INSTITUTION-BUILDING IN RTAS:
TRANSPARENCY, INTEGRITY AND
PARTICIPATIVE DECISION-MAKING
Iza Lejárraga
OECD Trade and Agriculture Directorate
Expert Group Meeting on Preferential Trade
Agreements and Regional Integration
Tunis, 5-6 December 2012
Presentation
 Overview of OECD work on RTAs
 Importance of transparency in trade
 Emerging best practices in RTAs
 Quantitative impact
OECD work on “Multilateralising Regionalism”:
Standards
Export restrictions
Govt procurement
WTO-plus
WTO-beyond
WTO-minus
Services
Enforceability
E-commerce
Homogeneity
MULTILATERALISATION
Agriculture
TRADE IMPACT
BEST PRACTICES
What can be multilatrealised – and how?
Bottom-up
(non-parties)
Top-down
(WTO)
Convergence
Consistency
Political Econ.
3
Presentation
 Overview of OECD work on RTAs
 Importance of transparency in trade
 Best practices in regional transparency
 Quantitative impact
Institution-building in RTAs
‘Positive integration’ (Tinbergen 1954):
the creation of
inter-governmental public goods in regional integration
schemes is also welfare-enhancing
 Beyond liberalization, countries are deploying RTAs to
build trust and develop mechanisms for informational
exchanges and predictability: market opacity
 Greif (1993) 11-th century Mediterranean trade was
facilitated by informal reputation and information
mechanisms within the ‘Maghribi trading coalition.’
OECD Trade and Agriculture Directorate
5
Effects of transparency in regional trade
Improves
implementation
Reduces
market entry
costs
Lowers
expropriatior
risks
Promotes
cooperation
Trade
Reduces
trade
disputes
From shallow to deep integration: Behind-the
border agenda requires greater transparency
 Along with NT and MFN, transparency is one of the key
pillars of the global trading system (Art X GATT 1947)
 In recent years, has migrated from the periphery to
the core of WTO jurisprudence: from ‘dormant
provisions,’ “subsidiary” to “substantive“ commitments
 Remains narrow in scope and undefined.
 Quest for ‘deep integration’ in RTAs has gone hand
in-hand with greater demands for transparency
 Behind-the-border agenda call for more sophisticated
mechanisms for information and for influence
 Non-tariff barriers require greater information and
predictability in domestic rule-making & enforcement
OECD Trade and Agriculture Directorate
7
Transparency goes a long way in making
NTMs less trade-restrictive
Introducing a
distortion
(trade-restrictive)
Addressing a
market failure
(welfareenhancing)
OECD Trade and Agriculture Directorate
8
Transparency: Public Goods in RTAs
Costs
Impact
• Not huge financial resources
• Coordination, administrative culture
• Avoids second-best complications
• Lower trade diversion
Multilateralisation • de jure preferential
• de facto MFN!!!
9
Presentation
 Overview of OECD work on RTAs
 Importance of transparency in trade
 Best practices in regional transparency
 Quantitative impact
Transparency features as a core objective of an
RTA: an end in itself, rather than a means
 56% of RTAs cite
transparency as a core
objective in preambles
Resolvedto promote transparency as
Resolved
regards all relevant interested parties,
including the private sector and civil
society organisations… EU-Korea FTA 2010
The objective of this chapter is to
establish a mechanism to
strengthen transparency...
SPS Chapter, AANZFTA 2010
WTO-plus definition of transparency
 30% of RTAs
signed by
OECD and key
emerging
economies
endorse these
four elements.
Fighting
corruption
Predictability
Participation
• Crimininalization
• Sanctions
• Whistleblower
• Peer review
• Dispute settlement
• Cooperation
• Foreign party
• Publish comments
• Consideration
• E-Publication
• Rationale
• Explanations
Information
RTAs horizontalize transparency: harmonizing and
streamlining procedures for all sectors & measures
SPS
TBT
GATS
Rules
Transparency Chapter
Over 40% (52 RTAs)
 Recent APEC Ministerial
In most jurisdictions,
have a horizontal
transparency chapter
endorsed inclusion of
transparency chapters.
regulated horizontally in
administrative law
...while deepening WTO-plus area-specific
transparency in corresponding chapters
Australia
US
5
4.5
Brazil
(MERCOSUR)
4
Turkey
3.5
Canada
3
2.5
2
1.5
New Zealand
Chile
1
0.5
0
Korea
China
TBT
Japan
EFTA
Indonesia
(ASEAN)
EU
India
SPS
Cross-border
services
Movement of
persons
Level of enforceability of WTO-plus transparency
WTO-plus Regulatory
Transparency in Agriculture
& non-Agricultural Goods
WTO-plus Regulatory
Transparency in Services
& Investment
CB
MP
 78% of WTO-plus SPS
transparency obligations are
enforceable,, while less than 7%
in TBTs are subject to DSU
80% of services and 92% investment
transparency provisions are enforceable,
while 59% of transparency measures for
movement of persons are mandatory.
RTAs provide transparency procedures
with greater operational specificity
WHAT?
WHEN?
Specificity
HOW?
WHOM?
16
RTAs introduce more precision and specificity:
Example of Prior Publication
WHAT?
WHEN?
HOW?
Relevant measures
(GATS ArtII)
Promptly
(GATT Art X)
Publish or otherwise
make available
(GATT Art X)
Non-exhaustive list
Prior to enactment
Available on the
internet
Central, local, regiona;
goverm, non-governml
Timing specified
(30-60-90 days)
English translation
Justification or policy
rationale
Prior consultation with
RTA partners
At no cost
Statistical information
Opportunity for
comment
Technical assistance
Private sectors is a direct receiver, and
often supplier, of transparency
“contracting party applying the restrictions
shall provide, upon the request of any
contracting party , information concerning ..”.
GATT
Member A
(Exporter)
Enquiry
Point A
WHOM?
Enquiry
Point B
Member B
(Importer)
Creating incentives: Aid-for-Transparency
 Aid-for-transparency
 Technical assistance to help administrations
coordinate and collect information
 Support to SMEs on foreign market information
 Cooperation chapters address transparency
 Contextualization:
 Adapting procedures to administrative culture and regime
 Making transparency safe
De-linking transparency from litigation
New Frontiers: Combating corruption and
bribery in regional arrangements
Anti-corruption Measures in US FTAs
No. of Anti-corruption Measures
Number of anti-corruption obligations in RTAs signed by United States
7
6
5
4
3
2
1
0
Mandatory
Best-endeavour
Presentation
 Overview of OECD work on RTAs
 Importance of transparency in trade
 Best practices in regional transparency
 Quantitative impact
Can countries stand to gain from negotiating
transparency disciplines in their RTAs?
 Transparency provisions in RTAs are
associated with trade-boosting effects:
A marginal improvement in transparency
(additional transparency obligation) is associated
with an increase in trade of over 1 percent.
 Sensitivity of trade flows to transparency can
vary by specific sectors and products:
The elasticity of trade with regards to RTAs
transparency provisions is slightly higher in
agricultural than in industrial goods.
OECD Trade and Agriculture Directorate
22
Transparency is not free: where is the biggest
bang for the buck of transparency obligation?
Horizontal measures on transparency are
more impactful than area-specific procedures
 Ag: horizontal transparency chapters are more
important that WTO-plus SPS/TBT transparency
Among area-specific transparency, rules of
origin emerges as the most significant.
Transparency related to the implementation
of obligations in the RTA, including dispute
settlement, are also important.
OECD Trade and Agriculture Directorate
23
What factors could contribute to a wider diffusion
of WTO-plus transparency norms?
 Countries
Democracy
with good
governance
negotiate more
transparencyfriendly treaties
 North-South
RTAs have more
comprehensive
transparency
provisions
Regulatory
quality
Differentiatted
produtcts
Common legal
familiy/colony
Rule of law
Factors
facilitating
WTO-plus
Accesion to
the WTO
transparency
Size of
country
Control
corruption
Distance
in culture
OECD Trade and Agriculture Directorate
Political
stability
Distance in
income
24
Reflections for multilateralsing regionalism
In some areas, WTO-plus
transparency provisions are
“regionalising multilateralism”
Legally
enforceable
obligations?
Critical
mass?
Homogeneity
& consistency
with WTO?
Public goods:
non-excludable,
de facto MFN?
Tradeboosting
effects?
Thank you for your attention.
Chokran jasilan!
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Contact: iza.lejarraga@oecd.org