The ‘Trade And…’ Agenda: Are We at a Crossroads?

TRADE POLICY RESEARCH 2001, John M. Curtis, Dan Ciuriak, eds., Department of Foreign Affairs and International Trade, pp. 249-294, 2001

46 Pages Posted: 4 Feb 2010

See all articles by Dan Ciuriak

Dan Ciuriak

Ciuriak Consulting Inc.; C.D. Howe Institute; Centre for International Governance Innovation (CIGI); BKP Development Research & Consulting GmbH; Asia Pacific Foundation of Canada

Date Written: 2001

Abstract

Disagreement over whether to develop additional multilateral instruments dealing with trade-related issues contributed to the failure to launch a new round of multilateral negotiations at the World Trade Organization (WTO) Ministerial meeting in Seattle. This paper takes a "horizontal" look at a number of trade-related issues to see if some general principles can be identified that could provide some guidance as to the way ahead. The paper draws several conclusions. First, the application of trade rules has constrained the design of domestic policies but not the substantive intent of domestic policies. By the same token, this makes trade rules an ineffective means to get at policy objectives that are broader than trade transactions, particularly in an extraterritorial way in foreign jurisdictions. Second, the capacity to manage risk across borders is lower than within a state. This suggests that the capacity to expand trade in areas where risk is an important factor will lag the expansion of the role of the market within borders. A corollary of this is that, while trade policy can legitimately be expected to open up markets where they exist, it probably should not be used to create markets where they do not exist, since this risks pushing societies faster and further than their internal frameworks for managing market-related issues can cope with. Third, in areas where the idea of market-determined outcomes collides with deep ethical, social and political principles and values and where the pursuit of wealth must give way to other concerns – including health (physical life), culture (socio-cultural life) and environment (ecological life) – the interests of trade should by the same token defer to domestic preferences. Fourth, reflecting the inevitability of eventually declining returns to more wealth, coupled with high positive income elasticities for "quality of life" factors such as health, richness of culture and a clean environment, the comparatively wealthy industrialized economies and comparatively income-poor developing economies will naturally have different preference structures. This suggests a multi-speed WTO for inclusion of trade-related "values" issues. Fifth, social contracts are needed in any market-oriented society, even without trade, and the size of border effects gives scope to governments to maintain them in the presence of trade; accordingly, there is no barrier here to trade liberalization. Sixth, WTO instruments should emphasize procedural rules and avoid building substantive rules into the body of hard-to-change WTO law.

Keywords: WTO, trade liberalization, health, culture,environment, labour, TRIPS, social contract

JEL Classification: F13, F16, F18

Suggested Citation

Ciuriak, Dan, The ‘Trade And…’ Agenda: Are We at a Crossroads? (2001). TRADE POLICY RESEARCH 2001, John M. Curtis, Dan Ciuriak, eds., Department of Foreign Affairs and International Trade, pp. 249-294, 2001. Available at SSRN: https://ssrn.com/abstract=1547330

Dan Ciuriak (Contact Author)

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