Mega-Regionals and the Regulation of Trade: Implications for Industrial Policy

Abstract

Since the stalling of the Doha Round – which was designed to be development friendly – the main trade negotiation action has shifted to mega-regional initiatives. These agreements – particularly the Trans-Pacific Partnership, being the largest and most ambitious – will impact market regulations in a wide range of areas bearing on industrial policy, both by establishing substantive horizontal and sectoral standards and by establishing requirements concerning institutional and procedural approaches to domestic market policies and regulations. Network and demonstration effects will broaden the reach of these measures beyond the immediate parties to the agreement. This note reviews the key industrial policy issue areas under negotiation in the megaregional free-trade agreements and evaluates the likely developments flowing from these agreements in terms of their impact on the international trading system. Based on this review, it discusses the likely future framework for industrial policy, which will integrate the additional policy constraints/changes introduced by these agreements.

Keywords: trade agreements, industrial policy, Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership, TPP, TTIP

JEL Classification: F15, L52, O25