Economic research and trade policy analysis

The World Trade Report 2017 was prepared under the general responsibility of Xiaozhun Yi WTO Deputy Director-General and Robert Koopman Director of the Economic Research and Statistics Division. This year the report was coordinated by Marc Bacchetta and José-Antonio Monteiro. The authors of the report are Marc Bacchetta Cosimo Beverelli John Hancock Mark Koulen Viktor Kummritz José-Antonio Monteiro Roberta Piermartini Stela Rubinova and Robert Teh (Economic Research and Statistics Division).

The expansion of global value chains (GVCs) has plateaued since the global financial crisis of 2008–2009 due to the slowdown in hyperglobalization (Chapter 1; Antràs 2020a; World Bank 2020). Old and new risks to GVCs as well as shocks threaten the continued viability of these chains. The risks and shocks include extreme weather events trade and technology wars increased protectionism geopolitical tensions and COVID-19. IMF (2021a) defines risk as the effect of uncertainty on objectives—and by inducing uncertainty shocks constitute an underlying source of risks along with limited information and an imprecise understanding of the sources and mechanisms triggering shocks which contributes to uncertainty. Given all this the first three sections of this chapter are taken up by an overview of the sources mechanisms and effects of the three main types of meta-risks: geopolitical environmental and those stemming from the COVID-19 pandemic.1 While addressing primarily the implications of the three risks for GVCs these sections also take note of reverse causal effects where GVCs exacerbate those risks.2 The chapter then examines the relative resilience of GVCs to shocks depending on the nature and magnitude of the shock as well as on GVC features industry and firm topographies availability of substitutions degree of transactional stickiness and type of shock (geopolitical environmental COVID-19). The subsequent section examines mutual interactions across all three risks and their compounded effects. The chapter concludes with policy recommendations and a discussion on future directions in the burgeoning analysis of risks to GVCs.

Building economic resilience requires an understanding of economic challenges and opportunities as well as the ability to anticipate evaluate and manage risks. Although trade can spread and magnify shocks it can help countries prepare for cope with and recover from shocks. Initial conditions the nature of the shock and policy choices including the level of diversification are important in determining what role trade will play.

Charles Dickens’ phrase “it was the best of times; it was the worst of times” is for many Indonesian workers an apt summary of their experience during the early 2000s. While the national economy and especially its resource-exporting sectors enjoyed trade-driven growth of unprecedented magnitude and duration millions of blue-collar workers and labor market entrants found themselves paradoxically sidelined from well-paid jobs in manufacturing and instead forced to seek livelihoods in low-paid low-skill service sector jobs. This happened at a time when many Asian countries led by the People’s Republic of China were enjoying (continued) expansion of manufacturing trade by participating in global production networks which in turn created better employment opportunities for their less-skilled agricultural workforces. For many Indonesians on the other hand the boom was a period of stagnating real wages and diminished earnings prospects even as national income and spending surged ahead and overall expectations for the future became increasingly bright. For workers the consequence of job displacement due to structural change would have been particularly severe during this time.

Cette section examine les effets de la technologie sur le niveau et la composition de l’emploi et des salaires. En augmentant la productivité des facteurs de production le progrès technologique repousse la frontière des possibilités de production d’une économie de sorte que la même quantité de produits peut être obtenue avec moins de ressources ou une plus grande quantité avec les mêmes ressources.

The emergence of democracy in Indonesia as a result of the economic crisis in the late 1990s has brought significant changes to the policy-making process in the country. The reform advocates who emerged following the downfall of the authoritarian Suharto regime saw liberalization and engagement with the global economy as key to advancing economic reform in Indonesia. While recognizing the importance of concluding the global trade negotiations under the auspices of the World Trade Organization (WTO) Indonesia also remains committed to pursuing liberalization at the regional level through its membership of the Association of Southeast Asian Nations (ASEAN). Recently Indonesia has also engaged in bilateral preferential trade agreements (PTAs) in part due to the stalling of the Doha Round negotiations but also because the pursuit of PTAs by Indonesia’s immediate neighbours has generated fear among government and economic actors about the possible loss of competitiveness in key export markets.

WTO accession still holds a magnetic attraction for non-members. Why is this so in spite of the challenges faced by the organisation conclusions by analysts of deadlock in the Doha Development Agenda assessments that trade policy action has shifted elsewhere to preferential trade arrangements (bilateral and regional trade agreements including more recently ‘mega-regionals’) and repeated forecasts about the WTO’s ‘irrelevance’ and ‘unravelling’? Systemically what have WTO accessions contributed to the rules-based trading system through their processes procedures best practices and results? What effects have accession negotiations had on domestic reforms in Article XII members? Are there broader lessons for the WTO? This chapter demonstrates that after the coming into force of the WTO in 1995 results from WTO accession negotiations served to update trade rules continuously (including influencing WTO jurisprudence) enlarged market access opportunities provided acceding governments with a critical multilateral instrument for legislation-based domestic reforms and supported geopolitical and geo-economic transformations from centrally planned to market-based economies the rule of law and good governance. The changes associated with these results were evident from the 1989 fall of the Berlin Wall and the 1991 collapse of the Soviet Union. The evidence strongly suggests that the accession process and its results have established a legal framework for international cooperation contributed to the global economic transformation of command to market economies and provided a platform for Article XII members to implement their development and modernisation priorities. Overall the legal economic and trade policy impact from the deposited Accession Protocols and the process of accession negotiations per se have not only reinforced existing rules and raised the systemic bar with associated catalytic effect for domestic reforms but have also staked out the parameters for the future of the rules-based trading system including a future WTO work programme.

Ukraine embarked on its road to WTO accession in 1992 a year after it had declared its independence. Fourteen years of intense work steep learning persistence political will and flexibility were to follow. Ukraine faced many immediate challenges and tasks in strengthening its independence and creating and establishing the national institutions required by an independent state moving away from a centralised economy and reinforcing foreign policy. Ukraine had to totally eliminate its post-Soviet legacy. A new system of national government and administration had to be established. Democracy the rule of law and a free market became the guiding principles for political social and economic life. WTO accession implied increased competition which turned out to be quite painful for some companies. However the negative scenarios foreseen by some researchers did not occur; in fact the accession offered the national economy new incentives for structural and long-lasting change. However WTO membership is not simply a recipe for future happiness. While it stimulates trade and business environments members must still work within the multilateral system to keep up to date.

En esta sección se presenta un panorama de la utilización de las subvenciones tanto a nivel mundial como a distintos niveles de desglose geográfico y sectorial. Teniendo en cuenta la cantidad y la calidad de los datos disponibles no es posible presentar un cuadro exhaustivo y sistemático de la incidencia de las subvenciones.

In the interest of accuracy this publication uses the historical names of GATT contracting parties as they were used at the time of each dispute e.g. Ceylon Czechoslovakia Hong Kong the Federal Republic of Germany Yugoslavia or the Federation of Rhodesia and Nyasaland. Likewise this publication makes reference to EEC-6 EEC-9 EEC-10 or EEC-12 to reflect different stages of enlargement of the European Economic Communities. It also refers to individual EEC member States (e.g. France Italy etc.) for cases when these countries acted in their own capacity.