explains the timing of PTA formation? The chapter first presents a rationalist theory of domestic politics to explain the pattern of PTAs. It then develops seven auxiliary hypotheses that follow from the logic of the present model to further explore the model's implications.

This book examines why democratic institutions for accountability encourage use of adjudication to resolve trade disputes. It argues that governments file a formal legal complaint for World Trade Organization (WTO) adjudication as a costly signal to domestic and foreign audiences of the government's support for exporter interests that have been harmed by foreign protectionism. On the defendant side too, allowing oneself to be dragged into court signals support for importer interests that benefit from the trade barrier. The book develops a theory about domestic constraints to explain why democratic states are more likely to file legal complaints against trade barriers and select their cases based on the political influence of the affected industry. It explores the conditions under which states choose legal venues for dispute settlement, and how the legal context changes the outcome. This introductory chapter provides an overview of international trade law enforcement.

Addresses the question of why RTAs exist. Section 1 lists four proximate explanations on the basis of the immediate consequences of RTAs. Section 2 draws on the political economy of trade barriers literature to explain RTAs in terms of the impact on various groups with differing degrees of influence over trade policy formation and implementation. Section 3 offers some concluding observations.

This chapter starts with brief overviews of global trade flows in services, the barriers that restrict such trade, and the economics of service sector protection and liberalization. This is followed by a summary of the main elements of the GATS (General Agreement on Trade in Services) and a discussion of the experience obtained in the first five years of the operation of the GATS in expanding the coverage of the agreement. The chapter ends with a brief assessment of the usefulness of the GATS as an instrument for the pursuit of service sector reform. The different sections are as follows: Conceptual and empirical issues; Barriers and potential gains from reform; The Uruguay Round negotiations; The GATS; Sector‐specific negotiations and agreements; Electronic commerce; The challenge of expanding the GATS; and Conclusion.

This chapter examines the effectiveness of legal complaints to bring an end to trade disputes. Using quantitative data from the United States, it shows that when comparing similar kinds of disputes and trade partners, states gained better outcomes through the dispute mechanism. Conditioning on the fact that the most politicized cases are selected for World Trade Organization (WTO) adjudication, the legal forum is quite effective for dispute settlement. The chapter applies statistical techniques of matching to the sample of negotiated trade barriers to adjust for their propensity to be raised in adjudication, and then conducts regression analysis of dispute outcomes in terms of policy change. The results show that adjudication increases the probability of progress to resolve the complaint by one-third. Furthermore, a duration model that controls for the variables that influence strategy selection illustrates how adjudication reduces the time to removal of the barrier.

This chapter studies the second major issue that affects mankind, namely access to food. It outlines the barriers to trade and the tenets of the trade regime, and identifies subsidies as the worst barrier to international trade in agricultural commodities. It shows that international trade barriers affect the agricultural commodities market, and introduces the Agreement on Agriculture (AOA), which helped decrease disputes over agricultural subsidies over a period of nine years.

In this chapter the author describes the “traditionalist” view that the Japanese economy was protected but could be opened through trade talks. More importantly, traditionalists argued that trade frictions should not be allowed to damage the crucial U.S.‐Japan military relationship. The second half of the chapter traces the early origins of revisionist thinking against the backdrop of rising trade tensions that reached an emotional peak in the 1980s. Certain U.S. government officials and business leaders were crucial early proponents. One trade agreement, on semiconductors in 1986, was spurred in part by revisionist ideas about the dangers of allowing Japan to maintain a closed market. But for the most part the Reagan administration's Japan policy remained traditionalist in orientation, especially its emphasis on the political and military value of the alliance.

This chapter looks at the major sector‐specific agreements that have been negotiated under the auspices of GATT (General Agreement on Tariffs and Trade), and in particular at agriculture, and textiles and clothing. Both of these are sectors that have a long history of protectionism in many countries, and much remains to be done to lower barriers to trade to levels that approach the average prevailing in other sectors. Over time, both sectors were gradually removed from the GATT 1947 disciplines, and it was only during the Uruguay Round that they were re‐integrated into the trading system; the Uruguay Round agreements reached on the sectors are due to be fully implemented in 2005. The chapter also discusses the Information Technology Agreement (ITA), which was negotiated amongst a subset of WTO members during 1996, although it is applied on an MFN (most favoured nation) basis. The sections of the chapter are as follows: Agriculture; Textiles and clothing; The Information Technology Agreement; and Conclusion.

Despite the fact that China has gone further than India in terms of economic reform and opening, China's integration process so far remains characterized by a certain duality. On the one hand the opening up of trade and FDI in manufactured goods has spurred the emergence of a largely private sector. On the other hand the high level of public ownership and important regulatory barriers continue to dominate the services sectors. India has gone a long way in reducing its tariffs on nonagricultural products as well as selected non-tariff barriers but moderate protection still persists which likely adds to the hurdles faced by the Indian manufacturing sector. India has revealed a comparative advantage in certain segments of the services sector but its services trade policy is still very restrictive. More generally the extent of liberalization achieved so far in India suggests that the remaining goods and services trade barriers are just one item on the list of reforms that the country needs to tackle in order to promote trade-led expansion of more labor-intensive activities.

This chapter focuses on domestic instruments. Besides national treatment, Agreement On Technical Barriers To Trade (TBT), and Agreement on the Application of Sanitary and Phyto-sanitary Measures (SPS), it reviews the application of non-discrimination to a transaction explicitly mentioned in the GATT: state trading enterprises (marketing boards). The chapter proceeds as follows. Section 1 discusses the rationale for national treatment. Section 2 focuses on its coverage. Section 3 explains why because of national treatment, the GATT should be viewed as a negative integration contract with respect to domestic instruments. Section 4 analyses the legal discipline (national treatment) and discusses the exceptions to national treatment. Section 5 deals with TBT and SPS, whereas section 6 deals with state trading enterprises.

Most preferential trade agreements (PTAs) are in the form of free trade agreements (FTAs), which is a rare few contain an added common external tariff that converts them into customs unions (CUs). John Maynard Keynes, arguably the twentieth century's most influential economist, was reverting to an antidiscrimination view that had begun to make increasing sense to economists during the 1930s. The General Agreement on Tariffs and Trade (GATT) was designed to make uncoordinated free-for-all actions on raising trade barriers difficult through “rules” and “bindings” that would govern and discourage a lapse into competitive raising of trade barriers. In general, it is stated that the world is marred by discriminatory trade, much as had been experienced in the 1930s, from which all sensible men and women had recoiled.

The various mechanisms allowing for the re‐imposition of trade barriers are discussed in this chapter, which summarizes the rules on––and the economics of––the use of instruments of contingent protection. These have been very important in dealing with domestic political pressures and allowing the pursuit of non‐economic objectives. In practice, they have often been abused, to the detriment of both national and global welfare. The chapter focuses mainly on the safeguards and exceptions embodied in GATT (General Agreement on Tariffs and Trade); those of the GATS (General Agreement on Trade in Services) are very similar or still in development. The different sections are as follows: Renegotiation of concessions; Waivers; Emergency protection and VERs (voluntary export restraints); Antidumping actions; Measures to countervail subsidized imports; Trade restrictions for balance of payments purposes; Infant industry protection; General exceptions; and Conclusion.

Chapter two develops the economic logic behind regulatory protectionism in a ‘New New’ trade theory. In the Melitz-Chaney model of trade ‘fixed-cost’ regulatory barriers to trade shift profits toward the most productive firms. Tariffs and other traditional trade barriers affect each good, making those that produce more pay more. Regulatory barriers have a fixed cost component, a requirement that once paid, allow firms to produce at whatever volume. As a result, higher fixed costs force smaller, less productive firms to exit the market, lowering the number of available varieties and increasing prices. Higher prices allow firms that remain in the market to gain, and for the most productive firms, the benefits of higher prices and reduced competition mean an absolute increase in profits. Governments that internalize these profits will have additional reasons to adopt regulatory barriers to trade, on top of any public policy motivations for regulation.