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Globalisation and Economic Growth in China

In a new Series on Economic Development and Growth, ECIPE Director Razeen Sally and other experts discuss the effects of globalisation on China's growth prospects and of China's growth on the wider economy. Razeen Sally participates with a chapter about China's Trade Policies in Wider Asian Perspective.

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New Jan Tumlir Policy Essay - Assessing the EC Trade Policy in Goods

The recent shift in European trade policy to bilateral agreements is taking Europe into dangerous waters. It is not only a risk of creating a “spaghetti bowl” of bilaterals. All the bilateral agreements envisaged by the EC may turn into a system of “electron colliders”: the bilaterals are so many that they clash against each other. Europe should reorient its trade strategy in accordance with its multilateral ambitions and table realistic proposals for the Doha Round.

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European Union Policy towards Free Trade Agreements

The European Union has recently shifted to a trade policy that envisages a greater use of Free Trade Agreements. At the moment the EU is working on a number of FTA initiatives with Central America, ASEAN, India and is negotiation an FTA with South Korea. In a new ECIPE Working Paper, Dr. Stephen Woolcock discusses the motivations for the shift towards a more active use of FTAs and whether the EU can reconcile this greater emphasis on bilateral FTAs with its commitment to multilateralism in trade.

Rome Treaty at 50

The Rome Treaty celebrates its 50th anniversary this year. In a recent ECIPE Policy Brief Fredrik Erixon, Andreas Freytag and Gernot Pehnelt assess the role of the Rome Treaty theme of closer economic integration in a wider context of globalisation and the world economy.

Razeen Sally contributed with a chapter - "Europe in the world: Trade and globalisation" - in a new book European Union: the Next Fifty Years to mark the 50th Anniversary of the Treaty of Rome. In his chapter Dr. Sally suggests a new European Transparency Board with statutory powers to scrutinize EU regulations.

Portugal's EU Presidency

Portugal has launched a promising programme for its EU Presidency. EU-Africa relations will be at the centre and Peter Draper has recently given an overview of the faltering EPA negotiations between the two continents. It is crunch time for the review of EU’s Trade Defence Instruments, which Brian Hindley commented in a recent Policy Brief. Portugal has set out to revive the Lisbon Agenda, but Fredrik Erixon argues in a new article that this agenda would not yield much growth unless it streamlines policies and is expanded.

EU-Asia Trade Negotiations

The European Union has recently started negotiations with Korea about a new Free Trade Agreement and will soon embark on FTA negotiations with India and the ASEAN countries. Razeen Sally analyses trade policy in Asia in an ECIPE Policy Brief and assesses regional integration in Asia in an ECIPE Working Paper.

EU China Economic Relations

China is now Europe’s second trading partner. It is a tremendous opportunity for European investors and services. Yet commercial and political relations are tense. Protectionist sentiment is rising. Contentious issues run deep into domestic regulation on both sides. The EU wants to sign a partnership and cooperation agreement with China. Patrick Messerlin, at a recent ECIPE conference offered a fresh look at the reality of China: a new market almost the size of EU is taking shape. Razeen Sally in his latest paper explores ways of promoting EU-China cooperation outside formal trade negotiations.

The Future of the Doha Round

WTO countries did not agree on a Doha Round package before the expiry of the U.S. Trade Promotion Authority in the end of June. What should happen now? In a recent ECIPE paper, Patrick Messerlin argued for a remodeling of the Doha ambitions along the lines of "modest but clean". Razeen Sally gives a broad stock take of the problems of the Doha Round in the World Economics Journal and suggests a Nike strategy for trade liberalization in a recent paper.

Looking East: The European Union’s New Trade Negotiations in Asia

Europe has now joined the bandwagon of bilateral trade agreements in Asia. Ambitions are strong, yet the negotiations are fraught with problems. Also, the EU rhetoric on China gets shriller and the EU is putting at risk the efforts to form a strong trade and regulatory partnership with China.

In a new paper ECIPE Director Razeen Sally takes stock of current negotiations, EU policies towards China, and outlines a new strategy for better economic integration between Europe and Asia.

The G8 and the World Economy

In early June G8 leaders met Heiligendamm for its annual summit. In a recent Policy Brief, Fredrik Erixon and Andreas Freytag analyse the German agenda for its G-8 Presidency and discuss German policies for the world economy. Erixon and Freytag discuss the leitmotif of the summit agenda in an article for Frankfurter Allgemein Zeitung (only in German) and discuss G-8 policy coordination in articles for the Europe's World and Internationale Politik.

In advance of the G-8 Summit, ECIPE co-hosted a Berlin Roundtable Meeting with the G8 Research Group, University of Toronto, and the Friedrich Schiller University in Jena.

World Economy Challenges for 2008

The World Economic Forum gathered in Davos in the shadow of the global credit crunch. Crucial topics were the global economy, innovation and the shifting power equations of the world. Fredrik Erixon recently analysed innovation and emerging trade patterns in the world. Razeen Sally has set out a new structure for further trade integration with Asia; “China bashing” is certainly not the way forward. Gernot Pehnelt says globalisation has pushed down inflation and Meir Pugatch benchmarks approaches to intellectual property rights in trade agreements.

Inflation in times of globalisation

Inflation is looming again in the world economy. But we are far away from the dramatic inflation rates witnessed in the 1970s and until the early 1980s, when the current wave of globalization took off. In a recent paper, ECIPE Fellow Gernot Pehnelt shows that rising economic integration in OECD role played a significant role in bringing inflation rates down between 1980 and 2005. Can further international integration help stem current inflationary pressures?

Ways Forward for the Multilateral Trading System

The Warwick Commission published its report on "The Multilateral Trading System: Which Way Forward?" It says that consensus should no longer be a deal breaker in the World Trade Organization. ECIPE Senior Fellow Pierre Sauvé is member of the Commission. Similar conclusions are being drawn by other ECIPE scholars, such as highlighted in a recent panel at the World Trade Organization .

ECIPE Wins “Best New Think Tank Award”

ECIPE was awarded the “Best New Think Tank” award by the Stockholm Network at a recent ceremony in London. The Stockholm Network is a leading pan-European think tank. It offers a unique network of 130 think tanks across Europe providing access to high-level European policy thinking.

Kazakhstan’s Revealed Comparative Advantage Vis-À-Vis the EU-27

Kazakhstan is Central Asia’s biggest economy, and planning to join the World Trade Organization. More than four-fifths of its exports are hydrocarbons, and most of these go to the European Union. In his new working paper, Arastou Khatibi examines Kazakhstan’s competitiveness vis-à-vis world exports to the EU-27 and intra-exports between the EU-27 member countries. The analysis reveals that although Kazakhstan shows a revealed comparative advantage in a number of non-commodity sectors, its comparative advantage has been deteriorating in almost all these sectors.

Developing Countries in the World Trading System

Developing countries have increasingly geared up their participation in the world economy and trade policy. Roderick Abbott explores developing country participation in the WTO’s dispute settlement mechanism. Michael Finger takes stock of proposals on trade facilitation in the WTO negotiations. Razeen Sally calls for a rebalancing of trade policies in Asia. Peter Draper outlines the important issues in EU-Africa trade relations.

Kazakhstan’s Accession to the WTO: A Quantitive Assessment

In light of Kazakhstan’s interest to join the World Trade Organization (WTO), ECIPE Research Associate Arastou Khatibi ' s new Working Paper investigates the impact of the WTO accession on trade flows by using a standard gravity model. Khatibi argues that accession to the WTO involves a short run benefit from further reducing tariff and non-tariff barriers, and a long-term strategy that involves institutional reforms. The results indicate that, although Kazakhstan’s trade policy with its major partners is well in place, it still has weak market institutions, and gains from accession to the WTO will work best with complementary institutional reforms.

Kazakhstan and the World Economy: An Assessment of Kazakhstan’s Trade Policy and Pending Accession to the WTO

Kazakhstan has been negotiating accession to the WTO for twelve years, following a line of ex-Soviet states seeking membership. In this new, comprehensive study Brian Hindley presents a detailed analysis of Kazakhstan’s long accession process. WTO membership is a matter of economic strategy. For Kazakhstan though, legitimate geopolitical concerns have come into play as Russia has pushed for deepened regional economic integration while neglecting its own accession negotiations. But, Kazakhstan’s strategy of global economic integration would be better served by WTO membership than the regional alternative. Greater support from big WTO players such as the EU and the US could help the Kazakh government to accelerate accession without waiting for Russia.

So Alike and Yet so Different: A Comparison of the Uruguay Round and the Doha Round

As the first multilateral trade round to be conducted under the auspices of the WTO, the Doha Round is beginning to appear as protracted, complicated and politically controversial as the last round under the GATT – the Uruguay Round. In this essay Peter Kleen undertakes a substantive comparison of the Uruguay Round and the Doha Round, drawing insights and lessons for any future efforts to liberalize trade within the WTO. Covering the initiation and evolution, and the major players, he concludes that negotiating trade agreements must remain the raison d’être of the WTO.

Developing Countries, Globalization and Economic Reform

The momentum for economic openness has slowed down not only in developed but also in developing countries. In a recent paper Razeen Sally reminds us that “external liberalisation, as part of broad market-based reforms, has worked: countries that have become more open to the world economy have grown faster and become richer than those that have opened up less or remained closed. In a recent speech, Sally gave an overview of current trade and investment policies in the world’s largest emerging economies.

That Chinese “juggernaut” – should Europe really worry about its trade deficit with China?

China’s exchange-rate policy has been under attack in the last years, especially in the United States. Now the critique of Beijing’s policy is coming from Europe as well. In a new Policy Brief, Professor Andreas Freytag discusses EU-China trade relations in the context of China’s exchange-rate policy. Freytag scrutinizes the assumptions underlying the link between China’s exchange-rate policy and Europe’s rising bilateral deficit. Freytag finds this link tenuous, and argues that a bilateral deficit cannot prima facie be viewed as a problem when the overall current account of Europe largely is in balance.

An EU-China trade dialogue: a new policy framework to contain deteriorating trade relations

EU-China trade and economic relations have deteriorated. The rhetoric has become tougher on both sides. Increasingly hostile rhetoric and the danger of tit-for-tat protectionism are reason enough to establish a new process for bilateral trade relations. This Policy Brief assesses the opportunities to improve the souring economic relations between Europe and China offered by a new initiative to solve commercial problems and negotiate deeper integration: the EU-China High Level Trade and Economic Dialogue. The format of this dialogue is due to be announced in Beijing on the 24th of April 2008. In their paper, Iana Dreyer and Fredrik Erixon draw conclusions from a parallel US China Strategic Economic Dialogue launched in 2006. They analyse the risks and constraints under which the new EU-China Dialogue will operate.

EU-China Economic Relations

The EU and China launched a High Level Economic and Trade Dialogue to smoothen commercial and economic relations amid escalating political and economic tensions. Fredrik Erixon and Iana Dreyer discuss how to avoid the potential pitfalls of the proposed Dialogue. Patrick Messerlin and Jinhui Wang propose ways forward for the EU to reach a “small” as well as a “grand” bargain with China in future negotiations. Andreas Freytag undoes frequent assumptions on the EU's soaring commercial deficit with China.

Ways forward for the Doha Round?

The Doha Round is still in a rut. Reform fatigue is pervasive and does not support the process. Peter Kleen, by comparing the Doha Round with the Uruguay Round explores potential ways out of the stalemate. Patrick Messerlin proposed alternatives solutions for Europe’s offer in agriculture and explained how narrowing majorities in the world’s major democracies make decision-making in trade policies more difficult.

As part of our Ask the Expert series, Peter Kleen was asked three questions on how Doha could move forward. Find out more here.

Redesigning the European Union’s trade policy strategy towards China

The European Union’s recent trade-policy strategy towards China is ineffective and shortsighted. It focuses on bilateral market access and involves a strong U S-style confrontational stance. A redesign of the EU’s trade policy strategy is needed. In this paper, Europe’s leading trade scholar Patrick Messerlin and Jinghui Wang call for foresightedness in the European Union’s policies towards China. It reviews the EU’s strategy and proposes concrete policy options that will allow it to more effectively promote its commercial interests in China, by focusing on topics that will draw support from Chinese interests and bring greater economic benefits for both parties. Messerlin and Wang conclude by looking at the EU trade policy towards China in a truly global context and calls for the involvement of the U S, Japan and, most important, medium-sized economies as key partners.

European Trade Policy - Getting the Priorities Right with China

With the launch of the High Level Trade and Economic Dialogue, are EU policies towards China going in the right direction? Patrick Messerlin and Jinghui Wang argue that these policies need to be redesigned with focus on market openings that bring real long-term economic benefits and could draw support from interest groups within China. Along with Andreas Freytag , they also argue that the current obsession with the bilateral trade deficit is misguided, and is rather a matter of macroeconomic policy. The Dialogue mechanism itself could end up being an empty talkfest if the constraints and agenda are not set right, argue Iana Dreyer and Fredrik Erixon.

Kazakhstan in the world trading system

Despite its strategic significance, Central Asia has not received much attention in trade policy. ECIPE has recently undertaken comprehensive research on Kazakhstan, a key country in the region that is aspiring to join the WTO. Brian Hindley's publication gives an in-depth analysis of Kazakhtstan’s economic integration in the world economy. Arastou Khatibi calculated the benefits of Kazakhstan’s WTO accession and its comparative advantage vis-à-vis the EU.
A recent conference with the Kazakh government, the Commission and researchers from ECIPE and the Silk Road Studies Program discussed the hot economic, political and geopolitical issues surrounding Kazakhstan’s WTO accession.

Mounting calls for trade in healthcare

On both sides of the Atlantic, calls to free up trade in healthcare are mounting. The rising cost of health services and the crisis of healthcare systems in the developed and developing world provide a window of opportunity to consider alternative and cost-effective ways to cater for the rising needs of patients. Fredrik Erixon just made the case in the Financial Times, while Professor Jagdish Bhagwati and Sandi Madan recently made similar suggestions in the Wall Street Journal (an unabridged version of their article is available here ). ECIPE is running a big project researching trade in healthcare, and a first paper by Fredrik Erixon and Lucy Davis has just been published. Erixon and Davis conceptualizes approaches to trade in health care and set out an agenda for reform.

EU trade policy making without the Lisbon treaty

The institutional developments foreseen in EU trade policy-making by the Lisbon treaty will not enter into force. EU trade policy will remain fragmented. Investment policies in particular will remain with the member states after all. The European Parliament will have to wait to have full powers of co-decision. Discussions on both democratic accountability and risks of excessive politicization due to the Parliament’s rising powers can now be discarded. In its relations to China, for instance, the EU’s institutional complexity will complicate the task of smoothing trade relations, as shown by Fredrik Erixon and Iana Dreyer. The EU’s comparative weakness in IPR policies in its trade agreements such as discussed by Meir Pugatch will also continue.

Razeen Sally’s New Book

Razeen Sally’s new book, Trade Policy, New Century: The WTO, FTAs and Asia Rising, has just been published by the Institute of Economic Affairs in London. It covers the intellectual history of free trade versus protection; trade-policy reforms in developing countries; the WTO; FTAs; and unilateral liberalization in emerging Asia. Dr Sally argues that the WTO and FTAs have outdated negotiating models for 21st-century business and consumer realities. FTAs in particular risk creating new barriers rather than removing existing ones. Top-down negotiation-driven trade policy is yielding diminishing returns. The priority should be bottom-up unilateral liberalization, with China´s opening to the world economy leading the way.

Agriculture in the Doha Round

Amid soaring food prices, the Doha trade negotiations in the WTO are again in the limelight. Patrick Messerlin not only reminds us that the EU’s current tariff protections benefit food processing industries rather than farmers. He also proposes a smart formula to move forward in bringing agricultural tariffs down. Peter Kleen, in his recent analysis of the Doha Round, rues the absence of a strong “Café au Lait” type of coalition between outward-oriented rich and developing countries such as existed in the Uruguay Round. Such a coalition could cut trough the “iron triangle” – agricultural tariffs in Europe, agricultural subsidies in the United States and industrial tariffs in big developing countries - that blocks the current multilateral negotiations.

New Policy Brief: The Health of Nations: Conceptualizing Approaches to Trade in Health Care

Economic and trade integration have progressed over the last fifty years and yet one sector remains conspicuously un-globalized – health care. In this new policy brief, Lucy Davis and Fredrik Erixon examine the opposition to trade in health care and suggest ways of moving forward, expanding on the potential that it could bring to this beleaguered sector. Countries as diverse as Brazil, China, Cuba, India and South Africa are already significant exporters of health care. Patients in developed and developing countries stand to gain from lower health costs, increased efficiency and better quality of service.

Last Chance for Doha?

The WTO’s Secretary General called a new small ministerial meeting to attempt a breakthrough in the Doha Round of trade negotiations. In this context of crisis, ECIPE has been leading high-level discussions on the future of the world trading system. Over the last year, these activities have included: a panel at the WTO’s Public Forum in Geneva; a major conference in Brussels with key members of the WTO, the Commission, and business; an essay by Peter Kleen comparing the Uruguay and the Doha Rounds and a conference with the Warwick Commission. ECIPE’s Director Razeen Sally just published his new book, Trade Policy, New Century. The WTO, FTAs and Asia Rising. He discusses how the international trading system could be put back on track.

Globalization, earnings and consumer prices: taking stock of the benefits from globalization

Globalization has been accused of “stealing jobs” and depressing wages in the developed part of the world. China’s entry into the world economy, in particular, has sparked fears about a “middle-class squeeze”. These fears resemble the anxiety in previous eras over the rise of new emerging markets. As recent as twenty years ago, Japanese firms were by some considered to be far too competitive for American or European firms to survive. Now, as then, most of these fears are based on erroneous facts and wild exaggerations. In this new Policy Brief, Fredrik Erixon analyses data on wages, prices and income to estimate the benefits from globalization. He finds a strong link between disinflation and rising real income.

European Union Trade Policy – Where Next?

Roderick Abbott just published an insightful briefing paper on EU Trade Policy with Chatham House in London. He highlights that the recent shift of attention towards Russia and China is a “a new departure reflecting the weight of the new economies”. But the current strategy focusing on bilateral trade agreements is failing. Therefore, “the traditional EU preference for multilateral avenues might well reassert itself”. Razeen Sally commented extensively on Europe’s strategy in Asia. Stephen Woolcock explained how European free trade agreements work. Meir Pugatch compared their IPR clauses with the US’.

Sweden – a free trader?

Sweden has been one of the leading voices for freer trade in the post-war era. But its free-trade credentials are less convincing in the area of services trade and commitments to trade openness in the services sector. In fact, according to a new study by Fredrik Erixon and Lucy Davis, Sweden is the most protectionist country in the EU-15 group when commitments in the WTO are compared. Sweden’s tradable industry sector has compressed over the last decades while its non-tradable service sector has increased, which signals increasing difficulties to find material support in favour of freer services trade.

OECD project on comparative trade reform in the BRIICS and Annual Global Trade Forum 2008

The OECD Trade and Agriculture Directorate has undertaken several studies on trade policies and trade-policy reforms in the BRIICS (Brazil, Russia, India, Indonesia, China and South Africa). This was the theme of the Annual Global Trade Forum in late June 2008. Razeen Sally did a presentation at the forum and an overview paper on the political economy of trade liberalisation in the BRIICS.

The collapse of the Doha Round

The Doha Round has once again collapsed. Trade ministers could not come to an agreement on broad headline cuts in tariffs in subsidies during their marathon meeting in late July. The Doha Round will now take a long break, argues Fredrik Erixon in a new paper, and members should spend this time rethinking the structure of the WTO and revisiting its basic principles. Peter Kleen recently compared the Doha Round with the Uruguay Round, and found several differences explaining why the former has faltered. Razeen Sally argues in a new book that trade policy should be retooled to meet current demands from producers and consumers.

Europe’s Trade Policy at Crossroads

Roderick Abbott recently published a paper with Chatham House on the European Union’s trade policy strategy adopted since late 2006. Linking it to Europe’s overall growth and jobs strategy, the emphasis has been on bilateralism, and on Asia and Russia. This strategy is faltering, however: “trade policy globally is more or less static, with little or no progress being made. This reflects the problems of adjusting to a new situation in which emerging economies have much increased market power but the trade liberalization process has not yet produced new mechanisms for securing general agreement on how to move ahead”, says Abbott. Europe needs to reassess its strategy. In this context, “the traditional EU preference for multilateral avenues might well reassert itself”, writes Abbott.

Doha – No Future?

This summer, the Doha Round of trade negotiations collapsed once again in a last-ditch effort to hammer out a deal. In his latest paper, Fredrik Erixon analyses the wrong expectations that have contributed to the Round’s gridlock. Razeen Sally’s latest book explores ways to further trade liberalization without waiting for the WTO. In a recent contribution to the East Asia Forum, Razeen Sally discusses the future of the WTO. He stresses that “The Doha collapse reflects a deeper malaise. Policies governing international trade and investment have become hopelessly outdated. They are stuck in anachronistic twentieth-century mindsets, institutions and regulations, increasingly disconnected from today’s business realities.”

Trade in Healthcare an Increasingly Hot Topic

“[M]any developing countries want to liberalise trade in healthcare”, says Fredrik Erixon in the Financial Times. “Kenya could be importing patients instead of exporting health professionals”, say Lucy Davis and Fredrik Erixon in Business Daily Africa. Their new joint paper discusses how increasing trade in healthcare services – from web-based health solutions to trade tourism could help cure the rampant cost-disease undermining modern healthcare services and contribute to better serve the needs of today’s patients. Across the Atlantic, Professor Jagdish Bhagwati and Sandi Madan recently made similar suggestions in the Wall Street Journal (an unabridged version of their article is available here ).

New Orientation for the EU's Common Agricultural Policy?

EU agricultural policies are partly to blame for many failures to liberalize global trade. The EU is currently scrutinizing the foundations of its common agricultural policy. In an article published in the Wall Street Journal, Valentin Zahrnt outlines the current state of play in the debate on subsidies, their efficacy and their costs. In his recent policy brief Zahrnt also argues that the CAP is unfair and inefficient. It does not serve the purposes of environmental protection and food security. Targeted subsidies that reward farmers for providing socially valued services, such as maintaining scenic landscapes, should be adapted. Most of them could be provided at the national or local level rather than by Brussels.

Strategies for European Trade Policy

What should be the strategy for the new EU trade commissioner? EU-Asian commercial relations are centre-stage as Europe has launched new trade agreements with Asian countries. Razeen Sally’s analysis of Europe’s strategy in Asia provides a background to the current state of affairs. Patrick Messerlin and Jinghui Wang recommend foresight in Europe’s trade strategy towards China, and Fredrik Erixon and Iana Dreyer set out an agenda of the EU-Chinese trade talks. Antidumping is becoming a contested issue again. Brian Hindley has examined Europe’s strategic thinking about antidumping policies and has highlighted the costs of European antidumping practices. The Doha Round in the WTO is in the doldrums. Peter Kleen analyses why it is so difficult to negotiate compared with the Uruguay Round and Fredrik Erixon explains why the Doha Round has failed.

New Policy Brief: Europe’s Energy Dependency and Russia’s Commercial Assertiveness: What Should the EU do?

Europe is dependent on Russia for its energy supply and finds itself at odds with designing a policy that addresses its rising number of concerns over Russia while not putting its energy imports at risk. In a new paper, Fredrik Erixon takes stock of past and future development in Russia and discusses how Europe should design a policy which accommodates its energy supply as well as the interests of European energy investors in Russia. The EU needs to advance a single market for gas and should in its policy make greater use of existing legal structures – in Bilateral Investment Treaties (BIT) and the Energy Charter Treaty – which could address disputes and improve investment conditions.

EU China Trade and Investment Relations – Rising Stakes

EU-Chinese trade and investment relations remain a major political and economic “hot potato” this autumn. The financial crisis will force European and Chinese policy-makers to scrutinize their policies. In a recent article, Fredrik Erixon and Andreas Freytag warn against protectionism and harsh rhetoric as a tool to address a growing bilateral trade deficit and Chinese reluctance to open markets. Patrick Messerlin and Jinghui Wang argue for a new bargain for EU-Chinese trade and investment relations. Erixon, Messerlin and Razeen Sally have recently scrutinized China’s foreign trade policies since its WTO accession, and identify a slow-down of its market reforms.

Europe, Russia and the CIS

The conflict in Georgia has yet again revealed the fault lines in European economic policy towards Russia. Russia’s slide towards militarism goes hand in hand with the recent re-nationalisation and monopolisation of its economy. The links between Russia’s commercial and political assertiveness were highlighted by Fredrik Erixon at a recent conference in Kiev. Russia announced it would put its WTO accession on ice. This will have an impact on other former Soviet Union economies, such as Kazakhstan. The benefits for Kazakhstan to accede to the WTO were discussed by Brian Hindley in the Wall Street Journal.

EU-Indian Trade Relations

At a recent summit in Marseille, the EU and India have revived their economic and technological cooperation. They have pledged to finalize negotiations for a free trade agreement by end 2009. Razeen Sally argues that the only free trade agreement between EU and India that makes commercial sense is a deep-integration agreement that liberalizes services markets and considerably reduces FDI regulations. Yet such an agreement seems far away, mainly because of a slow-down of economic reforms in India and Europe. The EU should instead focus on effective regulatory cooperation. Razeen Sally, in his recent research, has further put India's trade policies in broader emerging market context. More here and here.

Russian Commercial Policies and the European Union – Can Russia be Anchored in a Legal International Economic Order?

Can Russia be brought to abide by international commercial rules? In ECIPE’s new Working Paper, Iana Dreyer and Brian Hindley discuss the isolation of Russia from international legal norms. They ask what commercial problems WTO accession could solve, and what the EU should do to support rules-based commercial relations with Russia. The authors argue that governments and businesses should make better use of existing legal agreements, such as the Energy Charter Treaty and the existing bilateral investment treaties with individual member states, which have not been used to their full potential. For the European Union, Russia’s WTO accession should continue to be regarded as a pre-requisite to a new partnership agreement. During the coming negotiations, the EU should consider dropping its usual method of regulatory embrace. It should focus on core market access issues, strong dispute settlement and adoption of international standards for regulation in business and industry.

What’s Next for EU-China Relations?

EU-China relations are souring. The Chinese premier Wen Jibao cancelled the December EU-China summit in France on the grounds that President Sarkozy was due to meet with the Dalai Lama. The rhetoric on both sides has become increasingly confrontational and protectionist. Iana Dreyer and Fredrik Erixon outlined a new framework for EU-China relations in a recent paper, and Patrick Messerlin and Jinghui Wang examined the bilateral economic relations in a joint ECIPE-GEM study. In a recent paper presented in Oxford, Fredrik Erixon, Patrick Messerlin and Razeen Sally scrutinize the developments in China’s external trade policies since it joined the WTO. Professor Henry Gao presented at an ECIPE seminar an in-depth analysis of China’s track record in the WTO’s dispute settlement mechanism. Razeen Sally discussed China in comparison with other BRIICs countries in a study for the OECD.

Solving the Energy Crisis

Europe is yet again failing to grapple with Russia’s stranglehold over gas supplies. As deliveries are being severely disrupted amidst a dispute with Ukraine, Europe needs to rebuild its energy policy and make itself less dependent on the Kremlin’s high politics of gas, says Fredrik Erixon. In a recent paper Erixon analyses in-depth the EU’s energy dependency on Russia and outlines solutions to progressively change the situation. These include energy market reform and taking legal steps within and outside the Energy Charter Treaty to channel commercial disputes out of political disagreements. Iana Dreyer and Brian Hindley, have published a comprehensive analysis of Russia foreign economic policies and outlines methods for the EU to bring EU-Russia relations onto a legalized and sustainable path.

How Should the EU Handle its Commercial Relations with Russia?

Commercial relationships with Russia are among the EU’s main challenges in the years to come. In a recent presentation at an ECIPE conference, Iana Dreyer explained that the EU needs to tackle Russia’s rising trade and investment protectionism, and Russia’s strategic use of trade bans in political disputes with its neighbours. In a recent paper Fredrik Erixon discussed the constraints the EU’s energy dependency puts on its ability to address its concerns with Russia. Erixon outlined a “constitutionalization” of EU-Russia commercial relations, which includes a greater use of the Energy Charter Treaty to settle investment disputes in the energy sector. He also commented in the Financial Times on the re-launch of the EU-Russia negotiations over a Partnership agreement. In ECIPE’s latest Working Paper, Iana Dreyer and Brian Hindley analyse the opportunities and limitations of Russia’s much awaited WTO accession and discuss the effectiveness of EU’s strategy to tackle commercial disputes with Russia.

US Global Economic Policy under Obama

President Obama assumes office amidst a severe economic recession. He has announced a new stimulus plan, but his policy for trade and the world economy remains unclear. In a post-election analysis, Fredrik Erixon forecasts likely developments in US trade policy. Implementation of existing trade agreements is likely to be at the top of the agenda. In this context, Iana Dreyer and Brian Hindley examine the current WTO dispute between the US and the EU on information technology goods. Razeen Sally criticized the US stimulus package, and together with Fredrik Erixon he warns that increased subsidies could spur protectionism.

The Crisis and Protectionism on the Rise

Will the pledges made by the G20 and G7 to fight protectionism translate into action? Protectionism is already on the rise. Fredrik Erixon and Razeen Sally analysed the protectionist trends, and how responses to the economic crisis reinforce them, in the Far Eastern Economic Review and in a syndicated article published in a dozen of newspapers across the world. They argue that it is a replay of the creeping protectionism of the 1970s that we should worry about. Spiralling tariff protectionism a la the 1930s appears unlikely. What to do about it? A Doha deal would help against tariffs but it would not be enough. Nonbinding promises from the Group of 20 and other large, unwieldy multilateral forums will not do the trick either. Ideally, a group of leading economies should form a “coalition of the willing”, committing themselves clearly not to undertake new tariff or nontariff protectionism, such as trade-distorting subsidies to national producers.

What Next for the Doha Round?

The G-20 pledge made last November to have the contours of a new WTO deal negotiated before year end has failed: the Doha Round will enter 2009 with few prospects to finish successfully. Fredrik Erixon analyzed the structural problems of the Doha Round in a recent paper and concluded that the era of big bargains is over. Razeen Sally recently examined trade-policy developments and forecasts creeping protectionism. Peter Kleen compared recent paper the Doha Round with the Uruguay Round and found many vexing differences. With rising global protectionism, the Doha Round will sail into even more difficult waters.

A Blueprint for Reform of the WTO Agreement on Agriculture

As the Doha negotiations are at a dead end, Valentin Zahrnt addresses some fundamental questions in a new working paper about the future direction of WTO disciplines in agriculture. First, which agricultural policy instruments should be permitted or prohibited by WTO disciplines so as to best account for the manifold effects of agriculture on societies’ welfare? Second, how should inefficient agricultural policies be treated as long as their removal is politically infeasible? And third, how can the WTO facilitate agricultural policy reform beyond establishing maximum thresholds for distorting policies? The author argues for moving from the current ‘boxes’ of domestic subsidies to a classification system that is more responsive to the differing degree of legitimacy of agricultural policy instruments. He also proposes to introduce ‘good governance’ norms that guide members’ decision-making in agriculture towards policies that are at the same time domestically efficient and internationally responsible.

EPA Offers Positive Future for Development in the Caribbean

The recent EC-CARIFORM Economic Partnership Agreement (EPA) draws a line under thirty years of preferential access to European markets enjoyed by Caribbean producers. In this new paper by Pierre Sauvé and Natasha Ward, the authors delve into the services and investment dimensions of the agreement – how they advance liberalisation, development and policy lessons for other ACP regions, particularly in Africa. They argue that the CARIFORUM EPA has set the bar high and demonstrates how a well-negotiated agreement between highly unequal partners can nonetheless generate outcomes that offer tangible benefits to the weaker side. It brings a welcome positive outlook on the much-maligned EPA process.

A Realist Agenda for the G 20

The G20 summit in London offers an opportunity for world leaders to prevent a continued slide towards protectionism. Yet the summit is already at risk of ending in failure as expectations run too high. The agenda is wide and covers areas characterized by sharp differences of opinion rather than emerging consensus. In his new policy brief, Fredrik Erixon argues that G20 rhetoric contains naïve hopes of building a new Bretton Woods system that will meet the hard realities of global economic co-operation. He sets out a six-point trade agenda for the G20 summit. Its main items are a ‘ceasefire agreement’ between the leading world economies covering tariffs, trade-distortive subsidies, and ‘buy local’ policies. He calls for greater scrutiny of fiscal policy to avoid ‘Keynesian protectionism’ – protectionism that grows out of government efforts to stimulate the economy.

Anti-dumping investigation in the EU: how does it work?

Anti-dumping rules are flexible and open to political bias. In the past ten years, EU investigating institutions have been biased towards the imposition of measures. The European Commission claims that all anti-dumping investigations are “rigorously and professionally carried out”. This new paper by Lucy Davis tests the validity of that statement. Davis makes a rigorous examination of the publicly available information from EU anti-dumping cases. She concludes that procedural reform is needed in the investigation process, to raise assessment standards and abate suspicions of anti-dumping protectionism.

Making Healthcare Services More Affordable Through Trade

International trade agreements have historically sidestepped the healthcare sector. However, as pressure grows on public finances along with rising healthcare needs due to ageing populations and more sophisticated demand, new ways to provide sufficient and quality services at a lower cost start to be explored. In a Policy Brief, Fredrik Erixon and Lucy Davis discussed the potential that trade could bring to this beleaguered sector. Patients in developed and developing countries stand to gain from lower health costs, increased efficiency and better quality of service. In a new paper, Lior Herman examines to what extent global trade in healthcare is already a reality. Lucy Davis discussed in the Guardian how British healthcare could gain from more trade. A recent ECIPE conference discussed cross-border trade in the EU and beyond.

EU-China Commercial Relations – A Dialogue of the Deaf?

There have been many frictions in EU-China commercial relations but as the US-China trade relation is defrosting there is a greater pressure to find ways for Europe and China to deepen economic integration. Both sides know they rely on each other to grow their way out of the crisis, but will they be able to smooth their way into greater mutual economic integration? Patrick Messerlin and Fredrik Erixon recently outlined what is at stake and how the EU and China can strike a deal. Along with Iana Dreyer, Erixon discussed the institutional constraints of the Dialogue. Andreas Freytag explained why fixation in the EU with its bilateral trade deficit with China does not make economic sense. Messerlin and Jinhgui Wang also outlined the possibility of a genuine grand bargain between the EU and China.

A Closer Look at EU Antidumping

Anti-dumping is a highly-charged area of trade policy. By taking a step back from individual controversies, a new paper by Lucy Davis aims to ‘distinguish the wood from the trees’ in providing a clear picture of how anti-dumping has been used by the EU over the last ten years, using data gathered from all 332 anti-dumping cases. Five main empirical tendencies are identified from the past ten years: Asia and emerging markets are the favoured targets of anti-dumping duties, China in particular; targeted products are concentrated in those sectors where European production is declining, i.e. raw materials, input goods and textiles; dumping margins reflect these patterns, being particularly high in the chemicals and steel sectors; duty levels are considerably higher than bound tariffs for all sectors and products, but especially so for more advanced technological products; a definitive duty is the most likely outcome once an anti-dumping investigation has been initiated.

How to Prevent the Return of Protectionism

A new book published by the CEPR on the VoxEu website gathers the views of 17 leading international trade policy experts on how to contain protectionist pressures in the current global economic crisis. The scholars all tend to agree that the adequate response to the current crisis is with macroeconomic policies, not with tariffs or other trade measures. The Doha Round should be concluded as well. Patrick Messerlin, Chairman of ECIPE's Steering Committee, says that in the Doha Round, G20 leaders will need more realism on industrial tariffs, raise transparency on agricultural liberalization policies and greater boldness on services liberalization. Peter Draper highlights that Africa is also set to suffer from the crisis, but that protection would make things worse for Africans. They should rather reform their economies. Harvard’s Robert Lawrence and Dartmouth's Douglas Irwin, members of ECIPE's Advisory board, also contributed to this publication.

Cause-of-injury analysis in European anti-dumping investigations

WTO rules require national anti-dumping authorities to answer two questions – does the local industry display symptoms of injury? and, are these symptoms caused by dumping? In this in-depth study of ten recent cases, Brian Hindley finds that the European Commission is good at finding positive responses to the first question, but not the second. He finds that the EC is perfunctory and ritualistic in its approach to determining the cause of injury in anti-dumping investigations. The danger is that duties are imposed on the basis of inaccurate justification. His findings provide a strong case for a new body, independent of the anti-dumping authority, to examine injury and provide cause-of-injury analysis.

EU anti-dumping duties depress trade

Anti-dumping is a favoured policy for protecting import-competing industries by raising import duties on specific foreign goods. But it is a complex and un-transparent tool and its real trade effects are not always easy to understand. In this new paper, Arastou Khatibi asks whether it really is the whole European market that benefits from anti-dumping duties. His results show that anti-dumping depresses trade overall, but allows greater trade between globally uncompetitive European firms. The result is inefficiency and price increases for consumers and importers.

Public Money for Public Goods: Winners and Losers from CAP Reform

The EU spends more than 40% of its budget on the Common Agricultural Policy (CAP). How these € 55 billion are distributed to the member states has surprisingly nothing to do with the CAP’s objectives – subsidies do not go where the need to help poor farmers or to protect the environment is greatest. As disadvantaged (new) member states complain about arbitrarily disparate subsidy levels, redistribution becomes unavoidable. In a recent working paper, Valentin Zahrnt considers criteria that are likely to guide the future distribution of CAP payments (e.g. fighting climate change), and he estimates member states’ future subsidy receipts. This reveals astonishing differences between the negotiating positions that some countries traditionally adopt and the subsidy levels they can expect from reform.

Globalisation and Emerging Economies

The OECD has just published a new book analysing the integration into the world economy of six major emerging economies, the so-called BRIICS (Brazil, Russia, India, Indonesia, China and South Africa). An overview of the main findings is available in this OECD Policy Brief. Razeen Sally provided the introductory chapter on the political economy of trade liberalisation in the BRIICS. The book finds that these countries have substantially benefited from opening their economies to the world economy in the last decades and thus reduced poverty significantly. Their challenges lie now with tackling so-called “second-generation reforms”, i.e. regulatory and institutional changes that go beyond reducing tariffs and eliminating other barriers to trade at customs. Aimed at tackling barriers to business, investment and trade, these should provide the backbone for these countries’ next stage of growth and integration with the world economy.

The Quality and Effects of Antidumping

Anti-dumping is a favoured policy for protecting import-competing industries by raising import duties on specific foreign goods. But it is a complex and un-transparent tool. Brian Hindley found severe problems in EU’s investigations into whether dumping has caused injury to domestic firms. In a new paper, Arastou Khatibi asks whether it really is the whole European market that benefits from anti-dumping duties. His results show that anti-dumping depresses trade overall, but allows greater trade between globally uncompetitive European firms. The result is welfare losses, and price increases for consumers and importers.

Transparency as an Antidote to Hidden Protectionism

As the economic crisis hits the job market, countries around the globe are shoring up trade barriers to protect domestic producers. Since the WTO and public opinion impose limits on tariff increases, governments are tempted to resort to less visible regulatory measures. In his new working paper, Valentin Zahrnt examines how the WTO could shed more light on food safety regulation, so that health objectives are not abused to shield the home market. For analysis of creeping protectionism – and measures against this threat – you can also read a recent policy brief by Fredrik Erixon or listen to a podcast from Razeen Sally.

Russia’s WTO Blues

Russia appears to be set to withdraw its own application to join the World Trade Organisation in favour of a joint application with Belarus and Kazakhstan, with whom Russia plans to enter a customs union. Such a move would delay WTO accession for Russia as well as Kazakhstan, but it is not surprising. A recent paper by Iana Dreyer and Brian Hindley outlined the state of play in Russia’s WTO accession and pointed to several remaining obstacles. As Fredrik Erixon recently argued in Wall Street Journal oped, Russia is currently entrenching protectionist features in its trade policy and gives many indications of not wanting to join the premier body for world trade rules. Rather than deepening economic integration with Russia, Kazakhstan should move closer to the European economy. As shown by Arastou Khatibi, it already overtrades with FSU countries and undertrades with Europe.

Message to the G20: Defeating Protectionism Begins at Home

On 16 November last year, G20 leaders made a commitment to resist protectionism. According to the World Bank, by the end of February 2009, seventeen of the twenty had already ‘implemented 47 measures whose effect is to restrict trade.’ When the leaders meet in Pittsburgh on 24 September 2009, they will have an opportunity to review their commitment and decide how best to strengthen it. Australia’s Lowy Institute has published a Policy Brief by Bill Carmichael, Saul Eslake and Mark Thirlwell that argues that the advice that G20 leaders have received to date fails to deal with the underlying causes of protectionism. Protectionism results from decisions taken by governments at home, for domestic reasons. As a consequence, any effective response to protectionism needs to begin at home. The authors therefore propose that G20 leaders should sponsor domestic transparency arrangements in individual countries, in order to provide public advice about the economy-wide costs of domestic protection. To read the paper, click here.

The Doha Round: A Death-Defying Act?

Almost eight years after the launch of the WTO's Doha Round, negotiations remain mired in a swamp of detail, with many participants unwilling or unable to make the hard decisions which would bring the Round to a conclusion. G20 leaders renewed at the Pittsburgh summit the call to successfully end the Doha Round, but it remains to be seen if the new call will be more successful than previous G20 declarations. In a new study by ECIPE, Stuart Harbinson takes stock of the Doha Round and examines why WTO members have failed to successfully conclude the Round. Harbinson sets out the main issues for a conclusion of the Round - and for the future agenda of the WTO.

New Book: Trade Reforms in Emerging Markets

In a new book edited by Razeen Sally, Peter Draper and Phil Alves, noted trade experts from around the world take stock of the past decades of trade reforms in emerging economies. With case studies from countries such as Brazil, Chile, and South Africa, the book offers analyses of how comprehensive programmes of trade reforms were achieved, often in a political climate initially hostile to liberalization, and how important reform processes can be derailed.

Challenges to Asian Economies

Asian economies are facing difficult political problems to sustain their high growth rates. In a recent paper, Guy de Jonquières discussed structural aspects of China’s economic downturn and its economic policy. Fredrik Erixon says that we might not wish a rapid re-orientation of Chinese growth towards domestic consumption. Razeen Sally is critical of the new Indian government’s capability of delivering much-needed economic reforms. In a new essay for the Far Eastern Economic Review Sally looks at Sri Lanka and discusses what economic reforms the country needs to pursue in order to strengthen the new peace.

The WTO’s Trade Policy Review Mechanism: How to Create Political Will for Liberalization

The economic crisis has sparked fears about emerging protectionism and created wide interest in initiatives to monitor trade policies. The WTO regularly examines its members' trade policies – but its reports are superficial and uncritical. In this new working paper, Valentin Zahrnt argues that these reports need a thorough overhaul to make a better case for liberal reform and serve as a more effective reference in domestic policy debates. Food for thought ahead of the WTO Ministerial Meeting end-November 2009 that is explicitly dedicated to systemic issues in the world trading system.

A New Deal for Transatlantic Economic Cooperation

Few policy issues in Brussels and Washington DC are met with such a compact unity across political boundaries as the idea of deepened transatlantic economic integration. Twenty years after the fall of the Berlin Wall, the support for transatlantic economic co-operation remains strong. There is only one fly in the ointment: post cold-war initiatives to deepen transatlantic economic integration, and they have been many, have failed to achieve anything substantial. In a new study, Fredrik Erixon and Gernot Pehnelt set out a new approach to deepened transatlantic economic integration. They outline alternatives for a Free Trade Agreement and argue that such a move would bolster liberalisation also in many other countries.

The World Trading System and Doha

In a new ECIPE publication, the FT’s Martin Wolf discusses in-depth the current state of the world trading system. He argues that in many respects it has been a huge success. The question, however, is where we go from here, at a time when the Doha round seems impossible to complete, preferential trade arrangements are exploding, the WTO is subject to constant political attack and protectionist pressures are rising. Wolf makes for main recommendations: stress the value of unilateral liberalisation; discipline preferential agreements; refocus the WTO, by reconsidering the idea of a single undertaking and by moving away from huge rounds; and, focus on domestic reforms that will allow societies to remain open to the world. Stuart Harbinson for his part recently unplucked the history of the Doha Round itself and discusses ways to finish it. In a shorter term perspective Roderick Abbott recommends a few concrete steps to close the Round so that the WTO can move on.

Does the Trading System have a Future?

There is a great deal of ruin in the trading system, argues Martin Wolf in a new ECIPE study. In many respects it has been a huge success. The opening of the world economy of the past three decades and the creation of the WTO itself are both aspects of this great success. But the world trading system is looking rather sicklier today, says Wolf, and outlines four recommendations for a reinvigorated global trade policy

New Approaches to Agricultural Subsidies and Protection

World agricultural policy needs to be reformed and better disciplined by international organisations. In a recent paper, Valentin Zahrnt took stock of current trends in agricultural standards and argues that the WTO should be empowered to examine the rising use of them. In a new paper, Zahrnt sets out the case for reform of EU’s agricultural subsidies. He calculates the distribution of subsidies in a number of reform scenarios and finds big differences between what many countries would gain or lose from reform and how they position themselves in the reform debate.

The Way Back - How to Restore the Global Economy?

ECIPE has gathered some of Europe’s leading minds on matters of the world economy for a conference on how to restore it. On November 25th the Chief Executive Officer of Electrolux, Hans Stråberg, along with leading figures from business, policy and academia will discuss how the world economy could be brought back on its feet again after the recent collapse. While the crisis has not triggered 1930s-style policies of spiraling protectionism, too many countries have succumbed to protectionism. Furthermore, there is a danger that reviving beliefs in various market regulations will slow down recovery and restrict the productive forces of globalization.

Defensiveness and Fragmentation in EU Trade Policy

EU trade policy is sailing into turbulent waters, say Fredrik Erixon and Razeen Sally in a new book published by Policy Network. Its trade-policy strategy in the recent past has been unsuccessful. Prevailing political winds will make it even more difficult in the near-to-medium term future to conclude substantial trade deals.

Trade Regulations to Combat Illegal Logging

The European Parliament has proposed to impose new trade restrictions to combat illegal logging. While it is a worthy goal to fight illegal logging, the introduction of trade-restrictive measures in the new legislation is likely to violate WTO agreements on trade, say Fredrik Erixon and Brian Hindley in a new paper. The use of discriminatory measures is a principal challenge against core articles of the WTO and should not be taken lightly.

Reform the CAP

The EU offers greater tariff protection and pays more subsidies to agriculture than to any other sector. EU tariffs on agricultural products average 18% – over four times more than charges on other goods. On top of that, the EU pays every year € 54 billion of subsidies to farmers. www.reformthecap.eu is a brand new resource site for all those interested in changing the EU's Common Agricultural Policy.

The EU’s Biofuels Policy and the Renewable Energy Directive: Violating WTO Rules

What happened to the professed environmental goal to substitute fossil fuels wit biofuels, asks Fredrik Erixon in a new study of EU biofuels policy. Biofules policy has become an industrial policy using various measures to shelter domestic producers from foreign competition. Protectionism increases the cost of moving away from fossil fuels – but the EU is about to usher its policy farther in that direction with its Renewable Energy Directive. If it is implemented in the way that has proposed, the EU is likely to run afoul of its obligations in the World Trade Organisation (WTO).

EU Trade Policy after the Lisbon Treaty

The Lisbon Treaty will introduce a number of changes to European Union (EU) external trade policy decision making. In a new paper, Steve Woolcock examines what changes to European trade policy formation the new Treaty will bring. Woolcock argues that the EU will strengthen its role as a trade actor and that it will compensate for the relative decline in EU market power due to systemic changes in the international trading system.

Better Competition Policies to Fight Europe’s Dependency on Russian Gas

Competition is a crucial factor in creating domestic resilience in case of gas supply disruptions. This new paper investigates the relationship between the level of competition in the gas markets of EU member states and their vulnerability to supply cuts from Russia. It finds that there is a high correlation of these two factors. Unfortunately, the Third Gas Directive passed in 2009 will not significantly boost competition. Furthermore, the current antitrust cases in the gas sector do not focus on the markets that need it most, namely Bulgaria, the Baltic States, and Slovakia. This needs to change.

Censorship May Violate WTO Rules

Online censorship may violate trade rules, argued Hosuk Lee-Makiyama and Brian Hindley in a recent paper. Google’s decision to withdraw from China unless its censorship policy changes has provoked widespread interest for bringing China for dispute resolution at the WTO. Censorship practices are sometimes designed to benefit local actors at the expense of foreign firms. Google, as well as other firms, have been challenged by censorship practices that clearly are protectionist, argued Lee-Makiyama and Fredrik Erixon in a recent article in the Wall Street Journal.

A Modern Trade Policy for the EU

European and global trade policy need a new direction, according to a group of senior business people who launched a report on EU trade policy in the next five years. The EU Trade Policy Study Group, formed last autumn, charts a new course for EU commercial policy. Stressing the modern realities of global business, the Group calls for a speedy end to the Doha Round, a new profile of EU’s bilateral policy, a quick reversal of crisis-induced protectionism, and a comprehensive pro-competitive reform agenda in Europe.

Why did Anti-dumping Reform Fail?

Few trade issues are as politically charged as anti-dumping policy. A few years ago the European Commission launched an effort to reform Europe’s use of trade defense policies, but it failed to deliver as the opposition grew too big. In a new paper, Dirk De Bièvre and Jappe Eckhardt examine the reasons for failure and conclude that lobbies in favour of status quo were better at forming a collective resistance than pro-reform lobbies were at organizing groups in favour of reforms.

The Elusive Quest for Asian Economic Integration

What will happen to regional economic integration in Asia? In a new paper, Razeen Sally takes stock of recent trade-policy initiatives in the Asian region and outlines recommendations for future regional and global integration in Asia. Sally argues that recent talk of region-wide FTAs, and east-Asian initiatives on financial and monetary cooperation, are too ambitious and remain grand visions. Rather, future regional and global integration depends on renewed unilateral, non-discrim inatory liberalization, this time going beyond border barriers to tackle behind-the-border regulatory barriers.

The Case Against Europe's 2020 Strategy

The European Union’s 2020 strategy for growth and competitiveness is deeply flawed, argues Fredrik Erixon in this new Policy Brief. It will push neither economic growth nor pro-growth reforms. At the heart of the strategy is an erroneous notion that Europe is such a unified economy that a central strategy works for all countries. Furthermore, it lives and breathes the sort of pop internationalism that presents economic success in other parts of the world as a threat. There is no point toying with marginal changes of the strategy. It should be put in the bin, and EU leaders should start afresh.

A Future for the World Trade Organization?

With the Doha Round stalling and the free trade agenda at sleep, what will be the future of the World Trade Organization? Recently, ECIPE hosted its Jan Tumlir Lecture with Peter Sutherland, former Director General of the WTO, former EU Commissioner. Not only did he analyse the various factors that have lead to Doha’s current stalemate, he also highlighted the systemic consequences of not finishing Doha on what works well at the WTO, namely its dispute settlement mechanism. “In the final analysis members of the WTO must do deals – make new commitments – if the system is to remain relevant and fully operational”. His speech builds on a series of events and publications ECIPE has dedicated to the state of the world trading system.

A Replay of the 1970s

The global economic crisis, and governments’ responses to the crisis, did not precipitate a descent into 1930s-style protectionism. That is a relief. But, argues Fredrik Erixon and Razeen Sally in a new paper, it provides no refuge from policy measures that will slow down globalisation and growth in the next decade. “Creeping protectionism” is increasing, and the crisis has reinforced trends visible before the start of the crisis. New patterns of protectionism are similar to developments in the 1970s and 1980s rather than the 1930s. Domestic “crisis interventions”, especially in capital and product mar kets, and the return of Big Government, will spill over to external policy, with more defensive trade policies and fragmented capital markets as consequences.

Beyond Geopolitics – The Case for a Free Trade Accord between Europe and Taiwan

This paper discusses the economics and geopolitics of EU Taiwan commercial relations and weighs the case for a free trade agreement (FTA) between them. There is a widespread belief that China will oppose an EU-Taiwan FTA. The recent cross-Straits rapprochement, recently crowned by a trade agreement, could provide a window for Taiwan to sign trade deals with other partners. An FTA with Taiwan would boost some of Europe’s most competitive sectors in ICT, automotives, pharmaceutical products, and telecommunications, financial, business, transport and environmental services. Taiwan needs to position itself as a production platform for global markets. Taiwan is member of the World Trade Organisation - legal obstacles to an EU Taiwan FTA are minimal. But China needs to be reassured that the agreement does not involve recognition of Taiwan’s formal statehood. (Click here)

Russian Investment Policy needs to Change

Russia’s model for investment policy is unsustainable, argue Fredrik Erixon and Iana Dreyer in a new paper. It has for long been clear that Russia arbitrary and Kremlin-based approach to investment protection has been damaging the prospects for Russia’s industrial sector to attract foreign investments. But now it is increasingly clear that the old model does not deliver gains to the Kremlin and oligarchs in the way it did in the past. Russia now needs to reform its investment policy, and the European Union should be a key partner in this task, e.g. through a new investment treaty.

A Future for the World Trade Organisation?

In ECIPE's Second Jan Tumlir Lecture, Peter Sutherland – the former Director General of the WTO who spearheaded the Uruguay Round of trade negotiations to a successful end – analyses the current state of the Doha Round and the future of the WTO. Sutherland gives a frank account of current problems and says the Doha Round needs to change. He wants clearer leadership from world political leaders – and points to China, a remarkable success story of trade, as a central actor for the future of the WTO that needs to show "visionary generosity".

A New Deal for Transatlantic Trade?

Should Europe and United States press ahead with a bilateral free trade accord? In a new study, Fredrik Erixon and Matthias Bauer estimate the potential dynamic gains from a transatlantic trade agreement that eliminates tariffs between the two giants of the world economy. The study shows the gains to be considerable – an agreement would boost trade and welfare on both sides of the Atlantic. It is difficult to come up with any other trade agreement within reach (the Doha Round included) that would deliver gains of similar magnitude to the two transatlantic partners, conclude the authors.

EU-Korea FTA: What is Really at Stake?

Four years after the launch of Global Europe – the European Union’s trade strategy from 2006 – policymakers are now confronted with the first negotiated agreement with one of the rising economic powers in the Far East. Europe is now moving closer to the final ratification of EUKOR, and it is still uncertain if it will be accepted by the European Parliament. Predictably, EUKOR will not have a big impact on EU welfare, but it provides EU firms with significantly improved market access opportunities. The critique against EUKOR has been based on myths about the effects on the EU automotive industry, and this new paper attempts to dispel these myths.

Summitry: Whither EU-Ukraine Relations?

How should Europe approach Ukraine, and vice versa, as they plan for the summit in late November? EU-Ukraine relations have become somewhat cooler in the past year. The new Ukrainian government has charted a new strategy towards Russia and has a more pragmatic approach to Europe. This was predictable, argued Fredrik Erixon in a recent paper, but it does not dilute the fact that Ukraine’s economic future lies in Europe. Europe should keep its focus on necessary political and democratic reforms in Ukraine, but should enforce its support to Ukraine’s economic reform programme, principally by stepping up efforts to conclude a trade agreement that could help Ukraine to diversify its economy. The Ukrainian government needs to push economic reforms with greater speed and show better leadership in curtailing deteriorating conditions for political pluralism.

What went Wrong with Baltic Economic Policy?

After years of high economic growth, the Baltic economies fell sharply in 2008 and 2009. What went wrong in the “Baltic economic miracle”? In a new paper, Fredrik Erixon surveys the post-independence economic reform programme in view of the crisis. He concludes that economic reforms were successful but that many Baltic policymakers grew complacent. A new wave of reform should have been launched upon accession to the European Union – a programme that focused on competitiveness and new policy instruments that could cool overheating economies. Crisis measures have been determined and largely correct – and central to Baltic recovery is to speed up reforms to increase competitiveness.

Obituary for the Estonian Kroon

On New Year’s Day, Estonia became a full member of the EMU and adopted the euro. The decision to join the euro amidst the current crisis has been seen as surprising, if not stupid, but it is a natural step for Estonia, says Fredrik Erixon in a new paper. Estonia’s currency policy has been remarkably successful and its currency board was central to post-independence stabilization. It also made Estonia a fiscal hawk, and its public finances have been in good order during the crisis. Euro membership will not change much for Estonia, says Erixon, but it is better than sticking to the currency board or moving to other exchange rate regimes.

Next Steps for EU-Asia Economic Cooperation

Europe now enters the last phase in the long process to secure the support of member states and the European Parliament for the trade agreement with Korea. Hosuk Lee-Makiyama and Fredrik Erixon debunked some myths about this agreement in a recent paper – and they have just released a new paper that considers the agreement in a Korean context. While Europe presses on with other Free Trade Agreements (FTA) in Asia, it is time to consider the implications for countries not covered by the casted net of FTAs. Japan and Taiwan are two countries that may be adversely affected by FTAs. ECIPE scholars suggested in a recent paper that Europe – in light of the cross-Straits rapprochement – should consider a trade and investment deal with Taiwan. Taiwan is an important part of “Factory Asia” and a trade agreement could spur trade and investment.

After the G20 Summit in Seoul

The G20 in Seoul last week displayed opposing views about the state of the world economy, and, predictably, leaders could not agree on a deal over currencies and trade imbalances. Nor should they have, argued Fredrik Erixon, who suggested that the US needs to start to reform its own economy if it wants to curb the trade deficit. Andreas Freytag and Stan du Plessis argued that the idea to establish a new gold standard, proposed by World Bank chief Robert Zoellick in advance of the G20 summit, should be put to sleep. What now for the world trade agenda? G20 leaders did not commit to anything new. This is what Roderick Abbott predicted – and he argued for scaled-down ambitions for the Doha Round.

Is European Food Security Threatened?

The European Commission, the European Parliament and most member states argue that the EU needs agricultural tariffs and subsidies to ensure its strategic food independence. But Valentin Zahrnt finds in a new paper that food security is a weak argument for a ‘strong’ Common Agricultural Policy. He concludes that food security concerns build on attitudes like ‘better safe than sorry’ and ‘you never know’. Yet, there are a number of threats out there about which we cannot have absolute certainty: attacks by Martians, killer mummies from the Pyramids and dinosaurs escaping from Jurassic Parks. Serious policy makers have to analyze and weigh these risks. Food security does not pass the test; there is no reasonably discernible threat to food security during the coming decades.

A Guide to CAP Reform Politics

CAP reform is the major bone of contention in the negotiations of the next long-term EU budget beyond 2013. In a new working paper, Valentin Zahrnt reviews the political landscape: what are the formal positions as well as the less visible interests and internal conflicts of the Commission, the European Parliament, the member states and civil society stakeholders? And what are the prospects for the reform process, such as a change in the CAP narrative towards competitiveness and innovation or the increasing influence of financial considerations and broader EU affairs on CAP reform?

Doha – Back from the Dead?

Doha Round negotiations in the WTO have yet again started to breathe as Trade Ministers decided during the Davos meeting to make a new attempt to conclude the Round. There may be better prospects now for concluding the Round – but as several ECIPE papers shown a successful conclusion requires that key countries are prepared to change their positions. Stuart Harbinson analyzed the Doha Round and explained the past failures to conclude the Round. Peter Kleen compared in a study the Doha Round with the Uruguay Round, and found differences that help us to understand current problems. Roderick Abbot set out an approach on how to revive Doha with some chance of success. Peter Sutherland offered in a recent ECIPE paper some ideas on how to simplify the negotiations and increasing its chances of ending successfully.

A Policy Narrative for Intellectual Property Rights

Few issues in trade and international commercial policy have in the past decade provoked as much contention as intellectual property rights (IPRs). Few issues are also as misunderstood as IPRs. What is missing is a narrative about the role of IPRs in a modern economy – a narrative that informs policymakers about rational design of policy. In this new study, Fredrik Erixon revisits the economics of IPRs and sets out a policy narrative for EU IPR policy.

Europe Ratified Trade Agreement with Korea

Last week the European Parliament ratified the new Free Trade Agreement (FTA) with Korea, the first FTA from the Global Europe strategy to graduate. Even if the economic benefits to Europe of this agreement are predictably small, it is an important step forward, argued Fredrik Erixon and Hosuk Lee-Makiyama in a recent paper. This FTA should be used as benchmark for other bilateral trade agreements and a rejection by the European Parliament would have torpedoed Europe’s ambition to sign trade agreements with globalizing Asia. In a follow-up paper, Lee-Makiyama and Erixon also set out the geopolitical implications of the agreement.

China’s Leadership for the Global Economy

Razeen Sally recently presented his new paper on Chinese trade policy at an over-subscribed event in Brussels. In a recent piece for the Wall Street Journal, Sally argued that Beijing needs to break its reform impasse and charge ahead with the opening up of its economy. Until it does, China will be limited in its ability to exercise meaningful global leadership. Its response to the crisis, Sally argued in another op-ed, has bolstered the public sector and state power at the expense of the domestic private sector and foreign multinationals

China's Trade Policy - a Post-crisis Stocktake

China’s trade policy has shifted in the near-decade since it joined the WTO, argues Razeen Sally in a new study. It behaves more like a very large, complex economy and less like a small-to-medium-sized open economy. It inclines less to unilateral liberalisation and more to hard-bargaining reciprocity. China’s short-term challenge is to contain protection at home, concludes Sally. Beyond that, China’s challenge is to stimulate further unilateral liberalisation related to domestic structural reforms. That means tackling non-border, but still trade-related, regulatory barriers, especially in investment and services.

The EU Competitiveness Pact

The EU debate over the Franco-German initiative for a new competitiveness pact continues. It is imperative that Europe increases its competitiveness, said Professor Dan Hamilton at a recent ECIPE event where he presented his new book Europe 2020: Competition or Complacency. In a recent paper, Fredrik Erixon argued that the EU’s 2020 agenda needs to be binned. It is an insult to the concept of growth strategy to be associated with this agenda, he argued recently in the European Voice. The crisis and the shift of the world economy to the East have accelerated the need for Europe to increase its attractiveness, argued Razeen Sally in a recent policy essay.

EU Priorities for Global Trading System

The EU remains the world’s leading trading entity, at the heart of globalization, say Razeen Sally, Ana Palacio and Hanns Glatz in a new paper from the CES. Now the danger is that the EU, consumed with fighting internal problems, will retreat into defensiveness and passivity; it might allow protectionism to creep ahead and fail to lead to keep markets open abroad. The EU must rise to the post-crisis challenge, not duck it. The domestic house must be put in order. Fiscal and monetary policies need to be cleaned up. At least as important, new structural reforms are needed to defend and advance the single market. The EU also needs to be more proactive in external trade policy, co-leading to contain emerging protectionism, induce further trade liberalisation worldwide and put the world economy back on the track of ‘reglobalisation’.

The Crisis and the Global Economy

The global economic crisis has sparked short-term divergence of economic performance between the West and emerging markets, and thereby accelerated the longer-run convergence of the latter on the former, argues Razeen Sally in a new study. This shift to the East is more evident in international trade and FDI than it is in other channels of globalisation. And it creates very different economic and geopolitical conditions to those that prevailed under US leadership and a transatlantic-centred world economy in the second half of the last century. Western and emerging-market elites are only just beginning to recognise this shift, but they still have little clue how to deal with it.

Indian Trade Policy After the Crisis

India, like China, had a “good” crisis, argues Razeen Sally in a new study. Both have spearheaded exuberant post-crisis recovery in emerging markets. A combination of stable government and roaring growth has given rise to predictions that India will hit annual growth rates of 10 per cent or more. This is India hype, says Sally. Reforms have stalled since 2004, with no prospect of big change. The combination of a barely-reforming government in Delhi and turbulent global economic conditions will make it difficult to maintain existing levels of growth. Geopolitically, India is a rising regional and global power, but it is still a second-tier emerging power, well behind China

Next chapter in EU-Japan relations?

The EU member states finally could not agree to start the EU-Japan FTA negotiations, without first going through a 'scoping exercise'. Hosuk Lee-Makiyama argues in his comment that EU could be looking for an emergency exit from the talks. The EU trade strategy has been diminished to a policy of least common denominators, unable to negotiate with the big trading partners. Meanwhile, the Japan is gradually recovering from the March crises – and media and pundits have offered many exaggerated or one-sided accounts of the consequences for the Japanese economy. Is the situation pitch-dark as they claim? No, argues Hosuk Lee-Makiyama in this blogpost, posted only few hours after the tsunami on Saturday 11th. But quantitative easing is not a sustainable solution to revive the export sector hit by the destruction and under the pressures of rising Yen – something only an ambitious trade deal could offer.

Sally Awarded the Hayek Medal

On 15th July Razeen Sally was awarded the prestigious Hayek medal for 2011 by the Friedrick A. von Hayek Gesellschaft at a ceremony in Freiburg, Germany. Here is the laudatio by Dr. Gerhard Schwarz, the former economics editor of the Neue Zuercher Zeitung and director of the Avenir Suisse Foundation. At the award ceremony, Razeen Sally delivered a lecture, ‘Liberty Outside the West’, which surveys the intellectual tradition of liberty and open societies in the world. Here a video of a lecture on the topic that Sally gave to the Adam Smith Institute in London.

Countering Digital Authoritarianism

Online censorship has taken the centre stage in the campaign to improve conditions for human rights, cyber security and commercial freedom of exchange on the Internet. At the G8 summit in Deauville, President Sarkozy presented his new initiative – laws and regulation for a “civilized” internet. On the same day, foreign ministers Carl Bildt and Uri Rosenthal sounded a strong defense of online freedoms at an ECIPE conference discussing a new study by Fredrik Erixon and Hosuk Lee-Makiyama. The report examines what governments can do to stop online censorship from proliferating, and suggests rules of the World Trade Organisation to be used in order to discipline how some governments censor the Internet.

Transatlantic Trade Leadership in a Post-hegemonic Era

The Doha Development Round and the WTO suffer from a broad systemic malaise that is besetting multilateralism, argues Guy de Jonquières in a new ECIPE/GMF working paper produced for the Transatlantic Task Force on Trade. Procedural and mechanical changes are not going to fix the problems in the WTO, since these are related to profound shifts in the structure of the world economy. The rise of important new economic players has eroded US and European dominance. At the same time, no one is prepared to lead the multilateral system in the style of the US hegemon during the Cold War. Diverging national priorities, unwillingness to compromise and the primacy of self-interest over the collective good are symptoms of this current transition away from the familiar old structures that have governed international co-operation. The US and the EU need to re-think their approaches to trade liberalisation. It is imperative to return to the core argument of trade liberalisation – the biggest economic benefits do not come from exports but from removing barriers to one’s own market, thereby increasing competition, productivity and innovation.

Transatlantic Opinions on Free Trade

Public opinion data suggests that people on both sides of the Atlantic are committed to free trade in principle, but advocate protection from international competition in practise. In a new ECIPE/GMF working paper, produced for the Transatlantic Task Force on Trade, Bruce Stokes demystifies public opinion in the EU and the US. While the public remains hesitant or negative to more trade with fast-rising countries in the east, there is a solid public support on both sides of the Atlantic for deeper commercial ties between Europe and the US, including the removal of barriers to trade and investment.

Africa and the Financial Crisis

In two papers and an article for the World Economics Journal, ECIPE Senior Fellows Andreas Freytag and Peter Draper have surveyed the effects of the crisis on Africa, and how African governments should respond. In one paper Freytag and Draper argued that South Africa cannot shield itself from the world economy through trade protection or heightened exchange-rate conflicts. In a second and previous paper, they argued that South Africa needs to undertake further microeconomic reforms to make itself a more attractive investments destination – and to protect itself from deteriorating global macroeconomic conditions.