Papers by Patrick Messerlin
There are voices in France advocating for a Korean-type screen quota system, seen as a key ingred... more There are voices in France advocating for a Korean-type screen quota system, seen as a key ingredient in Korean films’ success, and voices in Korea advocating for a French-type subsidy regime in Korea, perceived as needed in order to achieve further take-off of the Korean movie industry. This paper shows that the Korean screen quota has been irrelevant to the Korean success and that the French skyrocketing and huge subsidies have done nothing for improving the attractiveness of French movies in France. The paper concludes by suggesting that in-depth analysis of the policies pursued by the two countries is a good way to avoid a too costly trial-and-error process when designing policies related to cultural industries and to culture.
The World Bank Economic Review, 2004
China finds itself in a unique situation on antidumping and safeguard issues. It is by far the ma... more China finds itself in a unique situation on antidumping and safeguard issues. It is by far the main target of antidumping measures, but (so far) one of the smallest users of such measures. China's World Trade Organization (wto) accession protocol includes stringent ...
Revue française d'économie, 1988
Designing the European Union (EU) trade policy towards China is a daunting challenge for three re... more Designing the European Union (EU) trade policy towards China is a daunting challenge for three reasons. First, China (like the US) has a fully-fledged foreign policy, allowing its trade policy to focus on business issues, but also to be occasionally the continuation of its foreign policy. Europe (that is, the EU and its Member States) has not such a luxury. Second, trade negotiations are not yet driven by the same dynamics in China and in the EU. Many Chinese firms have not yet developed the same level of efforts than the EU firms for making their case to the trade authorities, and the Chinese press covers less extensively the world news that the EU press. Hence, the Chinese trade authorities still enjoy a large freedom of manoeuvre in trade matters, while China's trading partners have hard time to "mobilize" their potential Chinese allies on issues of common interest. Last but not least, although Europe will be a "diminishing giant", it will still be larger and richer than China during the next twenty years, bearing more responsibility than China in building sound future bilateral relations (like the US did with Europe fifty years ago, when Europe was hesitating between market economy and central planning, and their associated political regimes). Europe will continue to become richer while China will catch up. But, meanwhile, the EU may have hard times to resist to the temptation of exploiting short-lived advantages "before it is too late", while rising China may be tempted to procrastinate until it could enjoy its full strength. In such extraordinary times, Europe should choose carefully its objectives, and assess thoroughly the opportunities lost when insisting too long and/or too much on a topic. It
Journal of World Trade, 2018
This article explores which trade-related policies are effective – that is both economically and ... more This article explores which trade-related policies are effective – that is both economically and culturally sound – to promote the film industry that has recently been highlighted more due to its prominent political, economic and cultural dimensions. By examining the trade-related policies of nine major countries for their film industries over the last forty years, several important findings are extracted which contribute towards a more pragmatic debate on 'trade and culture'. First, regulatory barriers such as import or screen quotas should be avoided at all costs since they do not protect the domestic film industry. Second, tax relief schemes are unreliable because they tend to offer excessive support to attract foreign film producers. Third, as a choice to be considered, subsidies should be kept reasonable in size and focus on consistent goals. Fourth, well-designed trade agreements can contribute greatly to enhance film policies. Finally, once combined, these results explain to a large extent the remarkable success of the Korean film industry over the last two decades, which can be a good bench marker for countries that want to enhance their film industry and to promote their culture.
Trade will be critical for boosting North Korean growth. Hence North Korean options in terms of t... more Trade will be critical for boosting North Korean growth. Hence North Korean options in terms of trade policy deserve to be carefully examined. The paper aims to provide the best possible information to North Koreans willing to be better equipped for understanding and assessing the available trade policy options. Section 1 spells out the key challenges faced by any North Korean trade policy: very little knowledge on North Korean trade potential (comparative advantages); very high international political tensions that should not be amplified
by trade issues; a severe lack of appropriate institutions. It then defines the principles that any North Korean trade policy should follow for addressing these challenges: non-discrimination in
terms of goods (the same tariff on every product) is best for revealing North Korean comparative advantages; non-discrimination in terms of countries (“most favored-nation”) reduces as much as possible political tensions; an effort to find substitutes as costless as possible is the best answer to the
lack of the appropriate institutions required by a modern trade policy. Section 2 examines North Korean trade policy as negotiating tactics which are subjected to the strict constraint of the denuclearization issue. It first looks at the costs of non-accession to the WTO in the absence of a solution to the de
nuclearization issue. It then turns to the establishment of normal trade relations with North Korean major trading partners, in
particular the US, once the denuclearization issue will start to get a satisfactory solution. Lastly, it briefly reviews a few points of WTO accession once the final solution of the denuclearization issue is met.
The Bali WTO Ministerial may have been a successful exercise in “declaring victory and leave”, bu... more The Bali WTO Ministerial may have been a successful exercise in “declaring victory and leave”, but there are few hopes that the huge rest of the Doha Agenda will be subjected to negotiations in a predictable future. How to assess such a situation? On the one hand, it is very regrettable that negotiations on tariffs, quotas and subsidies will not be pursued in the WTO forum which is, by far, the best place to negotiate such issues. On the other hand, the
WTO does not seem the best place to negotiate in a substantial manner about regulatory issues—be technical norms in goods, regulations shaping services markets (trade and investment) intellectual property rights, and to some extent public procurement.
All the WTO Members do not face this ambiguous situation in a similar fashion. Developed and a few emerging economies (such as China) which have reduced substantially their tariffs are mostly interested in addressing barriers associated to regulatory issues—in particular the barriers in services which constitute the lion’s share of modern economies. These WTO Members are not very much concerned by the WTO current incapacity to host negotiations on tariff cuts. By contrast, most developing and the rest of the emerging economies (such as India) which have still substantial tariffs have a lot to lose from an economic point of view from the freeze of the Doha negotiations.
"Le régime du commerce international est en mutation rapide. Il a remarquablement fonctionné jusq... more "Le régime du commerce international est en mutation rapide. Il a remarquablement fonctionné jusqu’à présent : il y a eu une crise financière d’une ampleur inconnue depuis la Seconde Guerre Mondiale (et sans doute avant cette dernière) mais il n’y a pas eu de crise du commerce international, comme ce fut le cas dans les années 1930 avec les conséquences dramatiques que l’on sait. Au contraire, le commerce international s’est révélé très robuste depuis 2008, et ceci est largement dû aux disciplines de l’Organisation Mondiale du Commerce (OMC).
Pourtant, depuis la mini-Ministérielle de juin 2008, l’OMC a perdu son rôle de forum de négociations—mais elle garde celui en matière de règlement des différends. Le Doha Round est au point mort, pour longtemps peut-être. Les raisons de cette situation sont à chercher dans le formidable basculement géopolitique
en cours entre les Etats-Unis, l’Europe et l’Asie-Pacifique, non pas dans les relations commerciales per se. Le gel du Doha Round n’est qu’un des effets de cette mutation en cours, laquelle touche tout autant des sujets aussi divers que le changement climatique, l’approvisionnement en eau ou la lutte pour plus de croissance en Afrique.
1 Les ‘méga-zones préférentielles de libre-échange’ (MZLE), qui représentent des parts considérables de l’activité économique mondiale, semblent devenir la base du nouveau régime du commerce international. Cette note présente une vue d’ensemble de ce contexte dans lequel s’inscrivent les
négociations du Partenariat Transatlantique de Commerce et
d’Investissement (PTCI). La section 1 décrit l’état des lieux, à savoir le PTCI et les autres principales MZLE en cours de négociation et leurs motivations. La section 2 présente le contenu type de tels accords ‘préférentiels’ de libre-échange, en prenant l’exemple de l’accord entre la Corée du Sud et l’Union Eu
ropéenne (UE). Elle fait ensuite un bref tour d’horizon des sujets les plus ‘sensibles’, en particulier lors des négociations transatlantiques : les négligés, les hérités du passé, les émergent
s (sans doute les plus difficiles à maîtriser). Enfin la section 3 examine les différentes techniques de négociation—celles qui n’ont guère donné de résultats satisfaisants mais qui continuent d’être utilisées par pure routine, et celles qui sont prometteuses mais qui restent à développer. Le PTCI, comme les autres MZLE, ne sera un succès que s’il fait usage de ces techniques prometteuses. "
"The European Parliament hearings on the Commission’s proposal for a “Regulation establishing rul... more "The European Parliament hearings on the Commission’s proposal for a “Regulation establishing rules on the access of third countries’ goods and services to the EU internal market in public procurement” offers an opportunity to review two key pillars of the proposal. First, the Directive proponents claim that the EU public procurement markets are much more open than those of its main partners. Second, they assume that the threat of the “reciprocity” clause (allowing the EU to deny access to EU public procurement markets to firms originating from countries with public procurement markets that the EU would feel less open than its own markets) is credible.
The paper provides robust evidence that the EU public procurement markets are definitely not more open than those of its main partners. It first shows that, when one compares what is comparable, the impact assessment working document on which the Directive proposal relies fails to support the EU claim. Moreover, the paper provides a robust and exhaustive evidence (based on National Accounts) of the fact that the EU public procurement markets are often less open than those of its main partners.
The paper goes on to argue that the threat of the “reciprocity” clause is not credible for three, cumulative, reasons. The public procurement markets of some of the EU partners are rapidly becoming bigger than those of the whole EU or than those of the largest EU Member States – meaning that EU firms will lose more than partner firms in the case of reciprocity-based measures and that it will be difficult to build strong coalitions among EU Member States for generating credible threats. The paper also argues that the “reciprocity” clause is prone to “privatisation” by a few large and powerful firms— tothe detriment of all the other EU firms, with likely net costs for the entire economy of the EU Member States.
The paper provides two other interesting observations. First, it gives evidence suggesting that the Internal Market in public procurement does not work well. Second, it shows that negotiations in the context of preferential trade agreements (with Japan, the US, Taiwan, etc. ) are a much more promising way to improve EU firms’ access to foreign public procurement markets than the reciprocity clause. In addition, such negotiations, if well-conceived, would enormously help the EU to improve the functioning of its own Internal Market."
"The EU macroeconomic and budgetary policies will be politically sustainable only if the EU incre... more "The EU macroeconomic and budgetary policies will be politically sustainable only if the EU increases its anemic growth by making the necessary domestic regulatory reforms. In the absence of a Doha deal, preferential trade agreements (PTAs) are the only instrument left for buttressing EU domestic reforms and boosting EU growth. But PTAs could achieve such goals only if the PTA partners of the EU are big economies, well regulated and well connected to the rest of the world. Japan and Taiwan are the only economies in the world (except the US) meeting these three conditions--hence the need for a EU resolute pivoting to East
Asia based on concluding ambitious PTAs with these two economies as quickly as possible.
Another consequence of the Doha failure is to induce other large economies to create “mega” PTAs--the Trans Pacific Partnership (TPP) led by the US and the China-Japan-Korea (CJK) agreement. For the EU, the only way to insure its firms against the risks of
discriminations from these mega-PTAs is also to conclude a PTA with Japan (insuring against the TPP) and with Taiwan (insuring against the CJK).
Finally, managing a resolute EU pivoting to East Asia raises a series of problems. Those involving a few major EU trading partners--the US, China, Korea, Brazil and India-are examined."
Designing the European Union (EU) trade policy towards China is a daunting challenge for three re... more Designing the European Union (EU) trade policy towards China is a daunting challenge for three reasons. First, China (like the US) has a fully-fledged foreign policy, allowing its trade policy to focus on business issues, but also to be occasionally the continuation of its foreign policy. Europe (that is, the EU and its Member States) has not such a luxury.
"This study assesses the present state of the EU-Georgia discussions on a free trade agreement—to... more "This study assesses the present state of the EU-Georgia discussions on a free trade agreement—to say ‘negotiations’ would be premature since the European Commission has insisted on a hugely demanding set of preconditions before agreeing to open negotiations.
The case of Georgia is unique in two respects. On the one hand,
Georgia’s own trade policy is more open towards the EU than vice versa, and Georgia has achieved governance reforms on a par with some of the old and new EU member states. On the other hand, the Commission is insisting on a complex set of preconditions being met before the opening of negotiations, which it has not done in the case of other neighbouring countries (Eastern or Southern). Taking both factors into account, the Commission’s approach is strikingly anomalous."
"The EU severe debt problem requires urgently the design and implementation of domestic pro-growt... more "The EU severe debt problem requires urgently the design and implementation of domestic pro-growth reform agendas in Europe. Opening markets to foreign competitors has always been a way to boost and buttress such agendas. A “Sleeping Doha” Round leaves preferential trade agreements (PTAs) as the only channel for opening markets to foreign competition. In this context, this paper examines two questions: do the PTAs currently negotiated by the EU fit well the EU quest for growth? If not, what would be the appropriate PTAs?
Looking at the potential sources of growth in the world during the next decades provides a first lesson. The EU needs a profound change of mind and approach in its international relations because its economic weight will decline dramatically and rapidly. Its current share in the world GDP (25 percent) will be cut by half by 2030 and by three by 2050. The cliché “the EU is the biggest global player in international trade and investment” has lost any credibility.
PTAs can satisfy the EU urgent quest for growth only if the EU partner fulfills three conditions:
- it has to be big enough to have an impact on the EU economy;
- it has to be big enough in the immediate future, not in two or three decades from now, because the EU quest for growth is urgent;
- it has to have a regulatory framework good enough to induce the EU Member States to improve their own regulations, another powerful way to buttress and boost their domestic pro-reform agendas.
The PTAs that the EU is currently negotiating do not meet these conditions. Almost all of them involve partners that might be an useful source of growth but only in a too much distant future, and that lack deeply the regulatory quality needed. This situation is due to an intrinsic flaw in the current EU approach: it focuses on negotiations with countries highly protected in the hope to get large preferences – a hope that economic analysis shows to be illusory.
Leaving aside the United States, the paper shows that, today, only two economies meet the three conditions mentioned above: Japan and Taiwan (Korea has already a PTA with the EU). Negotiations with these two economies should thus be launched and concluded as quickly as possible."
"Tough times are expected in the year(s) to come, but focusing entirely on public and private bud... more "Tough times are expected in the year(s) to come, but focusing entirely on public and private budget cuts is not a politically sustainable policy. On top of its direct impoverishing impact, austerity has an indirect impact, which is very corrosive in the long run for consumers. It induces producers of goods and services to retreat to their home markets, reducing the level of competition in the markets they left behind.
There is thus an urgent need to build a pro-growth agenda, for which the services sector is the best candidate, since it accounts for 60-70 percent of the G20 GDP. Such an agenda means reforms: in order to take the right decisions when redesigning their strategies, service providers need clarity and
predictability on how their markets will operate.
History shows that introducing pro-growth domestic reforms is hugely bolstered by opening — or reopening — domestic markets to foreign competitors.
This is why a “sleeping” Doha is not a reason for not starting negotiations now on how to improve market access in services. This paper argues that the two largest world economies, the United States and the EU, should launch bilateral negotiations on services. The expected gains for consumers and the opportunities for service providers are huge in both sides of the Atlantic because their services sectors are likewise huge and because the protection still prevailing in many services areas is still high.
Potential gains come from three sources:
• cutting the currently applied barriers on market entry;
• lowering the U.S. and EU bound commitments on services liberalization dating from the Uruguay Round to the level of the (much) lower barriers actually in force today, a source of invaluable certainty in a crisis plagued by so much uncertainty; and
• “defragmenting” the EU internal market by opening the markets of the most protectionist EU Member States to competition from the United States and from the other EU Member States — and vice-versa for the U.S. “internal market.”
In this context, this paper gives a sense of the services for which some “willingness to negotiate” could be targeted for moving ahead. Transatlantic negotiations on services are likely to generate dynamics that will go beyond the United States and the EU. It would be relatively costless and highly beneficial to extend these talks to roughly eight countries — a group small
enough to kee p negotiations manageable and large enough to ensure that more than 80 percent of world production in services would be covered in the negotiations. Shifting from bilateral to such plurilateral negotiations would be attractive for all the participants because these eight additional countries have a service sector equal to the size of the EU or U.S. markets, with a level of protection similar or higher.
These powerful dynamics justify the complications inherent in extending bilateral transatlantic services negotiations to include a limited number of other countries because such a move would reduce the risk of distortions that a purely transatlantic deal would create, and because, ultimately, such an initiative would open the door to multilateral negotiations in services when the time comes. The United States and the EU are the “obvious” candidates to launch a liberalization process.
This may not be necessarily the case, however. Alternatives are emerging from transpacific initiatives in services to East-Asia initiatives to The German Marshall Fund of the United States
Asia-Europe initiatives. All these options share one common feature: as soon as one of these dialogs takes off, dynamic forces will induce the nonparticipating largest economies to join the ongoing talks. In other words, the starting point of the whole negotiating process may be different, but the dynamic effects will be the same. This is not so surprising. After all, it echoes very well the history of the last two centuries of international trade liberalization."
"The paper examines four aspects of the world trade under a Comatose Doha that could last for som... more "The paper examines four aspects of the world trade under a Comatose Doha that could last for some time. First, it examines the situation of the developing countries in the near future. All the developing countries which would freeze their liberalization process will loose. The small developing countries turning to preferential trade agreements (PTAs) will face much more difficult negotiations with the large (developed or developing) countries. Large developing countries will not be necessarily in a better situation, as illustrated by China which will have hard time to find partners willing to conclude PTAs with it. Only a few former developing countries (Korea, Chile, Taiwan) have already found alternatives to a Comatose Doha by concluding PTAs with the large economies. For instance, Korea has secured to its firms access to 77 percent of the world markets.
Second, the ongoing EU EPAs will also suffer from a Comatose Doha. The intrinsic flaws which are making the EPAs with the ACP countries costly to the ACPs will be amplified by the absence of a Doha Round. The EPAs with Asia (India) and Latin America (Brazil) do not target partners helpful to the debt-ridden, growth starving EU. These partners are too small (and will not be large enough before the 2030s), have deep-rooted protectionist instincts and are far to be the best regulated countries in the world – all features that make them unable to boost EU growth. The partners that the EU should target are the US, Japan and Taiwan, the only large enough, open enough and well regulated enough economies to boost fast enough EU growth.
Third, a EU development-friendly trade policy should take the Treaty of Rome as a model. The Treaty was very ambitious. It coped with the wide differences of income among the EU regions by fragmenting its huge liberalization programme in a carefully designed sequencing of phases. A sequencing of phases based on focus, progressivity and best negotiating techniques is key for making future EU PTAs development-friendly. In this context, the paper develops three themes:
-focus is ensured by defining the core content of a development-friendly PTA;
- progressivity is ensured by making the sequence of implementation conditional on some partner’s objective and economically sound features, such as threshold of its GDP per capita and/or its size.
- some negotiating techniques have proven to be much better than others in terms of favoring growth and diversification.
Finally, at the WTO level, reform is not a credible option. Rather the WTO should exploit its capacities to be a quiet forum of discussions for addressing some promising trade issues (trade facilitation, binding commitments negotiated in other for a, etc.) and for building coalitions of convergent interests looking for a better multilateral regime in trade, climate, water, fisheries, etc."
"This paper first tries to assess the discriminatory impact the “Trans-Pacific Partnership” (TPP)... more "This paper first tries to assess the discriminatory impact the “Trans-Pacific Partnership” (TPP) agreement could have on the EU economy. It demonstrates that the impact will be dramatic if the TPP agreement reaches its priority goal—to reduce or abolish “behind the border” barriers.
This situation leaves the EU with only two options.
First option consists in doing nothing. It is a very costly option from the very beginning, as East Asian economies are already quite large, particularly thanks to Japan. More importantly, the cost of this option will keep rising because EU’s weight will drop dramatically worldwide (it shall be cut by half during the next two decades) while the East Asian weight will keep rising. To refuse opening EU markets to East Asian products today will only cut the EU from what will be the world most important markets in twenty years from now. And threatening to close the EU markets as a leverage to open non-EU markets—as was recently suggested in the public procurement sector—lacks credibility because the relative magnitude of public procurement markets follows GDP’s. As a result, the EU threat gets weaker everyday, whereas it could inspire EU East Asian partners to make a similar threat, which would gain strength every day.
The second option consists in reaching rapidly a preferential trade agreement (PTA), first with Japan and then with Taiwan. Japan is the only country (except the US) to be large enough to boost the EU’s debt ridden economy in a dire need for growth. As a result, it offers what neither Brazil, nor India or Russia could offer. Taiwan is a more important economy than it first seems, if one takes into account its massive activities in China’s mainland—Taiwan then “weighs” half of India, is much better regulated and is not reluctant to open its economy. Last but not least, concluding PTAs with Japan and Taiwan is not only an “insurance” policy against the TPP, but it also allows the EU to boost the development of Europe, East Asia, and global trade.
This paper finally presents the key principles on which these two PTAs should be negotiated in order to ensure the best possible compromises between these agreements’ ambition to have a real economic impact on the EU economy and the required flexibility to implement them gradually and harmoniously."
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Papers by Patrick Messerlin
by trade issues; a severe lack of appropriate institutions. It then defines the principles that any North Korean trade policy should follow for addressing these challenges: non-discrimination in
terms of goods (the same tariff on every product) is best for revealing North Korean comparative advantages; non-discrimination in terms of countries (“most favored-nation”) reduces as much as possible political tensions; an effort to find substitutes as costless as possible is the best answer to the
lack of the appropriate institutions required by a modern trade policy. Section 2 examines North Korean trade policy as negotiating tactics which are subjected to the strict constraint of the denuclearization issue. It first looks at the costs of non-accession to the WTO in the absence of a solution to the de
nuclearization issue. It then turns to the establishment of normal trade relations with North Korean major trading partners, in
particular the US, once the denuclearization issue will start to get a satisfactory solution. Lastly, it briefly reviews a few points of WTO accession once the final solution of the denuclearization issue is met.
WTO does not seem the best place to negotiate in a substantial manner about regulatory issues—be technical norms in goods, regulations shaping services markets (trade and investment) intellectual property rights, and to some extent public procurement.
All the WTO Members do not face this ambiguous situation in a similar fashion. Developed and a few emerging economies (such as China) which have reduced substantially their tariffs are mostly interested in addressing barriers associated to regulatory issues—in particular the barriers in services which constitute the lion’s share of modern economies. These WTO Members are not very much concerned by the WTO current incapacity to host negotiations on tariff cuts. By contrast, most developing and the rest of the emerging economies (such as India) which have still substantial tariffs have a lot to lose from an economic point of view from the freeze of the Doha negotiations.
Pourtant, depuis la mini-Ministérielle de juin 2008, l’OMC a perdu son rôle de forum de négociations—mais elle garde celui en matière de règlement des différends. Le Doha Round est au point mort, pour longtemps peut-être. Les raisons de cette situation sont à chercher dans le formidable basculement géopolitique
en cours entre les Etats-Unis, l’Europe et l’Asie-Pacifique, non pas dans les relations commerciales per se. Le gel du Doha Round n’est qu’un des effets de cette mutation en cours, laquelle touche tout autant des sujets aussi divers que le changement climatique, l’approvisionnement en eau ou la lutte pour plus de croissance en Afrique.
1 Les ‘méga-zones préférentielles de libre-échange’ (MZLE), qui représentent des parts considérables de l’activité économique mondiale, semblent devenir la base du nouveau régime du commerce international. Cette note présente une vue d’ensemble de ce contexte dans lequel s’inscrivent les
négociations du Partenariat Transatlantique de Commerce et
d’Investissement (PTCI). La section 1 décrit l’état des lieux, à savoir le PTCI et les autres principales MZLE en cours de négociation et leurs motivations. La section 2 présente le contenu type de tels accords ‘préférentiels’ de libre-échange, en prenant l’exemple de l’accord entre la Corée du Sud et l’Union Eu
ropéenne (UE). Elle fait ensuite un bref tour d’horizon des sujets les plus ‘sensibles’, en particulier lors des négociations transatlantiques : les négligés, les hérités du passé, les émergent
s (sans doute les plus difficiles à maîtriser). Enfin la section 3 examine les différentes techniques de négociation—celles qui n’ont guère donné de résultats satisfaisants mais qui continuent d’être utilisées par pure routine, et celles qui sont prometteuses mais qui restent à développer. Le PTCI, comme les autres MZLE, ne sera un succès que s’il fait usage de ces techniques prometteuses. "
The paper provides robust evidence that the EU public procurement markets are definitely not more open than those of its main partners. It first shows that, when one compares what is comparable, the impact assessment working document on which the Directive proposal relies fails to support the EU claim. Moreover, the paper provides a robust and exhaustive evidence (based on National Accounts) of the fact that the EU public procurement markets are often less open than those of its main partners.
The paper goes on to argue that the threat of the “reciprocity” clause is not credible for three, cumulative, reasons. The public procurement markets of some of the EU partners are rapidly becoming bigger than those of the whole EU or than those of the largest EU Member States – meaning that EU firms will lose more than partner firms in the case of reciprocity-based measures and that it will be difficult to build strong coalitions among EU Member States for generating credible threats. The paper also argues that the “reciprocity” clause is prone to “privatisation” by a few large and powerful firms— tothe detriment of all the other EU firms, with likely net costs for the entire economy of the EU Member States.
The paper provides two other interesting observations. First, it gives evidence suggesting that the Internal Market in public procurement does not work well. Second, it shows that negotiations in the context of preferential trade agreements (with Japan, the US, Taiwan, etc. ) are a much more promising way to improve EU firms’ access to foreign public procurement markets than the reciprocity clause. In addition, such negotiations, if well-conceived, would enormously help the EU to improve the functioning of its own Internal Market."
Asia based on concluding ambitious PTAs with these two economies as quickly as possible.
Another consequence of the Doha failure is to induce other large economies to create “mega” PTAs--the Trans Pacific Partnership (TPP) led by the US and the China-Japan-Korea (CJK) agreement. For the EU, the only way to insure its firms against the risks of
discriminations from these mega-PTAs is also to conclude a PTA with Japan (insuring against the TPP) and with Taiwan (insuring against the CJK).
Finally, managing a resolute EU pivoting to East Asia raises a series of problems. Those involving a few major EU trading partners--the US, China, Korea, Brazil and India-are examined."
The case of Georgia is unique in two respects. On the one hand,
Georgia’s own trade policy is more open towards the EU than vice versa, and Georgia has achieved governance reforms on a par with some of the old and new EU member states. On the other hand, the Commission is insisting on a complex set of preconditions being met before the opening of negotiations, which it has not done in the case of other neighbouring countries (Eastern or Southern). Taking both factors into account, the Commission’s approach is strikingly anomalous."
Looking at the potential sources of growth in the world during the next decades provides a first lesson. The EU needs a profound change of mind and approach in its international relations because its economic weight will decline dramatically and rapidly. Its current share in the world GDP (25 percent) will be cut by half by 2030 and by three by 2050. The cliché “the EU is the biggest global player in international trade and investment” has lost any credibility.
PTAs can satisfy the EU urgent quest for growth only if the EU partner fulfills three conditions:
- it has to be big enough to have an impact on the EU economy;
- it has to be big enough in the immediate future, not in two or three decades from now, because the EU quest for growth is urgent;
- it has to have a regulatory framework good enough to induce the EU Member States to improve their own regulations, another powerful way to buttress and boost their domestic pro-reform agendas.
The PTAs that the EU is currently negotiating do not meet these conditions. Almost all of them involve partners that might be an useful source of growth but only in a too much distant future, and that lack deeply the regulatory quality needed. This situation is due to an intrinsic flaw in the current EU approach: it focuses on negotiations with countries highly protected in the hope to get large preferences – a hope that economic analysis shows to be illusory.
Leaving aside the United States, the paper shows that, today, only two economies meet the three conditions mentioned above: Japan and Taiwan (Korea has already a PTA with the EU). Negotiations with these two economies should thus be launched and concluded as quickly as possible."
There is thus an urgent need to build a pro-growth agenda, for which the services sector is the best candidate, since it accounts for 60-70 percent of the G20 GDP. Such an agenda means reforms: in order to take the right decisions when redesigning their strategies, service providers need clarity and
predictability on how their markets will operate.
History shows that introducing pro-growth domestic reforms is hugely bolstered by opening — or reopening — domestic markets to foreign competitors.
This is why a “sleeping” Doha is not a reason for not starting negotiations now on how to improve market access in services. This paper argues that the two largest world economies, the United States and the EU, should launch bilateral negotiations on services. The expected gains for consumers and the opportunities for service providers are huge in both sides of the Atlantic because their services sectors are likewise huge and because the protection still prevailing in many services areas is still high.
Potential gains come from three sources:
• cutting the currently applied barriers on market entry;
• lowering the U.S. and EU bound commitments on services liberalization dating from the Uruguay Round to the level of the (much) lower barriers actually in force today, a source of invaluable certainty in a crisis plagued by so much uncertainty; and
• “defragmenting” the EU internal market by opening the markets of the most protectionist EU Member States to competition from the United States and from the other EU Member States — and vice-versa for the U.S. “internal market.”
In this context, this paper gives a sense of the services for which some “willingness to negotiate” could be targeted for moving ahead. Transatlantic negotiations on services are likely to generate dynamics that will go beyond the United States and the EU. It would be relatively costless and highly beneficial to extend these talks to roughly eight countries — a group small
enough to kee p negotiations manageable and large enough to ensure that more than 80 percent of world production in services would be covered in the negotiations. Shifting from bilateral to such plurilateral negotiations would be attractive for all the participants because these eight additional countries have a service sector equal to the size of the EU or U.S. markets, with a level of protection similar or higher.
These powerful dynamics justify the complications inherent in extending bilateral transatlantic services negotiations to include a limited number of other countries because such a move would reduce the risk of distortions that a purely transatlantic deal would create, and because, ultimately, such an initiative would open the door to multilateral negotiations in services when the time comes. The United States and the EU are the “obvious” candidates to launch a liberalization process.
This may not be necessarily the case, however. Alternatives are emerging from transpacific initiatives in services to East-Asia initiatives to The German Marshall Fund of the United States
Asia-Europe initiatives. All these options share one common feature: as soon as one of these dialogs takes off, dynamic forces will induce the nonparticipating largest economies to join the ongoing talks. In other words, the starting point of the whole negotiating process may be different, but the dynamic effects will be the same. This is not so surprising. After all, it echoes very well the history of the last two centuries of international trade liberalization."
Second, the ongoing EU EPAs will also suffer from a Comatose Doha. The intrinsic flaws which are making the EPAs with the ACP countries costly to the ACPs will be amplified by the absence of a Doha Round. The EPAs with Asia (India) and Latin America (Brazil) do not target partners helpful to the debt-ridden, growth starving EU. These partners are too small (and will not be large enough before the 2030s), have deep-rooted protectionist instincts and are far to be the best regulated countries in the world – all features that make them unable to boost EU growth. The partners that the EU should target are the US, Japan and Taiwan, the only large enough, open enough and well regulated enough economies to boost fast enough EU growth.
Third, a EU development-friendly trade policy should take the Treaty of Rome as a model. The Treaty was very ambitious. It coped with the wide differences of income among the EU regions by fragmenting its huge liberalization programme in a carefully designed sequencing of phases. A sequencing of phases based on focus, progressivity and best negotiating techniques is key for making future EU PTAs development-friendly. In this context, the paper develops three themes:
-focus is ensured by defining the core content of a development-friendly PTA;
- progressivity is ensured by making the sequence of implementation conditional on some partner’s objective and economically sound features, such as threshold of its GDP per capita and/or its size.
- some negotiating techniques have proven to be much better than others in terms of favoring growth and diversification.
Finally, at the WTO level, reform is not a credible option. Rather the WTO should exploit its capacities to be a quiet forum of discussions for addressing some promising trade issues (trade facilitation, binding commitments negotiated in other for a, etc.) and for building coalitions of convergent interests looking for a better multilateral regime in trade, climate, water, fisheries, etc."
This situation leaves the EU with only two options.
First option consists in doing nothing. It is a very costly option from the very beginning, as East Asian economies are already quite large, particularly thanks to Japan. More importantly, the cost of this option will keep rising because EU’s weight will drop dramatically worldwide (it shall be cut by half during the next two decades) while the East Asian weight will keep rising. To refuse opening EU markets to East Asian products today will only cut the EU from what will be the world most important markets in twenty years from now. And threatening to close the EU markets as a leverage to open non-EU markets—as was recently suggested in the public procurement sector—lacks credibility because the relative magnitude of public procurement markets follows GDP’s. As a result, the EU threat gets weaker everyday, whereas it could inspire EU East Asian partners to make a similar threat, which would gain strength every day.
The second option consists in reaching rapidly a preferential trade agreement (PTA), first with Japan and then with Taiwan. Japan is the only country (except the US) to be large enough to boost the EU’s debt ridden economy in a dire need for growth. As a result, it offers what neither Brazil, nor India or Russia could offer. Taiwan is a more important economy than it first seems, if one takes into account its massive activities in China’s mainland—Taiwan then “weighs” half of India, is much better regulated and is not reluctant to open its economy. Last but not least, concluding PTAs with Japan and Taiwan is not only an “insurance” policy against the TPP, but it also allows the EU to boost the development of Europe, East Asia, and global trade.
This paper finally presents the key principles on which these two PTAs should be negotiated in order to ensure the best possible compromises between these agreements’ ambition to have a real economic impact on the EU economy and the required flexibility to implement them gradually and harmoniously."
by trade issues; a severe lack of appropriate institutions. It then defines the principles that any North Korean trade policy should follow for addressing these challenges: non-discrimination in
terms of goods (the same tariff on every product) is best for revealing North Korean comparative advantages; non-discrimination in terms of countries (“most favored-nation”) reduces as much as possible political tensions; an effort to find substitutes as costless as possible is the best answer to the
lack of the appropriate institutions required by a modern trade policy. Section 2 examines North Korean trade policy as negotiating tactics which are subjected to the strict constraint of the denuclearization issue. It first looks at the costs of non-accession to the WTO in the absence of a solution to the de
nuclearization issue. It then turns to the establishment of normal trade relations with North Korean major trading partners, in
particular the US, once the denuclearization issue will start to get a satisfactory solution. Lastly, it briefly reviews a few points of WTO accession once the final solution of the denuclearization issue is met.
WTO does not seem the best place to negotiate in a substantial manner about regulatory issues—be technical norms in goods, regulations shaping services markets (trade and investment) intellectual property rights, and to some extent public procurement.
All the WTO Members do not face this ambiguous situation in a similar fashion. Developed and a few emerging economies (such as China) which have reduced substantially their tariffs are mostly interested in addressing barriers associated to regulatory issues—in particular the barriers in services which constitute the lion’s share of modern economies. These WTO Members are not very much concerned by the WTO current incapacity to host negotiations on tariff cuts. By contrast, most developing and the rest of the emerging economies (such as India) which have still substantial tariffs have a lot to lose from an economic point of view from the freeze of the Doha negotiations.
Pourtant, depuis la mini-Ministérielle de juin 2008, l’OMC a perdu son rôle de forum de négociations—mais elle garde celui en matière de règlement des différends. Le Doha Round est au point mort, pour longtemps peut-être. Les raisons de cette situation sont à chercher dans le formidable basculement géopolitique
en cours entre les Etats-Unis, l’Europe et l’Asie-Pacifique, non pas dans les relations commerciales per se. Le gel du Doha Round n’est qu’un des effets de cette mutation en cours, laquelle touche tout autant des sujets aussi divers que le changement climatique, l’approvisionnement en eau ou la lutte pour plus de croissance en Afrique.
1 Les ‘méga-zones préférentielles de libre-échange’ (MZLE), qui représentent des parts considérables de l’activité économique mondiale, semblent devenir la base du nouveau régime du commerce international. Cette note présente une vue d’ensemble de ce contexte dans lequel s’inscrivent les
négociations du Partenariat Transatlantique de Commerce et
d’Investissement (PTCI). La section 1 décrit l’état des lieux, à savoir le PTCI et les autres principales MZLE en cours de négociation et leurs motivations. La section 2 présente le contenu type de tels accords ‘préférentiels’ de libre-échange, en prenant l’exemple de l’accord entre la Corée du Sud et l’Union Eu
ropéenne (UE). Elle fait ensuite un bref tour d’horizon des sujets les plus ‘sensibles’, en particulier lors des négociations transatlantiques : les négligés, les hérités du passé, les émergent
s (sans doute les plus difficiles à maîtriser). Enfin la section 3 examine les différentes techniques de négociation—celles qui n’ont guère donné de résultats satisfaisants mais qui continuent d’être utilisées par pure routine, et celles qui sont prometteuses mais qui restent à développer. Le PTCI, comme les autres MZLE, ne sera un succès que s’il fait usage de ces techniques prometteuses. "
The paper provides robust evidence that the EU public procurement markets are definitely not more open than those of its main partners. It first shows that, when one compares what is comparable, the impact assessment working document on which the Directive proposal relies fails to support the EU claim. Moreover, the paper provides a robust and exhaustive evidence (based on National Accounts) of the fact that the EU public procurement markets are often less open than those of its main partners.
The paper goes on to argue that the threat of the “reciprocity” clause is not credible for three, cumulative, reasons. The public procurement markets of some of the EU partners are rapidly becoming bigger than those of the whole EU or than those of the largest EU Member States – meaning that EU firms will lose more than partner firms in the case of reciprocity-based measures and that it will be difficult to build strong coalitions among EU Member States for generating credible threats. The paper also argues that the “reciprocity” clause is prone to “privatisation” by a few large and powerful firms— tothe detriment of all the other EU firms, with likely net costs for the entire economy of the EU Member States.
The paper provides two other interesting observations. First, it gives evidence suggesting that the Internal Market in public procurement does not work well. Second, it shows that negotiations in the context of preferential trade agreements (with Japan, the US, Taiwan, etc. ) are a much more promising way to improve EU firms’ access to foreign public procurement markets than the reciprocity clause. In addition, such negotiations, if well-conceived, would enormously help the EU to improve the functioning of its own Internal Market."
Asia based on concluding ambitious PTAs with these two economies as quickly as possible.
Another consequence of the Doha failure is to induce other large economies to create “mega” PTAs--the Trans Pacific Partnership (TPP) led by the US and the China-Japan-Korea (CJK) agreement. For the EU, the only way to insure its firms against the risks of
discriminations from these mega-PTAs is also to conclude a PTA with Japan (insuring against the TPP) and with Taiwan (insuring against the CJK).
Finally, managing a resolute EU pivoting to East Asia raises a series of problems. Those involving a few major EU trading partners--the US, China, Korea, Brazil and India-are examined."
The case of Georgia is unique in two respects. On the one hand,
Georgia’s own trade policy is more open towards the EU than vice versa, and Georgia has achieved governance reforms on a par with some of the old and new EU member states. On the other hand, the Commission is insisting on a complex set of preconditions being met before the opening of negotiations, which it has not done in the case of other neighbouring countries (Eastern or Southern). Taking both factors into account, the Commission’s approach is strikingly anomalous."
Looking at the potential sources of growth in the world during the next decades provides a first lesson. The EU needs a profound change of mind and approach in its international relations because its economic weight will decline dramatically and rapidly. Its current share in the world GDP (25 percent) will be cut by half by 2030 and by three by 2050. The cliché “the EU is the biggest global player in international trade and investment” has lost any credibility.
PTAs can satisfy the EU urgent quest for growth only if the EU partner fulfills three conditions:
- it has to be big enough to have an impact on the EU economy;
- it has to be big enough in the immediate future, not in two or three decades from now, because the EU quest for growth is urgent;
- it has to have a regulatory framework good enough to induce the EU Member States to improve their own regulations, another powerful way to buttress and boost their domestic pro-reform agendas.
The PTAs that the EU is currently negotiating do not meet these conditions. Almost all of them involve partners that might be an useful source of growth but only in a too much distant future, and that lack deeply the regulatory quality needed. This situation is due to an intrinsic flaw in the current EU approach: it focuses on negotiations with countries highly protected in the hope to get large preferences – a hope that economic analysis shows to be illusory.
Leaving aside the United States, the paper shows that, today, only two economies meet the three conditions mentioned above: Japan and Taiwan (Korea has already a PTA with the EU). Negotiations with these two economies should thus be launched and concluded as quickly as possible."
There is thus an urgent need to build a pro-growth agenda, for which the services sector is the best candidate, since it accounts for 60-70 percent of the G20 GDP. Such an agenda means reforms: in order to take the right decisions when redesigning their strategies, service providers need clarity and
predictability on how their markets will operate.
History shows that introducing pro-growth domestic reforms is hugely bolstered by opening — or reopening — domestic markets to foreign competitors.
This is why a “sleeping” Doha is not a reason for not starting negotiations now on how to improve market access in services. This paper argues that the two largest world economies, the United States and the EU, should launch bilateral negotiations on services. The expected gains for consumers and the opportunities for service providers are huge in both sides of the Atlantic because their services sectors are likewise huge and because the protection still prevailing in many services areas is still high.
Potential gains come from three sources:
• cutting the currently applied barriers on market entry;
• lowering the U.S. and EU bound commitments on services liberalization dating from the Uruguay Round to the level of the (much) lower barriers actually in force today, a source of invaluable certainty in a crisis plagued by so much uncertainty; and
• “defragmenting” the EU internal market by opening the markets of the most protectionist EU Member States to competition from the United States and from the other EU Member States — and vice-versa for the U.S. “internal market.”
In this context, this paper gives a sense of the services for which some “willingness to negotiate” could be targeted for moving ahead. Transatlantic negotiations on services are likely to generate dynamics that will go beyond the United States and the EU. It would be relatively costless and highly beneficial to extend these talks to roughly eight countries — a group small
enough to kee p negotiations manageable and large enough to ensure that more than 80 percent of world production in services would be covered in the negotiations. Shifting from bilateral to such plurilateral negotiations would be attractive for all the participants because these eight additional countries have a service sector equal to the size of the EU or U.S. markets, with a level of protection similar or higher.
These powerful dynamics justify the complications inherent in extending bilateral transatlantic services negotiations to include a limited number of other countries because such a move would reduce the risk of distortions that a purely transatlantic deal would create, and because, ultimately, such an initiative would open the door to multilateral negotiations in services when the time comes. The United States and the EU are the “obvious” candidates to launch a liberalization process.
This may not be necessarily the case, however. Alternatives are emerging from transpacific initiatives in services to East-Asia initiatives to The German Marshall Fund of the United States
Asia-Europe initiatives. All these options share one common feature: as soon as one of these dialogs takes off, dynamic forces will induce the nonparticipating largest economies to join the ongoing talks. In other words, the starting point of the whole negotiating process may be different, but the dynamic effects will be the same. This is not so surprising. After all, it echoes very well the history of the last two centuries of international trade liberalization."
Second, the ongoing EU EPAs will also suffer from a Comatose Doha. The intrinsic flaws which are making the EPAs with the ACP countries costly to the ACPs will be amplified by the absence of a Doha Round. The EPAs with Asia (India) and Latin America (Brazil) do not target partners helpful to the debt-ridden, growth starving EU. These partners are too small (and will not be large enough before the 2030s), have deep-rooted protectionist instincts and are far to be the best regulated countries in the world – all features that make them unable to boost EU growth. The partners that the EU should target are the US, Japan and Taiwan, the only large enough, open enough and well regulated enough economies to boost fast enough EU growth.
Third, a EU development-friendly trade policy should take the Treaty of Rome as a model. The Treaty was very ambitious. It coped with the wide differences of income among the EU regions by fragmenting its huge liberalization programme in a carefully designed sequencing of phases. A sequencing of phases based on focus, progressivity and best negotiating techniques is key for making future EU PTAs development-friendly. In this context, the paper develops three themes:
-focus is ensured by defining the core content of a development-friendly PTA;
- progressivity is ensured by making the sequence of implementation conditional on some partner’s objective and economically sound features, such as threshold of its GDP per capita and/or its size.
- some negotiating techniques have proven to be much better than others in terms of favoring growth and diversification.
Finally, at the WTO level, reform is not a credible option. Rather the WTO should exploit its capacities to be a quiet forum of discussions for addressing some promising trade issues (trade facilitation, binding commitments negotiated in other for a, etc.) and for building coalitions of convergent interests looking for a better multilateral regime in trade, climate, water, fisheries, etc."
This situation leaves the EU with only two options.
First option consists in doing nothing. It is a very costly option from the very beginning, as East Asian economies are already quite large, particularly thanks to Japan. More importantly, the cost of this option will keep rising because EU’s weight will drop dramatically worldwide (it shall be cut by half during the next two decades) while the East Asian weight will keep rising. To refuse opening EU markets to East Asian products today will only cut the EU from what will be the world most important markets in twenty years from now. And threatening to close the EU markets as a leverage to open non-EU markets—as was recently suggested in the public procurement sector—lacks credibility because the relative magnitude of public procurement markets follows GDP’s. As a result, the EU threat gets weaker everyday, whereas it could inspire EU East Asian partners to make a similar threat, which would gain strength every day.
The second option consists in reaching rapidly a preferential trade agreement (PTA), first with Japan and then with Taiwan. Japan is the only country (except the US) to be large enough to boost the EU’s debt ridden economy in a dire need for growth. As a result, it offers what neither Brazil, nor India or Russia could offer. Taiwan is a more important economy than it first seems, if one takes into account its massive activities in China’s mainland—Taiwan then “weighs” half of India, is much better regulated and is not reluctant to open its economy. Last but not least, concluding PTAs with Japan and Taiwan is not only an “insurance” policy against the TPP, but it also allows the EU to boost the development of Europe, East Asia, and global trade.
This paper finally presents the key principles on which these two PTAs should be negotiated in order to ensure the best possible compromises between these agreements’ ambition to have a real economic impact on the EU economy and the required flexibility to implement them gradually and harmoniously."