Annex 6A Supplementary figures

PTAs have tended to support shallow integration, not focused on helping governments define good policies, though there is a strong presumption among economists that lowering border barriers constitutes good policy by supporting the efficient allocation of scarce resources. Recent PTAs are turning in that direction—for example, by including provisions supporting the adoption of good regulatory practices and international regulatory cooperation.

Governments can build on that change in direction by doing the same for subsidies and SOEs. A first step would be to use PTAs more as a framework for enhancing transparency and assessing the effects of subsidies and the operation of SOEs. That step could be complemented by improving understanding of how policies affect value chain investment and operations. Research on industrial policy has noted many cases of success associated with resolving a coordination or information problem (Sabel 2012). A focus on documenting and analyzing subsidies and SOEs can thus be combined with one on determining whether those instruments are appropriate or effective at attaining industrial diversification objectives through firms and stakeholders participating in value chains. Such research can identify areas where cooperation can both improve domestic policy outcomes and attenuate potential competitive spillovers.

Figure 6A.1 Selected subsidy-related provisions in Latin American and Caribbean PTAs versus those of the rest of the world and other middle-income countries, 2017

Does the agreement cover subsidies in the services sector?

Does the agreement cover support granted by subcentral, regional, and local authorities?

Does the agreement cover support to state enterprises?

Does the agreement provide for any institution to deal with transparency or enforcement?

Does the agreement provide for notification requirements (individual measures, annual reporting)? Does the agreement provide for the discussion of information or for the deliberation and assessment of individual measures/situations? Does the agreement provide for the supervision or review of subsidy regulations?

Does the agreement specify any objective for controlling subsidies and reactions to them?

0 10 20 30 40 50 60 70 80 90 100

Share of all agreements by group (%) Latin America and the Caribbean Rest of the world Middle-income countries

Source: World Bank’s Deep Trade Agreements database. Note: “Middle-income countries” are defined according to World Bank income classifications. PTA = preferential trade agreement.

Figure 6A.2 Selected SOE provisions in Latin American and Caribbean PTAs versus those of the rest of the world and other middle-income countries, 2017

Does the agreement cover state-owned enterprises, state enterprises, or public undertakings? Does the agreement provide for a body or a committee to deal with transparency or enforcement of the regulation of state enterprises? Does the agreement provide for any dispute settlement mechanism to deal with state enterprises?

Does the agreement provide for discussion of information or for deliberation and assessment of operations/conduct?

Does the agreement regulate subsidization to state enterprises? Does the agreement require state enterprises to act in accordance with commercial considerations (for commercial activities)? Does the agreement specify an objective of regulating the state intervention in the economy via state-controlled or delegated entities?

0 10 20 30 40 50 60 70 80 90

Share of all agreements by group (%) Latin America and the Caribbean Rest of the world Middle-income countries

Source: World Bank Deep Trade Agreements database. Note: “Middle-income countries” are defined according to World Bank income classifications. PTA = preferential trade agreement; SOE = state-owned enterprise.

Source: World Bank Deep Trade Agreements database. Note: “Middle-income countries” are defined according to World Bank income classifications. PTA = preferential trade agreement.

Figure 6A.3 Selected competition-related provisions in Latin American and Caribbean PTAs versus those of the rest of the world and other middle-income countries, 2017

Does the agreement establish cooperation in the field of competition?

Does the agreement provide for coordination among bodies with a competition mandate?

Does the agreement provide for exchange of information among bodies with a competition mandate?

Does the agreement provide for the creation of a regional/agreement-related competition authority?

Does the agreement regulate undertakings with exclusive rights?

Does the agreement regulate anticompetitive behavior of state-owned enterprises?

Does the agreement regulate monopolies?

0 10 20 30 40 50 60 70 80

Share of all agreements by group (%) Latin America and the Caribbean Rest of the world Middle-income countries