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Chapter

John Ravenhill

This chapter assesses regional trade agreements (RTAs). The number of RTAs has grown rapidly since the World Trade Organization (WTO) came into existence in 1995. Roughly one-half of world trade is now conducted within these preferential trade arrangements, the most significant exception to the WTO's principle of non-discrimination. Governments have entered regional economic agreements motivated by a variety of political and economic considerations. They may prefer trade liberalization on a regional rather than a global basis for several reasons. The chapter then reviews the political economy of regionalism: why RTAs are established; which actors are likely to support regional rather than global trade liberalization; the effects that regionalism has had on the trade and welfare of members and non-members; and the relationship between liberalization at the regional and global levels.

Chapter

This chapter details the history, politics, and recent trends and challenges of the multilateral trade system. The twentieth century witnessed a remarkable emergence of international institutions, and nowhere was their impact greater than in international trade. Following decades of depression and war, a global trading regime was initiated with the creation of the General Agreement on Tariffs and Trade (GATT) in 1947, which expanded steadily in both scope and membership through the twentieth century and culminated in the establishment of the World Trade Organization (WTO) in 1995. Underpinned by the philosophy that open markets and non-discriminatory trade policies promote the prosperity of all countries, and issued with a powerful dispute settlement mechanism, the WTO has been hailed as the most prominent example of cooperation between countries. At the same time, however, the WTO has been subject to internal and external criticism and now faces a number of difficulties.

Chapter

This chapter explores the complex and multifaceted relationship between international trade and environmental protection. The global trade regime's normative principles, legal rules, and real-world consequences often contradict environmental governance. For example, there is tension between trade and environmental governance with respect to the commercialisation of endangered species, export of hazardous wastes, emissions involved in transporting goods, and patentability of living organisms. However, there are also synergies, which enable trade liberalisation and environmental protection to reinforce one another. For example, trade forces were key drivers in the reduction of ozone-depleting substances and the affordability of pollution abatement technologies. The chapter explores these conflicts and synergies by first discussing the literature that examines the positive and negative impacts that trade has on the environment. It goes on to look at the trade dimensions of various environmental regimes, and then environmental dimensions of the trade regime, within both the World Trade Organization and preferential trade agreements.

Chapter

This chapter examines how the European Payments Union resolved the problem of currency convertibility and unlocked the potential of trade liberalization, thereby paving the way for the European Economic Community (EEC), which in turn spurred further intra-European trade. It first provides an overview of trade and payments before and immediately after World War II and goes on to discuss postwar approaches to convertibility and liberalization. It then considers the degree, speed, and commitment with which countries opened up their domestic markets to each other's exports under the Trade Liberalization Programme. It concludes with an assessment of Britain's efforts to join a wider free trade area with the members of the Organization for European Economic Cooperation.

Chapter

16. Trade Policy  

Making Policy in Turbulent Times

Alasdair R. Young

This chapter introduces the importance of EU trade policy both to the European integration project and to the EU’s role in the world. It explains how different aspects of trade policy are made. The chapter also charts how the emphasis of EU trade policy has shifted from prioritizing multilateral negotiations to pursuing bilateral agreements. It considers how the EU has responded to the apparent politicization of trade policy within Europe and to the United States’ more protectionist and unilateral trade policy. It also considers Brexit EU trade policy and how trade policy complicated Brexit. It argues that there has been considerable continuity in EU trade policy despite these challenges.

Chapter

John Ravenhill

This chapter examines the political economy of regionalism, focusing on why regional trade agreements are established and which actors are likely to support regional rather than global trade liberalization. It also considers the effects that regionalism has had on the trade and welfare of members and non-members, as well as the relationship between liberalization at the regional and global levels. The chapter begins with a discussion of various forms of regional trade cooperation, ranging from free trade areas to economic unions. It then explains why regionalism has been attractive to governments throughout the post-war period, and especially in the last two decades. It also explores the economic consequences of regional economic integration and concludes with an assessment of the effects of regionalism and the World Trade Organization (WTO) on global trade negotiations.

Chapter

Ann Capling and Silke Trommer

This chapter focuses on the evolution of the global trade regime, with particular emphasis on how it has been established through the actions of trading countries over the past 150 years, how it became institutionalized in the World Trade Organization (WTO), and why it is facing difficulties now. It first considers the historical antecedents of the global trade regime from 1860 to 1945, focusing on the golden age of liberalism and the Reciprocal Trade Agreements Act of 1934. It then looks at the General Agreement on Tariff and Trade (GATT), the Uruguay Round, the WTO, and the Doha Round, along with the WTO's relationship with civil society. It concludes by outlining the range of challenges to the multilateral trade system.

Chapter

This chapter examines the European Union’s external trade relations in the context of the wider framework of global trade agreements, along with its related policies on development aid, particularly with the African, Caribbean, and Pacific (ACP) states. It first looks at the history of the EU’s trade and development aid before discussing its external trade policy, its relations with the ACP states, and its European Neighbourhood Policy. It then considers theoretical explanations of the EU’s external trade and development aid policies as well as criticisms against such policies. Analysis of the EU’s external economic relations brings to the fore a number of theoretical themes, such as the tension between nationalism and supranationalism, the complexities of bargaining within multiple international forums, and the dominance of particular ideas across different forums.

Chapter

Sophie Meunier and Kalypso Nicolaïdis

This chapter examines the determinants of the European Union's trade power as well as the contribution of trade policy to the power of Europe in the international system. It first considers how the EU acquired and expanded competence to represent the member states in trade policy, from the Common Commercial Policy in the Treaty of Rome to trade policy after the Treaty of Lisbon. It then provides an overview of the EU trade policymaking process before discussing the exercise of the EU's trade power. In particular, it explores the European single market and world trade liberalization, settlement of disputes in the World Trade Organization, and the EU's retreat from multilateralism. The chapter also looks at preferential trade agreements, along with bilateral and regional agreements, and concludes with an analysis of how the EU is resolving the tensions inherent to being a world power in trade and through trade.

Chapter

This chapter examines the European Union’s (EU’s) external trade relations in the context of the wider framework of global trade agreements, along with its related policies on development aid, particularly with the African, Caribbean, and Pacific (ACP) states. It first looks at the history of the EU’s trade and development aid, before discussing its contemporary external trade and development policies. It explains the workings of the common commercial policy, considers disputes within the World Trade Organization (WTO), especially with the United States, and explores the EU’s trading relationship with developing countries and near neighbours in the context of the European Neighbourhood Policy (ENP). It then considers theoretical explanations of the EU’s external trade and development aid policies, as well as criticisms of such policies. Analysis of the EU’s external economic relations brings to the fore a number of theoretical themes, such as the tension between nationalism and supranationalism, the complexities of bargaining within multiple international forums, and the dominance of particular ideas across different forums.

Book

Edited by John Ravenhill

This introduction to Global Political Economy offers a comprehensive introduction to global political economy, combining history, theory, and contemporary issues and debates. With a careful balance of empirical material and critical analysis, the chapters introduce readers to the diversity of perspectives in GPE, and encourage readers to unpack claims and challenge explanations. This new edition features a brand new chapter on the global trade regimes and thorough updates throughout to reflect the rise of new actors, especially the BRICs, and the role of developing economies in global governance. The second section of the text gives emphasis to questions of global trade and production.

Chapter

This chapter explores policy outcomes by looking at a number of European countries. It considers some salient policy areas, including those that are decided primarily at the national level, for example health, and policies that are determined at the more macro, European Union (EU) level, for example trade. It also looks at policy areas that involve shared decision-making across different levels of government, examples here include immigration and the environment. The chapter also focuses on the role of position-taking by political parties and other groups, such as interest groups and social groups or movements. It considers how these explain variations in policy outcomes.

Chapter

This chapter examines the role of developing countries in the contemporary global economy. It first provides an overview of trends in the global economy, taking into account the implications of globalization for the developing world and the question of free trade vs protectionism. It then considers three key features of an increasingly globalized economy and their significance for the developing world: trade, foreign direct investment (FDI), and financial flows. It also discusses the role(s) of developing countries in global trade, the advantages and disadvantages of FDI, and two major components of the global economy that can cause serious economic disruptions: the buying and selling of currencies and stocks and shares in local economies, and the rapid movement of capital across borders. The chapter concludes with an assessment of factors that can reduce the economic well-being of countries in the developing world.

Chapter

Suzette R. Grillot

This chapter discusses the international weapons trade. It first provides a historical background on the global arms trade and highlights the ways in which the trade in defence and military equipment has shifted throughout the years until the present day. It then examines contemporary trends in the weapons trade and how weapons are illicitly traded. It also shows how the illicit arms trade is connected to the legal arms market and concludes by describing various attempts that have been made in recent years to control the global arms trade, as well as prospects for its future regulation. Three case studies are presented to highlight the main issues surrounding the international weapons trade: the first relates to the use of man-portable air defence systems (MANPADS) in terrorism, the second involves arms broker Victor Bout, and the third deals with the non-governmental organization known as the International Campaign to Ban Landmines.

Chapter

Suzette R. Grillot

This chapter discusses the international weapons trade. It first provides a historical background on the global arms trade and highlights the ways in which the trade in defence and military equipment has shifted throughout the years until the present day. It then examines contemporary trends in the weapons trade and how weapons are illicitly traded. It also shows how the illicit arms trade is connected to the legal arms market and concludes by describing various attempts that have been made in recent years to control the global arms trade, as well as prospects for its future regulation. Three case studies are presented to highlight the main issues surrounding the international weapons trade: the first relates to the use of man-portable air defence systems (MANPADS) in terrorism, the second involves arms broker Victor Bout, and the third deals with the non-governmental organization known as the International Campaign to Ban Landmines.

Chapter

Jennifer Sterling-Folker

This chapter examines the neoliberalist argument that international institutions promote international cooperation. While neoliberalism acknowledges that cooperation can be difficult to achieve in anarchic conditions, it insists that institutions allow states to overcome a variety of collective action impediments. The central concern of neoliberal analysis is how institutions do so, and how they might be redesigned to more efficiently obtain cooperative outcomes. This chapter considers three questions that are relevant for understanding neoliberal contributions: How did neoliberalism emerge? What are the barriers to international cooperation? How does neoliberalism study international institutions? The chapter uses the World Trade Organization as a case study to illustrate the importance of institutional design for international free trade cooperation. Along the way, various concepts such as interdependence, hegemonic stability, hegemon, bargaining, defection, compliance, autonomy, and principal–agent theory are discussed, along with the game known as Prisoner’s Dilemma.

Chapter

Jennifer Sterling-Folker

This chapter examines the neoliberalist argument that international institutions promote international cooperation. While neoliberalism acknowledges that cooperation can be difficult to achieve in anarchic conditions, it insists that institutions allow states to overcome a variety of collective action impediments. The central concern of neoliberal analysis is how institutions do so, and how they might be redesigned to more efficiently obtain cooperative outcomes. This chapter considers three questions that are relevant for understanding neoliberal contributions: How did neoliberalism emerge? What are the barriers to international cooperation? How does neoliberalism study international institutions. The chapter uses the World Trade Organization as a case study to illustrate the importance of institutional design for international free trade cooperation. Along the way, various concepts such as interdependence, hegemonic stability, hegemon, bargaining, defection, compliance, autonomy, and principal–agent theory are discussed, along with the game known as Prisoner's Dilemma.

Chapter

16. Trade Policy  

Policy-Making after the Treaty of Lisbon

Stephen Woolcock

This chapter examines the decision-making process in the European Union’s trade and investment policy following the changes brought about by the Treaty of Lisbon. It shows how EU policy competence has been extended progressively over many years due to internal institutional developments, but also in response to demands made upon the EU by external drivers. It also considers the respective roles of the EU institutions and argues that effective policy-making requires that all of the major actors have faith in the decision-making regime. Such a regime involving the European Commission and the European Council was developed by the EU over many years. The challenge for decision-making is for the European Parliament to be integrated into this regime. The chapter explains how the EU has shifted to a policy that includes the active pursuit of free trade agreements in parallel with efforts to promote a comprehensive multilateral trade agenda.

Chapter

This chapter addresses the intersection of international law and international politics as it relates to global trade. To study global economic governance is to study international law, international relations, and international political economy (IPE) all at once. The chapter begins with a brief introduction to IPE, a discipline which seeks to understand the workings of the global economy in its political context. It examines the relationship between economic globalization and state sovereignty, before turning to the construction of the postwar global economic order, with a focus on the Bretton Woods institutions. The postwar global economic order has often been described as ‘liberal’ by virtue of its underlying assumptions and the ideological convictions of its framers. Importantly, the postwar liberal order was built by, and for, the developed countries of the Global North-a fact that has informed critiques emanating from the developing countries of the Global South. The chapter then assesses global trade governance, analysing the structure, powers, and role of the World Trade Organization.

Chapter

This chapter explores important issues in the conduct of global trade and global finance. It asks why the global economy is so good at allowing some people to own untold riches while many others have too little money to meet basic subsistence needs, and whether the world would be better or worse off without the institutions of global economic governance. After discussing the globalization of trade and finance, the chapter considers the regulation of global trade and global finance. Two case studies are presented, one dealing with the ongoing trade war between the US and China and the other with the effect of tax havens on overseas aid budgets. There is also an Opposing Opinions box that addresses the question of how far the institutions of global economic governance currently go to work specifically to the benefit of developing countries.