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Trade negotiations have been a great success since the 1950s and today virtually every country in the world is part of at least one trade treaty. Nowadays, there is widespread participation in multilateral trade agreements, with members of the World Trade Organization accounting for more than 95% of world trade. Also, there is widespread membership in preferential trade agreements, with each member of the WTO joining on average twenty other trade agreements that allow for deeper integration between countries. This dissertation investigates the causes and consequences of this phenomenon. The first chapter examines what motivates trade agreements. I challenge the view that trade treaties are necessary because countries have an incentive to unilaterally impose import tariffs to manipulate their terms-of-trade and obtain welfare gains at the expense of partners. This is a mainstream argument in economics, the so-called terms of trade theory. I evaluate whether predictions of this theory are consistent with the data by asking what import tariffs countries would choose if multilateral trade negotiations were designed according to its logic. Motivated by empirical evidence on tariffs and a theory of trade negotiations, I pursue this goal in the context of a quantitative gravity model that simulates partial cooperation inside the WTO. Matching the model to the data of 15 countries during the Uruguay Round, I find that counterfactual average tariffs are consistent with real negotiated outcomes for the EU, Japan, and the US, the main trade negotiators at the time. For other economies, tariff choices do not imply a sizable trade externality that can promote cooperation. The second chapter looks at the consequences of the rules of the world trading system for developing countries. It investigates the effects of the Generalized System of Preferences, a form of nonreciprocal tariff cuts which apply over exports from developing economies. I use an empirical gravity equation approach to study how those nonreciprocal preferences affect the exports of the beneficiary nations. In line with existing studies, I find that the average trade effect stemming from nonreciprocal preferences is highly unstable across econometric specifications. However, once I allow for heterogeneous effects, results become robust and economically important. Specifically, non-reciprocal preferences have a strong effect on the exports of beneficiaries when they are members of the World Trade Organization and are very poor. Not-so-poor beneficiaries also expand foreign sales, but only if they are not WTO members. For all others, the average export effects of NRTPs are mute. Acordos comerciais têm sido um grande sucesso desde a década de 1950. Atualmente, a maioria dos países participa de acordos comerciais multilaterais, com membros da Organização Mundial do Comércio hoje responsáveis por mais de 95 % do comércio mundial. Além disso, a maioria dos países também é membro de acordos preferenciais de comércio - cada membro da OMC adere, em média, a outros vinte outros acordos preferenciais de comércio que permitem uma integração mais profunda entre parceiros. Esta dissertação investiga causas e consequências desse fenômeno. O primeiro capítulo investiga o que motiva acordos comerciais. Eu questiona a visão de que acordos comerciais são necessários porque países têm um incentivos a impor unilateralmente tarifas de importação para manipular seus termos de troca e obter ganhos de bem-estar às custas dos parceiros. Este é um dos argumento dominante em economia, a chamada teoria dos termos de troca. Eu avalio se as previsões dessa teoria são consistentes com os dados perguntando quais tarifas de importação países escolheriam se negociações comerciais multilaterais fossem desenhadas dentro dessa lógica. Motivado por evidências empíricas sobre tarifas e uma teoria de negociações comerciais, eu conduzo essa análise através de um modelo de gravidade quantitativo que simula cooperação parcial dentro da OMC. Comparando o modelo com os dados de 15 países durante a Rodada do Uruguai, eu observo que as tarifas médias contrafactuais são consistentes com os dados da União Européia, do Japão e dos EUA, os principais negociadores à época. Para outras economias, as escolhas tarifárias não implicam externalidades que sejam capazes de promover cooperação. O segundo capítulo analisa as conseqüências das regras do sistema mundial de comércio para países em desenvolvimento. Eu investiga os efeitos do Sistema Geral de Preferências, uma tipo de preferências tarifárias não recíprocas que se aplicam às exportações de países em desenvolvimento. Eu utilizo uma abordagem empírica através de equações da gravidade para estudar como essas preferências não recíprocas afetam exportações de países beneficiários. Em acordo com estudos existentes, os resultados mostram que o efeito médio de preferências não recíprocas é altamente instável de acordo com as diferentes especificações econométricas. No entanto, uma vez que eu permito efeitos heterogêneos, os resultados se tornam robustos e economicamente importantes. Especificamente, preferências não recíprocas têm um forte efeito nas exportações de beneficiários quando eles são membros da Organização Mundial do Comércio e são muito pobres. Já beneficiários não tão pobres também expandem as suas exportações, mas apenas se não forem membros da OMC. Para todos os outros, os efeitos médios das exportações são nulos.

We use an empirical gravity equation approach to study how nonreciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line with existing studies, the average trade effect stemming from nonreciprocal preferences is highly unstable across specifications. However, once we allow for heterogeneous effects, results become robust and economically important. Specifically, NRTPs have a strong effect on the exports of beneficiaries when they are members of the World Trade Organization and are very poor. Not-so-poor beneficiaries also expand foreign sales, but only if they are not WTO members. For all others, the average export effects of NRTPs are mute.

Evidence indicates that trade costs are a much more substantial barrier to trade than tariffs are, especially in Sub-Saharan Africa. This paper decomposes trade costs into: (i) trade facilitation, (ii) non-tariff barriers, and (iii) the costs of business services. The paper assesses the poverty and shared prosperity impacts of deep integration to reduce these three types of trade costs in: (i) the East African Customs Union–Common Market of East and Southern Africa–South African Development Community "Tripartite" Free Trade Area; (ii) within the East African Customs Union; and (iii) unilaterally by the East African Customs Union. The analysis employs an innovative, multi-region computable general equilibrium model to estimate the changes in the macroeconomic variables that impact poverty and shared prosperity. The model estimates are used in the Global Income Distribution Dynamics microsimulation model to obtain assessments of the changes in the poverty headcount and shared prosperity for each of the simulations for the six African regions or countries. The paper finds that these reforms are pro-poor. There are significant reductions in the poverty headcount and the percentage of the population living in poverty for all six of the African regions from deep integration in the Tripartite Free Trade Area or comparable unilateral reforms by the East African Customs Union. Further, the incomes of the bottom 40 percent of the populations noticeably increase in all countries or regions that are engaged in the trade reforms. The reason for the poor share in prosperity is the fact that the reforms increase unskilled wages faster than the rewards of other factors of production, as the reforms tend to favor agriculture. Despite the uniform increases in income for the poorest 40 percent, there are some cases where the share of income captured by the poorest 40 percent of the population decreases. The estimated gains vary considerably across countries and reforms. Thus, countries would have an interest in negotiating for different reforms in different agreements.

Despite strong economic growth since 2000, Moldova remains one of the poorest countries in the region. Excessive reliance on remittances, export dependency on a few products, and insufficient domestic job creation make the Moldovan economy highly vulnerable to external conditions. As a small and open economy, Moldova’s development potential is linked to its trade and investment integration strategy. Moldova is situated between two large markets: the European Union (EU), which absorbs more than half of Moldova’s exports, and the Russian Federation. Reducing the economic distance to large regional markets and reaping the benefits of openness is key to overcoming Moldova's structural constraints and spurring export-led growth. The objective of the Moldova Trade Study is to contribute to a better understanding of the factors and challenges underlying Moldova’s foreign trade performance and to identify policy interventions that can enhance the competitiveness of Moldova’s exporting firms and the value added of their exports. . The rest of the note is structured as follows: (ii) section two summarizes the analysis of Moldova’s export performance; (iii) section three focuses on constraints on Moldova’s competitiveness; (iv) in section four, the authors consider alternative trade policy scenarios and their implications for the Moldovan economy; (v) section five synthetizes existing analysis on constraints for agriculture competitiveness and exports, while section six evaluates the performance of free economic zones in Moldova. In the final section, the authors present policy recommendations

Moldova’s recent Association Agreement with the European Union (EU), which includes a Deep and Comprehensive Free Trade Agreement (DCFTA), represents an important opportunity, as well as challenges. This analytical document has been commissioned by the World Bank Group to provide insights into potential outcomes of the DCFTA and of other trade options that Moldova has, using a Dynamic Computable General Equilibrium (DCGE) model calibrated to its economy. This paper begins by describing the general trends in economic relations between Moldova and the EU over the past 10 years, with an emphasis on trade, as well as Foreign direct investment (FDI) and labor migration. This section includes some additional facts and details that complement the Trade Competitiveness Diagnostic. In the second section, the paper presents the main elements of the DCFTA and highlights the trade commitments and concessions that the EU and Moldova undertook. It also includes a short review of available literature on the ex-ante or ex post impact assessments of other Association Agreements between the EU and third countries that have been done using CGE models. The third section presents key features of the DCGE and discusses the data used for assembling the Social Accounting Matrix (SAM). Then, the main features of the simulated trade scenarios are presented. Finally, this paper discusses the DCGE simulation results, including the effects of the various scenarios on welfare, trade, and economic activity level. Some distributional impacts are also brought into discussion. The final section concludes and makes several recommendations.

How do global supply chain linkages modify countries' incentives to impose import protection? Are these linkages empirically important determinants of trade policy? To address these questions, this paper introduces supply chain linkages into a workhorse terms-of-trade model of trade policy with political economy. Theory predicts that discretionary final goods tariffs will be decreasing in the domestic content of foreign-produced final goods. Provided foreign political interests are not too strong, final goods tariffs will also be decreasing in the foreign content of domestically-produced final goods. The paper tests these predictions using newly assembled data on bilateral applied tariffs, temporary trade barriers, and value-added contents for 14 major economies over the 1995-2009 period. There is strong support for the empirical predictions of the model. The results imply that global supply chains matter for trade policy, both in principle and in practice.

This background paper provides information on the study of the Group of 20 (G-20) and challenges faced by low-income developing countries (LIDCs). The study analyzes LIDCs development challenges and how G-20 economic policies can be coordinated so they can contribute to creating an enabling environment for their development. The focus of the paper is the role that trade and investment policies of G-20 countries play in this context. The paper is composed of three parts 1) the characteristics of LIDCs integration in the world economy, 2) the evolution of G-20 policies that affect LIDCs integration, and 3) the potential for changes in the G-20 trade and investment policy landscape to benefit LIDCs.

Economic activity in many African countries remains highly concentrated and exports are often dominated by mineral resources or a few primary products. The World Bank’s 2011 report on light manufacturing in Africa identified poor trade logistics performance as a constraint that especially penalized African exporters that relied on imported inputs, very often making them uncompetitive. The report highlighted research that demonstrated how poor logistics added roughly a 10 percent production cost penalty in Ethiopia, Tanzania, and Zambia across the five subsectors of light manufacturing where opportunities were identified as greatest in Africa. The report outlined how in Africa poor trade logistics increase production costs (often wiping out the labor cost advantage) and lead to long and unreliable delivery times, making local firm’s unattractive suppliers to lead firms in global value chains (GVCs), particularly for light manufacturing. This note seeks to contribute to a review of progress in achieving export diversification through greater exports of light manufacturing products. It looks at recent trends in the exports of the five categories of light manufacturing identified as having strong potential in Africa. The note reviews progress in improving trade logistics in Sub-Saharan Africa, with a focus on the three countries highlighted in the light manufacturing study: Ethiopia, Tanzania, and Zambia, and additionally Kenya and Uganda.

What affects a country's decision of whether to formally engage in a trade dispute directly related to its exporting interests? This article empirically examines determinants of affected country participation decisions in formal trade litigation arising under the World Trade Organization (WTO) between 1995 and 2000. It investigates determinants of nonparticipation and examines whether the incentives generated by the system's rules and procedures discourage active engagement in dispute settlement by developing country members in particular. Though the size of exports at stake is found to be an important economic determinant affecting the decision to participate in challenges to a WTO-inconsistent policy, the evidence also shows that measures of a country's retaliatory and legal capacity as well as its international political economy relationships matter. These results are consistent with the hypothesis of an implicit 'institutional bias' generated by the system's rules and incentives that particularly affects developing economy participation in dispute settlement.

Although average Organisation for Economic Co-operation and Development (OECD) tariffs on imports from the least developed countries are very low; tariffs above 15 percent have a disproportional effect on their exports. Products subject to tariff peaks tend to be heavily concentrated in agriculture and food products and labor intensive sectors, such as apparel and footwear. Although the least developed countries benefit from preferential access, preferences tend to be smallest for tariff peak products. A major exception is the European Union, so that the recent European initiative to grant full duty free and quota free access for the least developed countries will result in only a small increase in their exports of tariff peak items. However, as preferences are less significant in other major OECD countries, a more general emulation of the European Union initiative would increase the least developed countries total exports of peak products by US dollar 2.5 billion. Although almost half of this increase is at the expense of other developing country exports, this represents less than 0.05 percent of their total exports. This trade diversion can be avoided by reducing tariff peaks to a uniform 5 percent applied on a nondiscriminatory basis. However, such a reform would imply no gains for the least developed countries, suggesting that the globally welfare superior policy of nondiscriminatory elimination of tariff peaks should be complemented by greater direct assistance to poor countries.

The Central America region is a small market. The region contains around 43 million inhabitants (0.6 percent of total world population) who generate around 0.25 percent of the world's Gross Domestic Product (GDP). While the region has successfully embarked on a regional integration agenda and has strong commercial links with the US, extra-regional trade-mainly with large fast-growing emerging economies-remains a challenge. Export performance is analyzed along three dimensions that, together, give a fairly comprehensive picture of competitiveness: 1) the composition, orientation and growth of the export basket; 2) the degree of export diversification across products and markets; and 3) the level of sophistication and quality of their main exports. This analysis allows exports dynamics at the different margins of trade (intensive, extensive, and quality) to be evaluated and individual countries' to be benchmarked with peers in the Central American region. The results of this report allow policy makers to identify key areas to explore in the overall discussion of export competitiveness in the Central American region. This paper relates to the literature on challenges and opportunities that trade liberalization can bring to the Central American region. Much of the recent literature focuses on the role of the free trade agreement negotiated by Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua, with the US.

Global general equilibrium simulations of “regional” (within Sub-Saharan Africa –SSA-) and “multilateral” (Doha and preferential) trade integration are compared to assess policy reform priorities. Their coherence with the objective of agriculture-led industrialization is tested. New results reveal that for SSA regional integration delivers as much as multilateral integration. Multilateral liberalization drives Sub-Saharan African countries further away from agricultural-led industrialization. On the contrary regional integration fosters the production and trade of processed agricultural products. Regional integration has heterogeneous impacts on countries in SSA and gains might be concentrated on a few countries. Accompanying redistributive policies to compensate the loosers might help bring the negotiations further.

Lack of integration into the global economy is a major factor in the continued underdevelopment of the poorest countries. The reasons for this include obstacles faced by exporters both abroad and at home: access to foreign markets is frequently limited by import barriers, while inadequate infrastructure and weak policies at home - including their own trade policies - often frustrate producers seeking to compete abroad.With many low-income countries (LICs) lagging in the global effort to reach the Millennium Development Goals (MDGs), there are calls for intensified action to spur growth and development. Trade is one key area where action can be taken. This paper suggests possible actions to foster trade integration for the LICs, substantially increasing their export potential and thereby helping them to progress toward the Millennium Development Goals.As the foundation for these ambitions, we emphasize the role of a secure, open global trading environment - strengthened further by concluding the WTO Doha Round. From this base, the poorest countries could also benefit from better trade preferences from the Advanced Market (AM) and major Emerging Market (EM) countries. Building the capacity to take advantage of trade opportunities will require support from the international community and policy reforms - including to their own trade regimes - by the poorest countries themselves. The Fifteen Point Plan of possible actions outlined in this paper could increase annual exports of the least developed countries (LDCs) by US$10 billion or more, with additional benefits for other LICs.

Publication Inra prise en compte dans l'analyse bibliométrique des publications scientifiques mondiales sur les Fruits, les Légumes et la Pomme de terre. Période 2000-2012. http://prodinra.inra.fr/record/256699; This paper analyzes the access of Eastern and Southern Mediterranean countries to the EU fruit and vegetables market and provides a measure of the level of preferences from which they benefit. To take into account the complexity of EU protection in the F&V sector, in particular the seasonality of protection and the Entry Price System, we conducted our analysis at a very disaggregated level (eight digits of the nomenclature, monthly data). We showed that, on average, Mediterranean countries do have significant preferences compared to other countries exporting to the EU. However, the magnitude of the preferences differs among countries; Morocco has the highest preference, while Syria and Israel have the lowest. We simulated a multilateral reduction in the MFN tariffs (as planned in the Doha Round) and showed that this would reduce the heterogeneity within the zone by more strongly eroding the preferences of the most advantaged countries. The classification of Entry Price products as sensitive products would either benefit or have no effect on most Mediterranean countries.; Cet article porte sur l’accès au marché européen des exportations de fruits et légumes en provenance des pays de l’est et de sud de la méditerranée, sur les droits de douane auxquels font face ces pays et sur la mesure des préférences dont ils bénéficient. Afin de prendre en compte la complexité de la protection européenne dans le secteur des fruits et légumes, en particulier la saisonnalité de la protection et le Système de Prix d’Entrée, l’analyse a été menée à un niveau très désagrégé (données mensuelles, au niveau produit). Les auteurs montrent qu’en moyenne les pays méditerranéens ont des préférences nettement plus importantes que les autres pays qui exportent vers l’Union Européenne. La situation des pays méditerranéens est cependant hétérogène, le Maroc ayant les préférences les plus élevées, la Syrie et Israël les plus faibles. Les auteurs simulent l’impact d’une libéralisation multilatérale (tel qu’envisagée dans les négociations OMC en cours) et les auteurs montrent qu’une telle libéralisation aurait pour effet de réduire l’hétérogénéité des préférences dans la région méditerranéenne en provoquant une érosion des préférences pour les pays actuellement le plus avantagés. Le classement des produits à prix d’entrée en produits sensibles n’aurait pas d’effet négatif sur les marges préférentiels des pays méditerranéens.

This paper analyzes the economic effects of agricultural price and merchandise trade policies around the world as of 2004 on global markets, net farm incomes, and national and regional economic welfare and poverty, using the global economy wide Linkage model, new estimates of agricultural price distortions for developing countries, and poverty elasticity's approach. It addresses two questions: to what extent are policies as of 2004 still reducing rewards from farming in developing countries and thereby adding to inequality across countries in farm household incomes? Are they depressing value added more in primary agriculture than in the rest of the economy of developing countries, and earnings of unskilled workers more than of owners of other factors of production, thereby potentially contributing to inequality and poverty within developing countries (given that farm incomes are well below non-farm incomes in most developing countries and that agriculture there is intensive in the use of unskilled labor)? Results are presented for the key countries and regions of the world and for the world as a whole. They reveal that, by moving to free markets, income inequality between countries will be reduced at least slightly, all but one-sixth of the gains to developing countries will come from agricultural policy reform, unskilled workers in developing countries the majority of whom work on farms will benefit most from reform, net farm incomes in developing countries will rise by 6 percent compared with 2 percent for non-agricultural value added, and the number of people surviving on less than US$1 a day will drop 3 percent globally.

The Doha round of multilateral trade negotiations stalled in 2008 owing in no small degree to a lack of agreement on the terms of substantially reducing trade-distorting support for agricultural products and to what extent this will be beneficial to developing countries. Nicaragua presents an interesting case in point, being one of the poorest economies in Latin America with still a relatively large agricultural sector and high degrees of rural poverty. In 2005, the country signed a free trade agreement with the United States. This chapter provides a quantitative analysis addressing that question. It does so using a computable general equilibrium (CGE) model for Nicaragua coupled with a micro-simulation methodology. The first section provides background information on trade reform policies and macroeconomic trends in Nicaragua, with special reference to the agricultural sector and rural poverty. The section that follows describes the main features of the CGE model and the micro-simulation methodology used to assess the impact on poverty and inequality. The author then lay out the model scenarios considered, which include liberalizations of agricultural and all merchandise goods trade by the rest of the world and by Nicaragua itself. That is followed by a summary analysis of results. This analysis includes tests for the sensitivity of the results with respect to assumptions regarding the responsiveness of trade to price liberalization, as identified through the relevant trade elasticities. The final section provides conclusions and possible policy implications.

While diversification of exports is often a desirable trade objective, it is far from clear how best to tap into new opportunities. This paper discusses the range of avenues of diversification, including (i) expanding the range of markets into which existing products are sold (geographic diversification); (ii) upgrading the value of existing products, including agricultural exports (quality diversification); and (iii) taking advantage of opportunities to expand non-merchandise exports (services diversification), in addition to introducing entirely new export products. All offer opportunities for cost?effective positive policies relating to the incentive regime, backbone services, and export support institutions.

Earnings from farming in many developing countries have been depressed by a pro-urban bias in own-country policies as well as by governments of richer countries favoring their farmers with import barriers and subsidies. Both sets of policies, which reduce national and global economic welfare and contribute to global inequality and poverty, have been undergoing reform since the 1980s. Using the linkage model of the global economy and modifications to the pre-release of version 7 of the Global Trade Analysis Project (GTAP) protection database for 2004, this paper seeks to compare the effect of those reforms to date with those that would come from removing remaining agricultural and trade policies. Two sets of results are thus presented: one showing the effects of policy reforms between 1980-84 and 2004, the other showing what the removal of remaining distortions as of 2004 could be. Both sets of results indicate improvements in the real value of agricultural output and exports, the real returns to farm land and unskilled labor, and real net farm incomes in most developing country regions despite the adverse effect on the international terms of trade for some developing countries that are net food importers or are enjoying preferential access to agricultural markets of high-income countries. Landowners in those high-income countries still offering their farmers price supports could readily afford to compensate them from the benefits of removing remaining agricultural protectionism.

This article assesses the impact of the world price-depressing effect of agricultural subsidies and border protection in Organization for Economic Co-operation and Development (OECD) countries on developing economies' exports, imports, and welfare. Developing economy exporters are likely to benefit from reductions in such subsidies and trade barriers, whereas net importers may lose as world prices rise. A simple partial equilibrium model of global trade in commodities that benefit from domestic support or export subsidies is developed to estimate the relevant elasticities. Simulation results suggest that a 50 percent reduction in border protection will have a much larger positive impact on developing economies' exports and welfare than a 50 percent reduction in agricultural subsidies. Although there is significant heterogeneity across developing economies, the results suggest that efforts in the Doha round of World Trade Organization (WTO) negotiations should be directed at substantially reducing border protection.

This article examines the macroeconomic effects of the erosion of trade preferences, with a focus on the export of Caribbean bananas to Europe. Estimates are made of the magnitude of implicit assistance provided over a period of three decades to eastern Caribbean countries through banana trade preferences. The value of such assistance rose until the early 1990s and has declined precipitously since then. Using vector autoregressive analysis, the article finds that changes in the level of implicit assistance have had a considerable macroeconomic impact, especially on Caribbean real gross domestic product growth.