Regulatory Divergence and Convergence in the Age of Megaregionals
Edited by Shin-yi Peng, Han-Wei Liu and Ching-Fu Lin
Chapter 2: Regulatory cooperation in the WTO: Why it matters now? How could it be achieved?
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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