Publication Type: Conference Paper/Unpublished Manuscript
Abstract: This paper addresses the issue of industrialization in the WTO regime, focusing on the role of asymmetric free trade agreements. Specifically, it seeks an explanation to the puzzle of why developing countries agree to policy limitations in asymmetric free trade agreements (FTAs) that they actively oppose in the multilateral forum of the World Trade Organization (WTO)? It proposes a framework where FTAs offer payoffs in terms of policy space and independence that are unavailable in their absence. To evaluate these payoffs, I explore the channels through which FTAs affect domestic policy decisions. The central conclusion of this research is that FTAs provide developing countries with additional policy flexibility in various stages of the negotiation and implementation process. Existing work on FTAs has treated them as a simple discontinuity for trade outcomes; the prospect that they might have positive outcomes on industrial policy space has been largely overlooked.Since it became clear that the WTO agreements would not deliver the growth and development results that the developing countries had expected, these countries have exhibited a distaste for any additional multilateral regulation of their domestic trade policies. Yet, at the same time, developing countries are actively negotiating and implementing asymmetric FTAs that include not only regulations that go beyond existing WTO commitments, but also regulations on activities that are not even covered multilaterally, such as e-commerce and telecommunications. There is no existing satisfactory explanation to non-linearity of this preference. In this paper, I suggest that the FTA “process” of negotiation and implementation contains a number of different opportunities to expand and enact industrial policies in ways that exceed existing WTO allowances. By relaxing the assumption that all FTAs are alike, several new features become apparent. First, in nearly every case, the FTA does not advance the developing country’s regulatory regime from a WTO baseline. Second, there are elements of FTAs that can enable developing countries to enact policies that would be non-compliant with the existing international trade regime in the absence of an FTA. Third, I expect to find a high degree of leeway in FTA implementation. This approach will use a political economy lens to examine a phenomenon that has been observed but not explained in several different literatures including international relations, economics, and law. By using an inherently interdisciplinary perspective, I hope to use this project not only to piece together the answer to this puzzle, but also to bridge the various elements of these related but discrete disciplines on this topic.