Forskningsprosjekt
Global trade policy at the crossroads
Events
Since the turn of the century, global trade policy largely had a reform pause since the “development round” of the WTO failed. There has therefore been more than 20 years with few reforms, at the same time as globalization and development have changed the world and placed development issues into a new light. The trade system therefore has long-term challenges of adapting to a new world situation.
This has been accentuated by the election of President Trump, with protectionism and escalating trade conflict with China on the agenda. This new situation raises a number of important issues with a large and partly uncovered need for knowledge. In the project, NUPI will contribute to address this need through analysis and seminars in 2018-2019. During the period, NUPI will arrange at least three seminars with focus on important current issues. In addition, knowledge will be disseminated through popular science publications, particularly Policy Briefs.
I prosjektet vil NUPI bidra til å dekke dette kunnskapsbehov gjennom analyse og seminarer i 2018-2019. NUPI vil i perioden arrangere minst tre seminarer med fokus på viktige aktuelle temaer. I tillegg vil kunnskap bli formidlet gjennom populærvitenskapelige publikasjoner, spesielt Policy Briefs.
Project Manager
New publications
China’s Export Success: Due to Unfair Practices or Fair Competition?
Compared with previous ratings, China’s trade policy today is more positively acknowledged. Yet, China can still be criticised in particular because of its non-transparent subsidy policy, the privileged role of state-owned enterprises, the heavy hand of the state in general, the sluggish enforcement of intellectual property rights, and the prevalence of non-tariff barriers. Yet, it cannot be ignored that Chinese entrepreneurship mentality is highly developed outside state interference in world markets. Especially, in the digital economy, high motivation and a large pool of human skills act as drivers of innovations, so far mainly process innovations. The trade war with the US hurts China and is responded by China with asymmetrical retaliation. The more Chinese exports to the US in total are affected, the more costs will have to be borne by US consumers as options to shift to alternative suppliers become weaker. What President Trump would see as a “good” deal for the US is unclear. It can be thus presumed that the trade war will continue into 2020 and that it is in fact a tech war. The EU is affected as EU companies produce in China for the US market and in the US for the Chinese market. While it might gain from trade diversion effects in the short run, the negative effects on investment due to uncertainty weigh more heavily. The EU is tempted to negotiate a free trade agreement with China but rightly refuses to start negotiations before China is prepared to conclude an agreement on investment. The EU should not see China and the US on equidistance. Workable relations with the US are much more important. To conclude, China’s trade policy has improved relative to Western standards but still warrants further steps towards much less state influence. Yet, its global competiveness especially in the state-of-the-art digital economy is high and is owed to a strong entrepreneurial mentality.
State-owned Enterprises and the Trade Wars
Do state-owned enterprises (SOEs) and state capitalism create unfair competition in international markets? Empirical evidence surveyed in this brief suggests that from the turn of the century, state-owned enterprises (SOEs) indeed started competing increasingly with private firms, trading across borders and establishing themselves abroad through foreign direct investment. Some SOEs benefited from government-granted advantages unavailable to their private peers. International legal disputes involving SOEs have multiplied, and discussions of new trade and investment policy initiatives aiming to discipline SOEs have emerged. However, opinions differ as to what are the best policy approaches. The OECD Guidelines on SOEs would go a long way towards maintaining an international level playing field, but these are not mandatory and therefore unevenly implemented. WTO law gives countries freedom in managing their SOEs and focuses instead on disciplining government actions which may distort competition in international markets, irrespective of their ownership status. Some recent preferential trading agreements (PTAs) have included new SOE-specific disciplines that may influence future policy developments. On-going concerns about the allegedly unfair trade practices in emerging market economies with large state sectors, most notably China, are likely to strengthen the pressure for a closer scrutiny of SOEs and a development of new national and international disciplines. Improved transparency and disclosure are likely to be a common denominator of these new initiatives.