Reconstructing the World Trade Organization for the 21st Century

The Increasing Importance of Bilateral Agreements in the Foreign Trade Policy

“…The focus here will be on how the rise of global supply chains has had an impact on the political economy of trade and countries motivations for bilateral cooperating on trade policies (Jones, 2015). There is both theory and evidence suggesting that participation in global supply chains tends to strengthen anti-protectionist forces (Jones, 2015).…”

“…The focus here will be on how the rise of global supply chains has had an impact on the political economy of trade and countries motivations for bilateral cooperating on trade policies (Jones, 2015). There is both theory and evidence suggesting that participation in global supply chains tends to strengthen anti-protectionist forces (Jones, 2015). The main impact, has been on unilateral tariff reductions (mostly among developing countries) and the proliferation of preferential trade agreements (PTAs) and bilateral investment treaties (Krist, 2013); (Jones, 2015); (Deudney, 2014).…”

“…There is both theory and evidence suggesting that participation in global supply chains tends to strengthen anti-protectionist forces (Jones, 2015). The main impact, has been on unilateral tariff reductions (mostly among developing countries) and the proliferation of preferential trade agreements (PTAs) and bilateral investment treaties (Krist, 2013); (Jones, 2015); (Deudney, 2014). A considerable amount of trade opening has thus taken place outside the WTO.…”

“…Before the emergence of supply chains -and the information and communication technology (ICT) revolution that underpinned it -industrialization involved building a strong industrial base often behind the protection of tariffs and other NTMs (Jupill, Mattli, Snidal, 2013). The unbundling of global production made it possible for countries to industrialize by joining international supply chains (Jones, 2015). This process also changed the political economy of trade policy, creating in many developing countries a strong incentive to undertake unilateral tariff reductions.…”

“…As a result, lobbying in favour of import tariffs on these goods decreases and pressure to reduce upstream tariffs increases. This effect, however, is more limited in cases where governments set up export processing zones to exploit the growing industrialization opportunities offered by supply chains (Jones, 2015). Secondly, a fall in coordination and communication costs may also have an impact on lobbying.…”