Beyond Trade: How deep trade agreements shape non-trade outcomes

EditedbyAnaFernandes,NadiaRochaandMicheleRuta BeyondTrade HowDeepTradeAgreementsShapeNon-TradeOutcomes BeyondTrade HowDeepTradeAgreementsShapeNon-TradeOutcomes WITHSUPPORTOFCEPRPARISFOUNDINGPARTNERS CEPRPRESS CentreforEconomicPolicyResearch33GreatSuttonStreet London,EC1V0DX,UK 187boulevardSaint-Germain 75007,Paris,France Tel:+44(0)2071838801 Email:cepr@cepr.orgWeb:www.cepr.org ISBN:978-1-912179-72-5 Copyright©CEPRPress,2023 BeyondTrade HowDeepTradeAgreementsShapeNon-TradeOutcomes EditedbyAnaFernandes,NadiaRochaandMicheleRuta CENTREFORECONOMICPOLICYRESEARCH(CEPR) TheCentreforEconomicPolicyResearch(CEPR)isanetworkofover1,700researcheconomistsbasedmostlyinEuropeanuniversities.TheCentre’sgoalistwofold:topromoteworld-classresearch,andtogetthepolicy-relevantresultsintothehandsofkeydecision-makers.CEPR’sguidingprincipleis‘Researchexcellencewithpolicyrelevance’.ItwasfoundedintheUKin1983,whereitisaCharity,andinNovember2019CEPRinitiatedthecreationofanAssociationunderFrenchlaw,inordertoprovideavehicleforanexpansioninFrance.ThemembersoftheConseild’AdministrationoftheAssociationareidenticaltotheUKBoardofTrustees. CEPRisindependentofallpublicandprivateinterestgroups.IttakesnoinstitutionalstandoneconomicpolicymattersanditscorefundingcomesfromitsInstitutionalMembers,projectsthatitrunsandsalesofpublications.Becauseitdrawsonsuchalargenetworkofresearchers,itsoutputreflectsabroadspectrumofindividualviewpointsaswellasperspectivesdrawnfromcivilsociety.CEPRresearchmayincludeviewsonpolicy,buttheTrustees/membersoftheConseild’AdministrationoftheAssociationdonotgivepriorreviewtoitspublications.TheopinionsexpressedinthisreportarethoseoftheauthorsandnotthoseofCEPR. ChairoftheBoardSirCharlieBeanFounderandHonoraryPresidentRichardPortes PresidentBeatriceWederdiMauro VicePresidentsMaristellaBotticiniPhilippeMartinUgoPanizza MarReguantHélèneRey ChiefExecutiveOfficerTessaOgden Contents Acknowledgementsvi Forewordvii Howdeeptradeagreementsshapenon‑tradeoutcomes1 AnaFernandes,NadiaRochaandMicheleRuta Section1:Trade‑offsinthedesignofdeeptradeagreementswithnon‑tradeobjectives 1Tradeagreementsandnon‑tradeobjectives:Acautionarynote13 LAlanWinters Section2:FDI,organisationofvaluechainsandinnovation 2Deeptradeagreementsandforeigndirectinvestment21 MarioLarchandYotoV.Yotov 3Deeptradeagreementsandfirmownershipinglobalvaluechains29 PeterH.EggerandGerardMasllorens 4Intellectualproperty‑relatedPTAsandpatenting35 JacobHoward,KeithE.MaskusandWilliamC.Ridley Section3:Non‑tariffmeasuresanduncertainty 5Whatcanweexpectfrompreferentialtradeagreements?45 NunoLimão 6Deeptradeagreements:Notatoolforstrategictradepolicy?55 GabrielJ.FelbermayrandFeodoraA.Teti Section4:Labourandmigration 7PerverseeffectsofchildlabourprovisionsinPTAs65 RyanAbman,ClarkLundberg,JohnMcLaren,MicheleRuta 8Deeptradeagreementsandinternationalmigration:Theroleofvisaprovisions73 AnthoninLevelu,AnnaMariaMaydaandGianlucaOrefice Section5:Environmentalprotectionandcivilrights 9Non‑tradeprovisionsindeeptradeagreementsandnon‑tradeoutcomes83 JosephFrancois,BernardHoekman,MiriamManchinandFilippoSanti 10Strengtheningenvironmentalagreementsthroughtradepolicylinkage89 ClarkLundberg,DanielSzmurlo,andRyanAbman Section6:Openresearchquestions Non‑tradeobjectivesandnewfrontiersforresearchininternationaleconomic policy99 EmilyBlanchard Acknowledgements ThiseBookistheresultofaresearchprojectontheimpactsofdeeptradeagreementsonnon-tradeoutcomesthatwaspromotedbytheWorldBank.TheprojectproducedresearchpaperswhosemainfindingsaresummarisedinthechaptersofthiseBook.ThepaperswerepresentedinworkshophostedbytheWorldBankinJune2022andwerediscussedbyspecialists. Weareextremelygratefultotheauthorswhodedicatedtheirtimeandintellecttothisproject.WewouldalsoliketoexpressourgratitudetocolleaguesinsideandoutsidetheWorldBankwhograciouslygavetheirtimetoprovideinputsatvariousstagesofthisprojectoractedasdiscussants:VanessaAlviarez,PauloBastos,SebastienDessus,AlvaroEspitia,DeonFilmer,HiauLooi-Kee,MauricioMoreira,GauravNayyar,BobRijkers,SandraRozo,andDariaTaglioni. RodrigoDeianaprovidedoutstandingresearchassistance.TanyaCubbins,AnnaGoodman,DianaLanchyCastillo,andRyanHahnprovidedexcellentadministrativesupportthroughouttheproject.ThisworkbenefittedfromthesupportoftheWorldBank’sUmbrellaFacilityforTradetrustfundfinancedbythegovernmentsoftheNetherlands,Norway,Sweden,Switzerland,andtheUnitedKingdom. Moreinformationabouttheprojectisavailableat:https://datatopics.worldbank.org/dta/index.html AnaMargaridaFernandes,NadiaRochaandMicheleRutaWashington,DC,April2023 Foreword Climatechange.COVID-19.ThewarinUkraine.Inanincreasinglyturbulentandfragmentedworld,preferentialtradeagreements(PTAs)areemergingaspotentialanchorsofstabilityandameanstotackleemergingsocialandenvironmentalchallenges.Halfacenturyago,theobjectivewastoimprovemarketaccess.Sincethen,PTAshaveevolvedtoembraceinvestment,competitionpolicy,andproductregulations.Today,goalsincludeprotectinglabourrightsandcuttinggreenhousegasemissions.DevelopingnationscanreapsubstantialbenefitsbyusingPTAstocem