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Won-Mog Choi

The TPP includes a small number of provisions on trade and biodiversity. It requires parties to promote sustainable use of biological diversity and to respect knowledge and practices of indigenous and local communities relating to sustainable use of biodiversity. TPP parties also recognize that some parties may require prior informed consent to access genetic resources and establish mutually agreed terms regarding sharing of benefits from the use of such genetic resources. Public participation and consultation mechanisms and cooperation frameworks are also established in this regard. Although these provisions look largely hortatory in their binding effect, they reflect historical and fundamental philosophical tensions between the Bretton Woods trade liberalism and the New International Economic Order, presenting a new paradigm of permanent sovereignty over natural resources. How to avoid clashes between these two paradigms and to achieve the goal of sustainable economic growth has become a primary issue in the era of mega-FTAs. In this light, the TPP has taken a mega-step for the prevention of a global clash between trade and environment regimes toward the mutually non-exclusive trade and biodiversity governance in the twenty-first century.

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Peter K. Yu

This chapter examines the efforts to set intellectual property standards in the Asia-Pacific region through the development of the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It begins by examining the regulatory convergence narrative, focusing on efforts to harmonize Asian intellectual property standards through the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and TRIPS-plus bilateral, regional, and plurilateral agreements. The chapter then turns to the regulatory divergence narrative, discussing the region’s inherent nation-based differences, the development considerations involved in developing Asian intellectual property laws and policies, and the growing rivalry between the TPP/CPTPP and the RCEP. This chapter concludes by suggesting that neither the convergence narrative nor the divergence narrative presents a complete and satisfactory story for a region as large, complex, and diverse as Asia. Instead, the chapter contends that the region is likely to see ‘regulatory crossvergence’—a simultaneous convergence and divergence of regulatory standards. Such crossvergence not only has resulted in the region’s development of compromising standards but has also been highly indicative of the ongoing and future standard-setting efforts in Asia.

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Cristiano Antonelli and Claudio Fassio

This chapter investigates the heterogeneity of the sources of external knowledge and identifies their differentiated effects on process and product innovations. Upstream vertical sources of external knowledge from suppliers exert a strong and positive role on the introduction of process innovations, while horizontal and downstream vertical sources stemming from competitors and customers respectively have stronger effects on the introduction of product innovations. The evidence supports the hypothesis that matching of sources of external knowledge and types of innovation is necessary to implement successful innovation strategies.

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Petros C. Mavroidis

The World Trade Organization (WTO) is managing international trade relations in an era characterized by the decline in tariffs and other border restraints to commerce. Non-tariff barriers (NTBs) are now the main market-segmenting factor. Trade liberalization amounts to the extension of the geographic scope of relevant product markets, and global value chains (GVCs) have been proliferating in an almost tariff-free world. GVCs are helped by bargaining solutions regarding impediments posed by NTBs, and absent a more general design to this effect, many candidates might find themselves outside the GVCs bandwagon. Together, these changes in the landscape form an integration strategy that we refer to as the new WTO Think. This strategy remains rooted in the original rationale of the General Agreement on Tariffs and Trade (GATT) of reducing the negative externalities of unilateral action and solving important international coordination challenges, but is more inclusive of regulators and non-state actors and more flexible and positive in its means. In particular, we advocate that the WTO should embrace the confluence of shared social preferences and trade, where it exists, as a motivation for advancing international regulatory cooperation. This strategy will not only increase gains from trade, by enlarging the list of candidates to participate in GVCs, but will also help the WTO maintain its policy relevance in the years to come.

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Sherzod Shadikhodjaev

Energy is an important ingredient of any nation’s socio-economic development. It can be derived from both fossil fuels and renewables. Renewable energy (typically, solar, wind, geothermal, hydropower, bioenergy, and ocean power) is gaining popularity across the globe as an environment-friendly substitute for energy derived from climate-harmful fossil fuel. Governments pursue renewable energy policies with a view to promoting green growth and ensuring sustainable energy supplies from virtually non-exhaustive sources. The World Trade Organization’s current rule book does not address renewables as such, although recently its dispute settlement and forum meetings have frequently dealt with this subject. The ongoing talks on the Environmental Goods Agreement focus on tariff removal (reduction), but are unlikely to cover regulatory issues. On the other hand, some regional trade agreements, including megaregionals, such as e.g. the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership, contain (or will introduce) specific provisions dedicated to renewable energy issues. With respect to renewable energy, they (i) pursue a common policy; or (ii) create specific trade and investment rules with no common policies; or (iii) simply support intra-governmental cooperation. This chapter aims to examine multilateral and regional trade rules with particular reference to localization measures, government support, infrastructural facilities, technical standards and services, as related to this field. For this purpose, it will discuss the status quo and areas for possible rule-making in the future, and suggest working towards a more renewables-oriented regulatory approach in the international trade regime.

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Anton Ming-Zhi Gao

Recent extreme weather and disasters have been raising the awareness of the serious issue of climate change. The attainment of low-carbon energy, especially in renewable electricity (RE), is a key mitigation and adaptation goal under the United Nations Framework Convention on Climate Change (UNFCCC) and is therefore central to implementing the Paris Agreement. In general, policies to promote RE have produced uncoordinated, frequently high-cost measures. Large subsidies are usually necessary to give impetus to RE development. However, such a subsidy-thirsty regime may threaten the important world order of international economic law (IEL) and trade law. Recent cases in the World Trade Organization (WTO) concerning green-power industrial policies have signaled a paradigm shift in the conflict between trade and the environment. How to strike a balance between the international climate law regime and IEL will become more and more important in the future. The main purpose of this chapter is to answer the core question: Can a regional trade agreement (RTA), particularly a mega-RTA, contribute to RE development? And in what aspects? (For example, can it reduce tariff or non-tariff barriers?) This chapter also analyses the dynamic interaction between the IEL/RTA system and the regulatory regime of RE, where the regulatory regime involves incentives for and regulation of RE development. The second research question is: How are regulatory divergence and convergence affected by the IEL/RTA system?

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Cristiano Antonelli, Francesco Crespi and Giuseppe Scellato

This chapter analyses the dynamics of path dependence, exploring the determinants of the persistence of firm productivity, here measured by total factor productivity (TFP). It highlights the crucial role of the interplay between the internal characteristics of companies, including their size and management strategies, and system properties such as access conditions to local pools of knowledge and the dynamics of economic activity in assessing the dynamics. Analysis of transition probability matrices (TPMs) and econometric analysis provide substantial evidence of the relevance of the mix of individual and systemic factors in shaping persistence as a path-dependent process in which events that take place along the process affect its direction and the pace of productivity dynamics.

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Cristiano Antonelli and Gianluigi Ferraris

Analysis of the Marshallian and Schumpeterian microfoundations of endogenous innovation enables us to draw a line between the new emerging evolutionary complexity from biological evolutionary analysis and to overcome its limits. This chapter integrates the Marshallian process of imitation and selection with the Schumpeterian creative response. In Marshall initial variety is given and exogenous, the dynamics of the process is driven by the selective diffusion of best practice and long-term equilibrium stops the generation of externalities; firms are not expected to try to react to unexpected mismatches between planned and actual product and factor market conditions. In Schumpeter firms are allowed to try to react, and the quality of knowledge externalities supports their creative response and may keep the system in a self-sustained process of growth. The Schumpeterian creative response can be regarded as a special case of the Marshallian dynamics that takes place when externalities – available to all firms, including best-performing ones – enable the introduction of innovations that account for the reproduction of superior performance and variety. The levels of reactivity of agents and of quality of knowledge externalities, provided by the system, account for output and productivity growth. This hypothesis is tested by means of an agent-based simulation model that shows how these microfoundations of endogenous innovation are able to generate aggregate dynamics based upon the interaction between individual decision-making and system properties.

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Ching-Fu Lin

Over the past several decades, the governance of food safety has been framed by various norms and actors at multiple levels, in particular the WTO and its Agreement on the Application of Sanitary and Phytosanitary Measures (SPS). The recent conclusion of the TPP/CPTPP negotiations in October 2015, however, represents a defining moment not only in trade liberalization, but also in food safety governance. Despite its unsettled future, the TPP/CPTPP in many ways serves as a crucial model as well as a major catalyst, leading to further transformation in the interactions between regulatory autonomy and international cooperation. While harmonization with international standards, scientific principle, risk analysis, and transparency still serve as the fundamental rubric of SPS cooperation, the cross-cutting of regulatory coherence rules, such as notice-and-comment requirements, cost-benefit analysis, and regulatory impact assessment, will come into play in significantly relevant and important ways. This chapter uses the TPP/CPTPP’s SPS Chapter as a vantage point to explore the transformation of food safety governance in the era of megaregionals. By referencing the WTO SPS Agreement and other essential legal instruments, this chapter analyzes the SPS-plus institutional designs therein and discusses their normative interactions with the Regulatory Coherence Chapter and, more broadly, the WTO multilateral trading system.

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Shin-yi Peng

Although the TPP has essentially collapsed, its Regulatory Coherence Chapter will serve as a useful reference for future trade negotiations. What lessons can be learned from the TPP? First, under the TPP text, each party has the right to decide to what extent its domestic regulation should be subject to the TPP regulatory coherence obligations. The applicable coverage of the Regulatory Coherence Chapter, as a result, is entirely uncertain. Second, it is not entirely clear whether the application of the Chapter is only limited to TPP parties’ secondary legislation, or the Chapter is also applicable to parties’ primary legislation. The examination of the relevant provisions of the Chapter in accordance with Articles 31 and 32 of the Vienna Convention on the Law of Treaties confirms that the Chapter was politically motivated by the desire to have ambiguously drafted provisions and to leave plenty of room for individual interpretation as to ‘who’ is required to apply regulatory impact analysis (RIAs) to their decision-making. Third, as demonstrated by the anti-spam laws of the TPP parties, the Regulatory Coherence Chapter falls short of a clearly defined threshold for how a RIA operates. Fourth, the RIA process under the TPP is also weakened by the lack of a clear and enforceable mechanism to ensure that the trade impact will be properly taken into account by all regulatory agencies. Finally, without sufficient quality assurance mechanisms, the cost-benefit analysis could not be properly applied. There are critical methodological questions that must be answered. This chapter concludes that the laws governing unsolicited commercial electronic messages provide an interesting case study on the challenges for the Regulatory Coherence Chapters in the megaregionals.