world trade report.2011 by group-1

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World Trade ReportGroup 1

Nitish George

Sourabh Bose

Jigar.S.ShahMadhav Jadhav

Abhishekh Kumar



SUMMARY

� PTA participation has accelerated over time andbecome more widespread

� 1950 onwards, the number of active PTAs haverisen from 70 in 1990 to close to 300 active PTAs

in 2010

� Surge in PTA is driven both by a growing numberof countries taking interest in reciprocal trade

�

Free trade agreements account for more thanthree quarters of all PTAs in force

� Value of world trade between members of PA hasincreased as the number of PTAs has expanded



SECTION A

� Merchandise exports surged by 14.5%

� Trade and output grew faster in developing

economies than in developed ones� Exports increased by 13% in developed

countries and 17% in developing countries

�

Developed economies imports rose by 11%and 18% in the rest of the world



Merchandise trade in volume terms

� World merchandise export in volume terms rose by 14.5%

� World merchandise imports in volume terms rose by 13.5%

� Uneven recovery in output produces an equally unevenrecovery in trade

� Asia and North America recorded exports growth ratefaster than that of the world average

� Europe, CIS, Middle East, Africa, South and Central Americarecorded slower than average growth in exports

� South and Central America, CIS, Asia, North America sawfaster than average growth rate in imports

� Europe and Middle East, Africa recorded slower thanaverage import rate



B. Historical background

and current trends



PTA

� A trade pact between countries that reduces tariffs for

certain products to the countries who sign the

agreement

� It is the form of economic integration

� Almost 300 PTAwere in force in 2010.

� Only 2 per cent is eligible for preference margin in

world trade.



Formulation of PTA

1. From empires to international agreements

2. The nineteenth century: surging trade and expanding

agreements

3. First World War and the Great Depression

4. Most-favoured nation and the birth of the GATT

5. The modern era: three new ³waves "of regionalism



Trade Flow related to PTA

� The total value of world merchandise trade

taking place among PTAmembers

� The degree to which trade has become more or

less geographically concentrated as regional

trade agreements have proliferated



Conclusion

� PTAs exist before multilateral trading system

� Growth has been seen in both extensive and

intensive margin� Many countries has Zero duty MFN rates and

widespread product exclusion.

�

Some PTAs go further than the WTO.� Tells countries deep integration through PTAs.



C.Causes and

effects of PTAs: Is

it all aboutpreferences?



MOTIVES FOR PTAs

� Neutralizing beggar-thy-neighbour trade

policies

�

Gaining credibility� Other economic motives

� Political motives

�

What explains the growth of PTAs



THE STANDARD ECONOMICS OF PTAs

�

An overview of the economic effects of PTAs� Trade creation and trade diversion

� The effects of PTAs in services

� Natural partners, accumulation and locationeffects of PTAs

� Effects of PTAs : the evidence

� The political economy of PTAs and external

tariffs� Rules of origin and trade diversion

Rules of origin : a source of trade diversion

Reducing such trade diversion : the way forward



GOING BEYOND THE STANDARD

ANALYSIS

� The concept of deep integration

� Why is deep integration gaining momentum

�The trade offs involved in deep integration



Introduction

� Gives evidence for the previous section C

� Evidences include

�examination of the magnitude of preferentialtariff rate

� the coverage and contents of the agreements

�

econometric evidence on the relationshipbetween production networks deeper PTAs

� the integration experience of specific PTAs.



Are lower tariffs still important for PTAs?

� Pre GATT average tariff among major countries

was 20 to 30 percent.

� Tariffs have progressively fallen since the

establishment of the General Agreement on

Tariffs and Trade (GATT) in 1948

� Since then numerous PTAs have significantly

reduced the tariffs applied by WTO members.� Reduction of tariffs on an MFN basis for all WTO

members accelerated in the late 1980 and 1990



Patterns in the content of PTAs

� Step one:

� 52 policy areas are classified into two groups

� WTO+(14 areas)

� WTO-X (38 areas)

� Step two: the legal enforceability of the PTA

obligations is ascertained.

� Step 3: the depth of an obligation isestablished for some policy areas.



Conclusion

� PTAs are not only about lowering tariffs.

� Research needs to focus increasingly on the

reasons for establishing PTAs that go beyondthe reduction of tariffs.

� Further reflection is needed on the

implications for the multilateral trading

system of deeper integration in PTAs.



E. The multilateral trading system

and PTAs



Deep PTA provisions and the

multilateral trading system� Deep integration is often non- discriminatory in nature

� Mechanisms supporting further liberalization are found inPTAs

Example-MFN clauses

� The effects of global production sharing

More consistent with the principles of the multilateraltrading system

� R elationship between the WTO and PTA dispute settlementsystems



Settlement Systems

� Diplomatic or political mechanism

� Standing tribunals

� Referral to ad hoc panel

�

Overlapping jurisdictions� Concerns over the coexistence of the WTO dispute

settlement system and PTA dispute settlementmechanisms

� Issues relating to PTA dispute settlement raised in WTO

disputes� WTO disputes between WTO members that are

partners in a PTA



The relationship between PTAs and the

WTO

� Coherence in international trade governance

� Multilateral disciplines on PTAs

� Possible ways to improve coherence



F.Conclusion



� Bilateral trade agreements long pre-dated the

multilateral trading system

�

PTA

has grown in recent trends� Many PTA goes beyond tariff commitment

� PTAs involve deep rather than shallow

integration� Trade and investment links among countries

have been growing.

world trade report.2011 by group-1

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