Economy: The year ahead
principal export, import and investment destinations and sources for many third countries, an ambitious agreement could therefore benefit third countries as well. In fact, an agreement could conceivably become a “gold standard,” opening the way for deep and comprehensive global trade and investment integration. By addressing a wider range of sensitive and complex issues that have so far eluded the WTO negotiations, the agreement would be a building block for future multilateral initiatives, in much the same way as today there is interest in “multilateralising” WTO-plus provisions of existing regional trade agreements. But if an agreement offers little new trade and investment liberalisation, at and behind the border, the TTIP would merely add one more deal to the hundreds of bilateral and regional arrangements that already exist. The announcement of the TTIP negotiations by the United States and the European Union was appropriately ambitious, focusing on the remaining impediments to trade and investment both at and beyond their borders. At the same time, there was explicit recognition of sensitive and long-standing areas of difference. Mutually acceptable solutions may in some areas remain elusive in the short term, but innovative approaches to improving international regulatory collaboration, from mutual recognition agreements to joint consultative bodies, could mitigate differences over time. Transparency will also be a key element. Given that regulatory matters are expected to be at the heart of any eventual agreement, transparency in the way regulations are made and implemented will allow other countries, not party to the agreement, to consider whether and how to “opt in”. Some regulatory measures, such as improved border procedures and more effective anti-corruption provisions, are nondiscriminatory by nature and offer benefits far beyond the borders of the EU and the US.
Trade relations
Partner shares in gross and value-added terms, as % of total exports and imports, 2009 Share of US in EU exports and imports, 2009
Share of EU in US exports and imports, 2009
Exports
Exports
Imports
Imports
0%
10% VA
20%
30%
40%
Gross
0%
10% VA
20%
30%
40%
Gross
Source: OECD TiVA trade database, May 2013
An eventual TTIP agreement could also be made open to other participants willing and able to agree to the provisions. In the investment field, the US and the EU are already bound by the most favoured nation (MFN) obligation under the OECD Codes of Liberalisation: any liberalisation measures which result from TTIP should be extended to other adherents to the OECD codes. Extending mutual recognition of standards to third countries, with which either the US or the EU has already reached a comparable agreement, is another possible way forward. The recent breakthrough at the multilateral trade talks at Bali in December is a boon for the WTO and for the multilateral trading system, and will generate large benefits, particularly for developing countries. Every effort must be made to ensure that progress continues. But governments will inevitably continue to pursue other avenues also. Fortunately, these second-best options can be supportive of an effective multilateral trading system if they are ambitious, break new ground in sensitive areas, keep participation as open as possible and are amenable to multilateralisation. With progress also being made in Geneva, it will be easier to ensure that regionalism and
multilateralism are ultimately reconciled and become mutually reinforcing. Another dimension to take on board concerns trade in value added (TiVA) and global value chains. The OECD’s work to date on these issues highlights that trade and investment openness are important components of comprehensive structural policy reforms that could contribute to strong, sustainable, balanced and inclusive growth. But much remains to be learned about the full range of policy implications for countries at different stages of development and for industries and firms of various characteristics, structures and sizes. Our goal is to integrate TiVA into the international statistical system; extend country, industry and indicator coverage; and expand our analysis across the full range of relevant policy areas. All of this work is expected to be carried out within an expanded network of partner institutions and governments. References Ash, Ken (2012), “Trading in facts”, in OECD Observer No 293, Q4 2012. Thompson, Lyndon (2013), “Profiting from trade in value added” in OECD Observer No 295, Q2 2013. Visit the OECD-WTO trade in value-added database at www.oecd.org/trade
OECD Observer No 297 Q4 2013
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