Ours is an age of free trade agreements (FTAs) of all sorts and of various depth and breadth in the issues they cover – simple bilateral preferential trade agreements, broad economic partnership agreements, regional trade agreements, customs unions, monetary unions, and single markets. And this only scratches the surface of the tangled web of agreements that cover a range of trade-affecting issues from investment to double taxation to patent office cooperation. The age of FTAs – nowadays deep and comprehensive FTAs (DCFTAs) – is also the age of global value chains (GVCs) and multinational enterprises (MNEs). The latter claim a large share of global cross-border trade and an equally impressive share of domestic markets through their foreign affiliate sales. MNEs emerged first, GVCs second, and DCFTAs third. Indeed, by the time the age of the DCFTA had arrived in the mid-2000s, the trend of global trade growing much faster than global GDP, which was driven by the formation of GVCs, was maturing. After the 2008-09 global financial crisis, trade as a share of GDP flat-lined following an initial rebound. Figure 1: Trade agreements over time (by class) Source: Osnago, Alberto, Nadia Rocha, and Michele Ruta. 2016. “ Deep Agreements and...
Written by Dan Ciuriak