POLI 354 Lecture Notes - Lecture 13: Preferential Trading Area, Mercosur, Single Market
13 May 2018
School
Department
Course
Professor
Lecture'13'POLI'358:'Why'the'new'regionalism?'
27th'February'2018'
!
Buzzword-)dramatic)proliferation)of)PTAs)that)has)been)taking)place)since)NAFTA-)distinguish)nw)
wave)that)is)different)from)what)we)saw)in)the)past.))
- Its)not)a)new)form)of)cooperation-)but)this)has)some)specific)characteristics)
!
Table'of'contents'
- Features!of!the!new!regionalism!'
o Preferential)liberalization)is)one)of)the)key)features)of)globalization'
o Something)that)made)it)into)the)political)arena)too'
o Create)concentrated)benefits)and)diffused)losses-)salience)in)elections'
- Explaining!the!new!regionalism!'
o Who)is)pushing)for)this?)Why)do)we)observe)this?'
'
Recap'
- The!multilateral!trading!system!!
o Non-!discriminatory!trade!liberalization-!MFN)is)the)basis)of)the)GATT)WTO!
o Strong!enforcement!mechanism!–!tried)to)see)if)this)mechanism)provides)and)
advantage)to)developing)countries)and)neutralizes)the)role)of)power)!
o Growing!emphasis!on!trade!related!issues-!WTO)has)become)more)and)more)
involved)in)things)like)investment,)IPR)!
- Closely)connected)to)what)we)saw)last)week)with)the)WTO)etc.)!
!
Preferential'Trade'Agreements'
- Definition:!tariffs-)two)countries)that)decided)to)lower)tariff)below)that)they)agreed)in)the)
WTO'
o Have)different)types)only)based)on)tariffs-)most)are)free)trade)areas)–)countries)that)
decide)to)cut)tariffs'
o Custom)unions:)different)from)FTA)in)that)they)have)common)external)tariffs.)E.g.:)
Mercosur'
o Common)market-)EU)used)to)be)a)common)market-)different)from)the)others)in)the)
sense)that)they)have)free)movement)of)capital)and)people-)factor)mobility)'
o Creation)of)the)euro-)another)step)towards)integration-)create)a)monetary)union.)
Some)of)the)TAs)in)Africa)also)have)the)common)currency.)–)shelter)myself)from)
fluctuations)of)other)currency)–)attractive)to)exporters)as)they)fear)appreciation'
- Different!types:'
o NAFTA'
o Mercosur'
o EU'
o Korea-!US'
o China-!ASEAN'
- PTA!vs!WTO'
o Article!24-!allows)countries)to)sign)PTA)is)they)increase)substantively)trade)
liberalization-)allowed)if)90%)of)the)products)go)to)0)tariffs)within)reasonable)
amount)of)time'
o Enabling!clause'
o Article!5'
'
WTO'Standard'for'notification'(Korea’s'PTAs)'
- Many)of)them)are)above)
the)90%)level-)have)some)
exception-)Korea)and)
EFTA-)less)than)90%)go)to)
0,)but)still)recognized)as)
PTA!
- Why)do)you)have)less)
tariffs)that)go)to)0?)
Agricultural)sector)is)kept)
protected-)Switzerland)is)
particularly)protective)about)the)agricultural)sector!
- Carve)out)industries)that)still)have)strong)protectionism-)can)do)this)with)PTAs!
'
Agricultural'Sector'
'
- Same)as)the)agricultural)argument'
'
Historical'trend'
'
- Shows)the)dramatic)proliferation)of)PTAs)signed-)see)the)
major)spike)after)1992-4'
'
'
'
'
'
Geographical'trend'
- PTAs)aren’t)only)a)tool)used)by)developed)economies'
- Large)chunk)of)the)PTAs)are)north-south)agreements.)'
- Avg.)country)is)a)member)of)8)PTAs)in)Africa'
'
'
'
'
Type'of'PTAs'
- Three)main)things'
o Categorize)them)and)we)see)the)most)of)the)PTAs)are)FTAs.)'
o Large)majority)are)bilateral-)and)a)lot)of)these)are)north)
south)'
§ Also)a)tool)used)to)make)the)developing)countries)liberalize'
o Regionalism)is)misleading-)makes)you)think)about)something)
that)happens)in)the)same)geographical)region-)true)in)the)beginning)
of)this)wave,)but)now)a)lot)of)them)are)countries)that)are)not)on)the)same)
continent.))'
§ See)this)in)a)broader)sense)and)not)just)restricted)to)geography'
'
Trade'related'provisions'
'
- Trade)agreements)are)
much)more)than)tariff)
reduction)'
- Lot)of)action)to)use)OTAs)
as)an)instrument)of)trade)
governance-)impose)your)
regulation)on)other)
countries)'
- IPR,)investment)
protection,)competition)
policy,)many)have)DSM)
that)is)independent)from)
the)WTO'
'
'
Design'of'PTAs'
'
- Depth)has)increased)over)time,'
- PTAs)are)more)demanding,)once)you)sign,)
you’re)more)likely)to)move)away)from)status)quo'
'
'
'
'
South'cluster'
- Lot)of)plagiarism)in)PTAs-)when)same)countries)are)signing)them-!
- South)cluster-)developing)countries)wit)developing)countries-)shallow)agreements)and)don’t)
include)a)lot)of)the)trade)related)agreements.!
!
EU'cluster'
- Forefront)of)liberalization)for)a)long)time.'
- Never)avle)to)asser)themselves)as)a)serious)actor)whren)there)are)political)tensions)alround)
the)world'
- Supranational)way)to)deal)with)trade-)agreements)very)similar)and)significantly)different)
from)the)south)cluster'
'
US'cluster'
- The)country)that)signs)the)most)ambitious)agreement-)US-)surprising)because)this)is)a)
recent)trend'
- This)happened)since)the)recession-)where)the)EU)lost)the)race)of)liberalization)and)countries)
tend)to)plagiarize)US)agreements'
)
Document Summary
Buzzword- dramatic proliferation of ptas that has been taking place since nafta- distinguish nw wave that is different from what we saw in the past. Its not a new form of cooperation- but this has some specific characteristics. Features of the new regionalism: preferential liberalization is one of the key features of globalization, something that made it into the political arena too, create concentrated benefits and diffused losses- salience in elections. Closely connected to what we saw last week with the wto etc. Definition: tariffs- two countries that decided to lower tariff below that they agreed in the. Wto: have different types only based on tariffs- most are free trade areas countries that decide to cut tariffs, custom unions: different from fta in that they have common external tariffs. Some of the tas in africa also have the common currency. Shelter myself from fluctuations of other currency attractive to exporters as they fear appreciation.
