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Non-tariff Issues in FTAs

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Abstract

This chapter reviews whether Free Trade Agreements (FTAs) lead to deeper liberalisation than the World Trade Organization (WTO) in non-tariff areas. In these areas, FTAs are often not discriminatory as for tariffs. This is because countries have liberalised unilaterally; for example, Organisation for Economic Co-operation and Development (OECD) countries for investment and services. In some areas, discrimination is also technically impossible; for example, standards are the same for all. In several areas, we find that the majority of FTAs do not do much beyond the WTO. However, some agreements do, and these are sometimes more discriminatory. Deep FTAs are mainly intra-regional and the analysis suggests that deep integration across continents is a high-hanging fruit. In some non-tariff areas, for example services and investment, unilateral liberalisation has created an issue of non-reciprocity that complicates international trade negotiations.

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Notes

  1. 1.

    See http://www.oecd.org/investment/investment-policy/codes.htm for information.

  2. 2.

    For an overview of EU law, see https://ec.europa.eu/info/law/law-topic/eu-banking-and-financial-services-law_en.

  3. 3.

    On OECD, see http://www.oecd.org/investment/investment-policy/foi.htm.

  4. 4.

    According to UNCTAD’s web page on investment, see http://investmentpolicyhub.unctad.org/IIA.

  5. 5.

    For a discussion, see Melchior (2017) (in Norwegian!).

  6. 6.

    The ten judicial FTAs are, according to Chase et al. (2016): Two in the Americas (Andean Community and CARICOM); five in Africa (CEMAC/Central Africa, COMESA/Southern Africa, East African Community, ECOWAS/West Africa and WAEMU/West Africa), two in Western Europe (EU and EFTA) and one in the former Soviet area (Eurasian Economic Community—now Union, EAEU).

  7. 7.

    Cadot and Gourdon (2016) use the data set of Piermartini and Budetta (2009) and a potential caveat is the dichotomisation of all indicators, with values of zero or one. This dichotomisation also applies to the DESTA database of Dür et al. (2014). On TBT , also Dür et al. (2014) partly relies on Piermartini and Budetta (2009). Having a closer look at EUs agreements and TBT in DESTA (downloaded from the DESTA website March 2018), we find a score of zero on all seven TBT indicators for EC 1957, EC Single European Act, EC Amsterdam, EC Lisbon, EC Maastricht and EC Nice. The European Economic Area (EEA) gets a score of one for only one out of the seven TBT indicators, whereas EFTA as such as well as many of EFTAs FTAs with third countries get positive scores on more indicators. This overall ranking is not plausible, and so there could be some devils in the details of the regression data. For example, TBT measures could be in secondary legislation that is not visible in the main text of FTAs such as EEA.

  8. 8.

    See http://tfig.unece.org/, Introduction to trade facilitation.

  9. 9.

    See https://euobserver.com/economic/24169.

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Melchior, A. (2018). Non-tariff Issues in FTAs. In: Free Trade Agreements and Globalisation. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-92834-0_5

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  • DOI: https://doi.org/10.1007/978-3-319-92834-0_5

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