Free Trade Agreements and Governance of the Global Trading System

Abstract

This article explores how far free trade agreements (FTAs) have strengthened or weakened global governance of the trading system. We open with an analysis of the altered political and economic context within which countries have come, in recent years, to assign a new importance to regional and bilateral trade agreements in their trade policies. We then consider each of the main provisions included in FTAs and comment on how these may separately affect the management of trade relations. We conclude with some observations of the broader trends affecting global governance that are associated with the spread of trade agreements as a whole.

Is there convergence across countries? A spatial approach

“…This finding is consistent with recent theoretical and empirical work in both sociology (Fligstein 2002) and political science (Gilpin 2000; Mansfield and Milner 1999; Brown and Stern 2011) highlighting the rising importance of blocs in global economic affairs and governance. These results also line up with findings of sigma divergence (Quah 1993).…”

“…The world has witnessed the emergence of continental-sized trade blocs such as the European Union (EU), NAFTA, and Mercosur, among others. A simple functional analysis highlights that trade blocs tend to be formed by countries geographically adjacent or close, with similar trade policies or regimes, and sharing a desire to organize regionally (Brown and Stern 2011; De Melo and Panagariya 1992; Mansfield and Milner 1999). Based on a variety of empirical models, a consensus has emerged in the political economy literature that regional trade agreements are trade-creating for member states, but could lead to trade diversion or destruction relative to non-members (Thursby and Thursby 1987; Frankel and Rose 2000; Rose 2000).…”

Chapter 6: Russia’s Regional Free Trade Agreements and Agri-Food Trade After 2014

“…Another important motive can be the need to cover a new issue that is missing in WTO/multilateral negotiations. 10 A negative view is that it is a mistake to put all efforts on new free trade agreements instead of focusing on multilateralism and thus supporting the World Trade Organization. 11 However, to negotiate RTAs can alternatively be viewed as a constructive response to the lack of progress at the multilateral level.…”

A Comparison of Global Governance Across Sectors: Global Health, Trade, and Multilateral Development Finance

“…Second, tariff reduction is more firmly implemented in agreements between developed countries and therefore the benefits accrued from South-South agreements are marginal. For instance, Brown and Stern (2011) note that the utilization rate in ASEAN was very low at below 10% (Brown and Stern 2011: 336). Furthermore, certification rules for RTAs can increase export costs, invalidating the RTAs' benefits (Brown and Stern 2011: 337).…”