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The footwear case provides an example of the complexities of World Trade Organization (WTO) rules on the use of safeguards, and of the interaction of multilateral and regional processes of liberalization. As a result both of Argentina's unilateral liberalization and the removal of barriers within Mercosur, imports of footwear increased rapidly. As Mercosur provides no intra-regional safeguard mechanism, the government of Argentina responded by applying import relief and WTO safeguards against third countries. The WTO Dispute Settlement Body addressed these measures and as a consequence, Argentina dismantled most of them, leading to four main conclusions: The jurisprudence of the WTO's Appellate Body has created serious uncertainty as to when a country can use safeguards. This does not contribute to the political balance that has to be maintained when developing countries implement trade liberalization programs. In fact, it detracts from this crucial goal. It is an error to negotiate ambiguous multilateral agreements on the expectation that the WTO Dispute Settlement mechanism will clarify them. An overvalued currency heightened the industry's problems. In the case of footwear, the decline in imports following the recent devaluation was more important than that following the implementation of earlier relief measures. The political economy of liberalization also indicates the need for regional agreements to include adequate transition mechanisms that will facilitate adjustment to free trade and to maintain support for it.

Appellate Body --- Currencies and Exchange Rates --- Dispute Settlement --- Dispute Settlement Body --- Dispute Settlement Mechanism --- Economic Theory and Research --- Emerging Markets --- Exchange Rate --- Finance and Financial Sector Development --- Free Trade --- Import Relief --- International Economics & Trade --- International Trade --- Law and Development --- Liberalization Of Trade --- Macroeconomics and Economic Growth --- Multilateral Agreements --- Policy Research --- Private Sector Development --- Public Sector Development --- Regional Agreements --- Regional Integration --- Regional Integration Agreements --- Regional Trade --- Safeguard Measures --- Trade --- Trade Barriers --- Trade Law --- Trade Liberalization --- Trade Policy --- World Trade Organization

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In early January 2003, the United States and Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua launched official negotiations for the Central American Free Trade Agreement (CAFTA), a treaty that would expand NAFTA-style trade barrier reductions to Central America. With deeper trade integration between Central America and the United States, it is expected that there will be closer links in business cycles between Central American countries and the United States. The paper finds a relatively low degree of business cycle synchronization within Central America as well as between Central America and the United States. The business cycle synchronization is expected to increase only modestly with further trade expansion, making the coordination of macroeconomic policies within CAFTA somewhat less of a priority.

Business Cycle --- Business Cycle Fluctuations --- Business Cycle Synchronization --- Business Cycles --- Business Environment --- Business in Development --- Competitiveness and Competition Policy --- Currency --- Deeper Trade Integration --- Free Trade --- Free Trade Area --- Impact Of Trade --- Industrial Production --- Industry Trade --- International Economics & Trade --- Monetary Policy --- Private Sector Development --- Public Sector Development --- Regional Integration --- Regional Trade --- Specialization --- Trade Agreement --- Trade Expansion --- Trade Intensity --- Trade Structure

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Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. The authors examine the actual scope for preference erosion, including an econometric assessment of the actual utilization and the scope for erosion estimated by modeling full elimination of OECD tariffs, and hence full most-favored-nation liberalization-based preference erosion. Preferences are underutilized due to administrative burden-estimated to be at least 4 percent on average-reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern.

Access --- Debt Markets --- Economic Theory and Research --- Emerging Markets --- Export Diversification --- Export Performance --- Finance and Financial Sector Development --- Free Trade --- Free Trade Agreements --- Global Trade --- International Economics & Trade --- International Trade --- Law and Development --- Liberalization Of Trade --- Macroeconomics and Economic Growth --- Multilateral Liberalization --- Multilateral Trade Liberalization --- Preferential Access --- Private Sector Development --- Public Sector Development --- Reciprocal Basis --- Reciprocity --- Tariff --- Tariff Reductions --- Tariffs --- Trade --- Trade and Regional Integration --- Trade Law --- Trade Negotiations --- Trade Policies --- Trade Policy --- Trade Preferences

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Because of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. The authors examine the actual scope for preference erosion, including an econometric assessment of the actual utilization and the scope for erosion estimated by modeling full elimination of OECD tariffs, and hence full most-favored-nation liberalization-based preference erosion. Preferences are underutilized due to administrative burden-estimated to be at least 4 percent on average-reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern.

Access --- Debt Markets --- Economic Theory and Research --- Emerging Markets --- Export Diversification --- Export Performance --- Finance and Financial Sector Development --- Free Trade --- Free Trade Agreements --- Global Trade --- International Economics & Trade --- International Trade --- Law and Development --- Liberalization Of Trade --- Macroeconomics and Economic Growth --- Multilateral Liberalization --- Multilateral Trade Liberalization --- Preferential Access --- Private Sector Development --- Public Sector Development --- Reciprocal Basis --- Reciprocity --- Tariff --- Tariff Reductions --- Tariffs --- Trade --- Trade and Regional Integration --- Trade Law --- Trade Negotiations --- Trade Policies --- Trade Policy --- Trade Preferences

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The authors illustrate some of the potential consequences of the World Trade Organization's Doha Round of multilateral trade negotiations on incomes and poverty globally. Using the global LINKAGE model to generate changes in domestic and international prices that have a direct impact on factor incomes and consumer prices, they estimate the change in real income at the poverty line that would accompany various reform scenarios. When accompanied by additional information about the elasticity of poverty with respect to income, this provides an estimate of the change in poverty by country. Under most liberalization scenarios considered, unskilled wages rise more than average incomes, but the estimated impact on global poverty is modest, especially if developing countries are unwilling to undertake much reform.

Agriculture --- Base Year --- Benchmark --- Constant Returns To Scale --- Consumers --- Debt Markets --- Development --- Economic Theory and Research --- Elasticity --- Emerging Markets --- Finance and Financial Sector Development --- Financial Literacy --- Free Trade --- Goods --- Inequality --- International Economics & Trade --- Labor Policies --- Macroeconomics and Economic Growth --- Multilateral Trade --- Poverty Reduction --- Prices --- Private Sector Development --- Pro-Poor Growth --- Public Sector Development --- Real Income --- Social Protections and Labor --- Trade and Regional Integration --- Trade Liberalization --- Trade Negotiations --- Trade Policy --- Trade Reforms --- Uruguay Round --- Utility --- Wages --- Welfare --- WTO