Brookings Press Blog

Chad Bown, Author of SELF-ENFORCING TRADE, Quoted in The Economist

China is the world’s largest exporter and as the country’s exports have grown, so has the number of disagreements with its trading partners. An article in The Economist on the rising number of disputes that China has brought to the World Trade Organization says that it is a good thing that Beijing and other emerging markets are turning to the WTO to settle disputes instead of retaliating on their own. But can the WTO’s dispute settlement system cool mounting tensions with China?

Chad Bown, author of Self-Enforcing Trade, argues “that America or the EU may still find disputes with China tricky. Countries often threaten to target their retaliation against politically-sensitive products, hoping that their manufacturers will convince their own governments to change course. But this sort of strategy may be more difficult in a dispute with undemocratic China.”

- Read the full article.

- Learn more about Self-Enforcing Trade.

Going Bananas: SELF-ENFORCING TRADE offers primer on recently settled WTO dispute between EU and Latin American countries over bananas

In mid-December, the EU reached accord with Latin American countries on the banana tax. This was the longest-running WTO dispute and is the subject of Chapter 3 in Chad Bown's Self-Enforcing Trade. In “An Introduction to WTO Dispute Settlement,” Bown uses the EC–Bananas III dispute to introduce the WTO’s formal trade dispute resolution process:

The fundamental economic interest that boiled over into a formal trade dispute in the early 1990s involved foreign access to the European import market for bananas—the world’s largest banana market with imports of roughly $2.5 billion per year. While the trade dispute on which I focus erupted in the early 1990s, the issue of EC banana imports has been politically contentious on the domestic front (that is, between EC member states) dating back to the 1950s and the Treaty of Rome. Until the early 1990s, member states had different and divergent external trade policies toward bananas. . . . The different trade policies of EC member states toward the same product managed to coexist until 1993 when, after politically rancorous internal negotiations, the members finally converged on a single, European Community–wide import regime for bananas. The new import policy, known as Regulation 404, was essentially a tariff rate quota. The quota divvied up the EC import market and established one quantitative import limit allocated to ACP producers and another to non-ACP producers (mainly Latin American exporters). Bananas coming in under the quota available to Latin American exporters would be subject to an import tariff that was not applied to imports from the ACP countries.

According to Bloomberg News, Latin American countries are the clear winners of the dispute. As a result of the settlement, banana prices in the EU will drop and exports from Latin America will rise.

- Read more about the settlement of the banana case from Bloomberg and the Financial Times

- Learn more about Self-Enforcing Trade

- Download Chapter 3 of Self-Enforcing Trade to learn the background on this issue

Chad Bown Op-Ed in Asian Wall Street Journal: “Free-Trade Greenshoots”

Recessions often bring high tariffs and trade wars, and recent figures from the World Bank show that industry requests for trade barriers are up 30% over the past year. But according to Chad Bown, there is cause for optimism as well. In an op-ed in the Asian edition of the Wall Street Journal, Bown writes that the "global economy may still stay on a pro-trade path." He points to a recent U.S. government decision to deny new trade barriers on imports of aluminum pistons from Argentina and China's use of the World Trade Organization to formally question barriers instead of resorting to retaliatory measures. Bown discusses the WTO's dispute settlement system in his new book Self-Enforcing Trade: Developing Countries and WTO Dispute Settlement.

- Read the op-ed

- Learn more about Self-Enforcing Trade

Requiem or Revival? The Promise of North American Integration

New book criticizes NAFTA while North American leaders defend it at annual summit

Canadian Prime Minister Stephen Harper met recently with US President George Bush and Mexican President Felipe Calderón near Ottawa for the annual North American Summit, aiming to strengthen security and economic ties between their countries. At the conclusion of the two-day summit, the three leaders issued a joint statement in which they said, "We must build on NAFTA's success and reduce unnecessary trade barriers to ensure North America remains a competitive and a dynamic place to do business."

At the same time, NAFTA, or the North American Free Trade Agreement, is receiving a growing amount of criticism from citizens of the three member nations. More than a dozen years after NAFTA's controversial but hopeful launch in 1994, progress toward economic integration has stalled. Mexico's economy remains far behind those of Canada and the United States, and such pressing issues as energy security remain unaddressed. In the timely new book, Requiem or Revival? The Promise of North American Integration, edited by Isabel Studer and Carol Wise, scholars and policymakers from all three nations dissect NAFTA's failure to fulfill its early promise and evaluate the prospects for further integration.

- Learn more about Requiem or Revival?

Global Trade and Poor Nations

New book assesses the impact of reformed trade policies on the world’s poorest nations

Global Trade and Poor Nations presents the likely effects of global trade reform on seven of the poorest countries in the world. The contributors, led by editors Bernard M. Hoekman and Marcelo Olarreaga, take into consideration the reforms agreed upon under the auspices of the World Trade Organization’s Doha Round and investigate the economic changes that would likely arise. The seven selected nations (Bolivia, Cambodia, Ethiopia, Madagascar, Nicaragua, Vietnam, and Zambia) represent a geographical and cultural cross-section of countries, allowing the analysis presented in the book to reach more than just one localized area of international trade policy. The researched showed that trade liberalization can potentially be a powerful catalyst for economic growth, which is crucial to mitigating poverty and sparking development.

The new book is published in conjunction with the Groupe d’Economie Mondiale at Sciences-Po, Paris and the Yale Center for the Study of Globalization (YCSG). YCSG strives to examine “the impact of our increasingly integrated world” on every level: individual, local, and national. The Center disseminates its cutting-edge analysis in the hopes of ultimately linking “academia and the policy world.” The current director of the YCSG, Ernesto Zedillo, who writes the foreword for Global Trade and Poor Nations, was preceded by current Brookings President Strobe Talbott.

- Learn more about Global Trade and Poor Nations.

- Learn more about the Groupe d’Economie Mondiale at Sciences-Po.

- Learn more about the Yale Center for the Study of Globalization.