Mega Regionals and the Developing Countries

14 Pages Posted: 30 Jun 2014  

Dan Ciuriak

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

Date Written: June 29, 2014

Abstract

Since the stalling of the Doha Round – which was designed to be development friendly – the world is awash in mega regionals. Major negotiations currently underway include the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), the Trade in Services Agreement (TISA), and the Regional Comprehensive Economic Partnership (RCEP), a negotiation that subsumes the China-Japan-Korea (CJK) negotiation, a mega regional in its own right, as well as the ASEAN Economic Community which is slated to come into force in 2016 and might be considered something of a mega regional as well. In addition, a number of other FTAs involving the world’s 10 largest economies (including bilaterals among various combinations of the United States, the EU, China, Japan, Korea, Canada, and Australia) have recently been concluded or are engaged.

How development-friendly is the current framework for trade and investment liberalization? This paper evaluates a number of features of the mega regionals that bear on this question: preference creation for trade in goods and services, regulatory competition/cooperation, rules of origin, preferential investment liberalization, intellectual property rights, disciplines on state-owned corporations, and financial sector regulation/exchange rate disciplines. The general conclusions are that (a) overall, the mega regionals are likely to impose costs on developing countries and the Doha Round would be a better deal for developing countries; (b) liberalizing rules of origin and investment liberalization serve to mitigate the general negative effects of mega regionals on developing countries; and (c) even if the mega regionals do not succeed (a distinct possibility in view of past failures such as the FTAA and FTAAP), the work on identifying paths forward may still be valuable in contributing to a conclusion of the Doha Round when a sufficient gestation period for that agreement has passed.

Keywords: Mega regionals, TPP, TTIP, TISA, RCEP, CJK, ASEAN Economic Community, trade diversion, market regulation, rules of origin, economic development

JEL Classification: F13, F63

Suggested Citation

Ciuriak, Dan, Mega Regionals and the Developing Countries (June 29, 2014). Available at SSRN: https://ssrn.com/abstract=2460501 or http://dx.doi.org/10.2139/ssrn.2460501

Dan Ciuriak (Contact Author)

Ciuriak Consulting Inc. ( email )

83 Stewart St.
Ottawa, Ontario K1N 6H9
Canada

C.D. Howe Institute ( email )

67 Yonge St., Suite 300
Toronto, Ontario M5E 1J8
Canada

Centre for International Governance Innovation (CIGI) ( email )

57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada

BKP Development Research & Consulting GmbH ( email )

Romanstrasse 74
München, 80639
Germany

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