Square pegs in round holes? Using trade policy for non-trade objectives – Volume 9, Issue 2, 2020

In this issue of Great Insights magazine, we present some of the insights of the research that we, together with a group of well-respected academics from across Europe, produced in the framework of the RESPECT project.

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    Square pegs in round holes? Using trade policy for non-trade objectives – Editorial

    Europe: Leader on non-trade objectives in trade agreements
    Lisa Lechner, Assistant Professor of Methods and Methodology in Political Science, University of Innsbruck

    The European Union has long been a leader in using trade agreements to pursue non-trade objectives, such as social and political rights, security, and environmental protection. Where Europe has lagged is in adding enforceability to these provisions and anchoring commitments in the international legal framework on sustainability. That, however, might be changing.

    Non-paper from the Netherlands and France on trade, social economic effects and sustainable development
    The Netherlands and France
    International trade rules and benefits are being challenged both outside the EU and within Member States. Moreover, new challenges for sustainable development, such as the fight against climate change, need mainstreaming in all EU external and internal public policies. These challenges still stand after COVID-19 pandemic.

    Practitioner perceptions on linkages between trade & non-trade issues
    Robert Basedow, Assistant Professor, London School of Economics, Bernard Hoekman, Professor, Robert Schuman Centre for Advanced Studies, Matteo Fiorini, Research Fellow, Global Governance Programme of EUI and Aydin Yildirim, Postdoctoral Fellow, World Trade Institute

    The EU may need to reconsider the use of trade agreements for promoting non-trade policy objectives. Many experts and stakeholders surveyed deem trade agreements to have limited utility in that regard. Instead, a stronger emphasis on support for non-governmental organisations, expert dialogues and targeted technical and development assistance seems warranted.

    EU trade policies: Carrot-and-stick mechanisms in pursuit of non-trade policy objectives?
    Ingo Borchert and Mattia Di Ubaldo, UK Trade Policy Observatory, Sussex University with Paola Conconi and Cristina Herghelegiu, Université Libre de Bruxelles
    European Union (EU) trade policies increasingly link access to its large market to compliance with Non-Trade Policy Objectives (NTPOs), such as human rights or labour and environmental standards. We argue that for pursuing these kinds of objectives the EU’s Generalised System of Preferences (GSP) is better suited as a carrot-and-stick mechanism than free trade agreements.

    Trade preferences need predictability
    Ingo Borchert and Mattia Di Ubaldo, UK Trade Policy Observatory, Sussex University

    Many developing countries export their products to the European Union (EU) at reduced tariffs. But these preferential market access conditions can be withdrawn, which can discourage trade. Removing the Damocles sword of continued uncertainty can lead to substantially more trade.

    Making EU trade and development policy ‘smarter’
    Julia Magntorn Garrett, Peter Holmes and Jim Rollo, UK Trade Policy Observatory, Sussex University

    Coherence in the values the European Union (EU) promotes makes it more likely that partners will take European principles on board. Both the EU institutions and member states have a role to play to reinforce and add value to each other’s efforts.

    EU-China convergence on sustainable development may be on the (far) horizon
    Jacques Pelkmans, Associate Senior Fellow, Centre for European Policy Studies (CEPS) and Professor, College of Europe and Goethe University

    China has long pursued economic growth ‘at all cost’. Evidence from the past decade suggests it is nudging towards a more sustainable growth path. EU trade policy may have helped.

    Trade & COVID-19: External Policy Coherence?
    Bernard Hoekman, Professor, Robert Schuman Centre for Advanced Studies and Matteo Fiorini, Research Fellow, Global Governance Programme of EUI

    Widespread use of trade policy to maximise access to medical supplies may have had significant knock-on effects internationally. While robust government intervention is arguably critical in emergencies like the COVID-19 pandemic, recent experience offers at least six lessons for external policy coherence.

    The under-tapped potential of trade and investment promotion tools: The Enterprise Europe Network
    Jeske van Seters, Head of Private Sector Engagement Programme at ECDPM and San Bilal, Head of Trade, Investment and Finance Programme at ECDPM

    Trade and investment promotion tools such as the Enterprise Europe Network (EEN) can contribute to making better use of trade policies and agreements to deliver real results for consumers, workers and businesses, with respect for the planet and human rights.

    Trade agreements, non-trade provisions and bilateral foreign direct investment
    Hugo Rojas-Romagosa, World Bank

    Today’s deeper and more complex preferential trade agreements have ushered in substantial growth in bilateral foreign direct investment (FDI) between partners. Non-trade related provisions in trade agreements also seem to have a positive effect, particularly provisions related to civil and political rights.

    Export promotion: another tool to reduce unemployment?
    Cristian Ugarte, Trade Policy Analyst, World Trade Organization and Marcelo Olarreaga, Professor of Economics, University of Geneva

    Export promotion helps reduce unemployment, especially when export promotion agencies focus their promotion efforts on sectors where a country has a comparative advantage. When they focus on sectors with high labour market frictions, unemployment increases.

    Using official export support in a crisis
    Kamala Dawar, Senior Lecturer in International Commercial Law, Sussex University

    Publicly funded export credit agencies (ECAs) help businesses access opportunities abroad, particularly in times of crisis, like the COVID-19 pandemic. Yet, without a clear governance framework, ECA support can become a ‘race to the bottom’ in export support terms and conditions.

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