The Indonesian zeitgeist to provide more checks toward the power of its executive organ to formulate and enter into international treaties and agreements during the infancy phase of the Reformasi ...era, which was spurred on by the international debt ballooning that they suffered under the leadership of President Soeharto, was somewhat undermined by the passing of the Law No. 24 of 2000, which effectively limits the involvement of the House in the formulation process of international treaties to which Indonesia would be a party to. This apparently voluntary weakening of the legislative’s oversight function is caused by the understanding that the realities of contemporary international intercourse has resulted in the increasing need for the formulation and entrance into international treaties and agreements as expeditiously as possible. The WTO, as the manifestation of globalization and its byproduct, neoliberalism, plays a role in creating such a necessity, which in turn incentivizes the imparity between the legislative and executive branches of the Indonesian government. The focus of this article is its dispute settlement system, and how its strengths and its weaknesses, has created the incentive for negotiations and expeditious decision making outside of the system itself, which requires a considerable degree of latitude to be afforded to the party involved in such negotiations, the executive. The discussion in this paper delves upon works dealing with the theoretical implications of several aspects of the WTO dispute settlement system and a case study of the US-Clove Cigarettes Case, which perfectly demonstrates said implications toward Indonesia.
This study offers novel evidence that reduced trade policy uncertainty (TPU) in the destination market promotes domestic entrepreneurial activities in a large developing economy. Exploiting China’s ...WTO accession as a quasi-natural experiment, we find that Chinese manufacturing industries with greater TPU reduction are associated with relative increases in the new firm entry rate. The TPU effect is more pronounced in industries with lower entry barriers or larger irreversible investments. In addition, TPU reduction fosters new entrants through both the exporting and non-exporting margins and contributes to strengthening regional agglomeration forces. Heterogeneity across regions with varying exporting costs and entry barriers is also identified, illustrating the important synchronization between external openness and internal reform for developing economies. Last, we show that reduction in TPU intensifies industry-level competition, induces better-quality entrants, and that new firm entry plays a non-negligible role in linking TPU reduction to improved economic performance.
•Reduced trade policy uncertainty (TPU) promotes domestic entrepreneurial activities.•Lower TPU fosters new firm entry through both exporting and non-exporting margins.•TPU reduction contributes to strengthening regional agglomeration forces.•TPU reduction intensifies industry-level competition and induces better-quality entrants.•Synchronization between external openness and internal reform is important.
Recent empirical studies have estimated the trade flow effect of membership in the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT). One ...important, although largely untested, conclusion from this literature is that the GATT/WTO works well if we ignore trade in agriculture - one of the institutions seemingly apparent failures. This article investigates this conclusion using a large panel of agricultural and non-agricultural trade flows. The results are impressive: the multilateral institution has delivered significant positive effects on members agricultural trade despite its sensitive nature and the reluctance of members to undertake serious reform. These findings are robust to various slices of the data and recent advances in the specification and estimation of the gravity equation to account for sample selection issues and the extensive margin of trade.
This is a correction to: Marc-Antoine Couet, 'From Bananas to Large Civil Aircraft: An OnGoing Quest for Value-Added in the Computation of Countermeasures at the WTO', Journal of International ...Economic Law, 2023; jgac056, https://doi.org/10.1093/jiel/jgac056
In this paper, we investigate the role of cultural distance in international trade disputes by using a hand-collected dataset of 535 World Trade Organization trade dispute cases covering 158 ...countries. We find that cultural distance significantly increases the probability of trade disputes and the willingness of a country to initiate a trade complaint. Country pairs with an additional unit of cultural distance measured directly by the Hofstede culture indices have an average 0.18% higher probability of being involved in a trade dispute. Country with a unit farther cultural distance to its trade partner has an average 0.18% higher probability of filing a trade complaint. We further measure cultural distance indirectly from the perspective of language dissimilarity and find that country pairs using a common official language other than their spoken or native language have an average 0.55% higher probability of trade disputes. Cultural costs and cultural protectionism the possible mechanisms are analysed in a general pattern. This study provides a cultural perspective for trade conflict resolution.
I study the impact of the most favored nation (MFN) principle of the GATT/WTO on bilateral trade agreements in the New Trade model. The paper offers four main predictions. First, a bilateral trade ...agreement without external tariff adjustments hurts the outside country, while a bilateral trade agreement under MFN benefits the outside country. Second, the MFN principle may cause a free‐rider problem. Third, a Pareto‐improving bilateral trade agreement under MFN does not exist if initial tariffs and the elasticity of substitution are sufficiently low. This suggests that the MFN principle may prevent bilateral trade agreements in the future when tariffs are already low and that the definition of “like products” in the MFN rule is welfare improving only if it covers only goods that are closely substituted. Fourth, in the future when tariffs are low, multilateral negotiations and preferential trade areas will become more desirable. Using a calibrated 10‐region 33‐industry model, I show that around 30% of bilateral trade agreements that would be agreed upon in the absence of the MFN rule could not be agreed upon if the MFN rule is imposed.
The proliferation of 'behind-the-border' issues has become a major challenge for the global trading system. Why are some trade-related issues integrated in the strongly judicialized WTO with its ...dispute settlement system, while others are governed in isolation from the trade regime? Contributing to the literature on WTO issue boundaries, the paper highlights the role of uncertainty and demand for transgovernmental regulatory cooperation as drivers of regime outcomes. I argue that high technical and political uncertainty delays GATT/WTO integration of trade-related issues in favour of a soft-law trade pathway. A further-reaching separation from the trade regime occurs when uncertainty remains high and national regulatory authorities exhibit a demand for trade-separate cooperation with foreign counterparts. Case studies on government procurement and competition policy substantiate the argument. Government procurement has been integrated into the GATT/WTO trade regime under a market access agenda pursued by EU and US trade actors, but only after uncertainty had been reduced in technical soft-law trade talks at the OECD. Conversely, in competition policy - despite repeated efforts at GATT/WTO integration - cooperation has thrived in less judicialized transgovernmental networks such as the International Competition Network, driven by competition agencies eager to solve regulatory cooperation problems independently from the trade regime.
Developing countries tend to use multilateral dispute settlement procedures less frequently than developed countries because the former lack the requisite economic and legal capacities. However, ...recent studies on the WTO have found increased use of the dispute settlement mechanism by developing countries. This article argues for the importance of legal capacity in determining the use of the multilateral process, especially within the WTO. Our empirical analysis indicates that (1) prior member country experiences and (2) the availability of legal assistance from the Advisory Centre on WTO Law increase the likelihood of developing countries using the full multilateral legal procedure.
Nurturing population and global demand for food are putting pressure on agricultural prices. Prices are a complicated prodigy. A cobweb model is innate in agricultural price policy. Setting the ...prices is the most difficult task for firms and the government. Meta‐analysis, and scientific and political policy analysis were approached to validate the results. The main objective of the paper is to review and analyze various agricultural price policies continent wise and selected country wise and formulate new global price policy for developed and developing countries. The study revealed that not only micro and macroeconomic indicators but also the environmental factors such as the COVID pandemic influence the prices, which may affect the producers and consumers either directly or indirectly based on the review of global prices effects. Market price supports, direct payments to producers, and reduced tariffs through trade agreements are the most common policies existing almost in all countries globally. The government must watch whether the planned policies are implemented successfully or not. The study suggests that the new Global price policy for developed countries is that they must equate international prices to domestic prices and for low‐ and middle‐income countries is that international prices + 20% to protect farmer's welfare coupled with WTO should discipline global trade with stable prices. High optimistic expectations, inadequate collaborative policymaking, dispersed governance, and the vagaries of the political cycle were the four main reasons for the failure of existing policies. Therefore, politicization is compulsory but not sufficient to illuminate accepting international organization norms and agricultural policies toward sustainable agriculture.
This paper examines the relationship between tariffs and the usage of non-tariff measures (NTMs) for a product-level global panel of 97 countries over the period 1996–2020. Using the most ...comprehensive NTM data set to date, I find that tariff levels or changes therein are of little relevance for implementing NTMs. Instead, smaller tariff overhangs, the difference between WTO members’ bound and applied tariff rates, emerge as a significant predictor of future NTM actions. The inverse link between tariff overhangs and NTMs is observable both (i) at the aggregate NTM level and (ii) for the large majority of different NTM subcategories.
•The usage of NTMs has been increasing across countries.•Lower tariff overhangs are a significant predictor of countries’ usage of NTMs.•Smaller tariff overhangs indicate less trade policy flexibility.•The inverse link with tariff overhangs is observable for most NTM categories.
