Regional Trade Agreements versus Global Trade Liberalisation: Implications for a Small Island Developing State

This study undertakes an empirical investigation of the macroeconomic and sectoral impacts of two forms of regional trade agreements vis‐à‐vis global trade liberalisation on a small island country, using Fiji as a case study. In order to capture the feedback effects of such a complex set of policies, we employ a dynamic computable general equilibrium model of the Fijian economy to investigate (i) the impact of the Pacific Island Countries Trade Agreement (PICTA), (ii) the impact of PICTA, the Pacific Agreement for Closer Economic Relations (PACER), and the Economic Partnership Agreements (EPAs), (iii) the impact of full tariff liberalisation (i.e. tariff removal only), and (iv) the impact of full trade liberalisation, with removal of both tariff and non‐tariff barriers. While PICTA consistently provides the least benefits across a range of macroeconomic indicators including real output, welfare, trade volumes and employment, full trade liberalisation involving the removal of tariff and non‐tariff barriers provides the greatest benefits compared to the other scenarios in terms of real output. However, the latter scenario is outperformed by PICTA, PACER, the EPAs and full tariff liberalisation in terms of welfare effects, trade volumes and employment. The policy implications hold important lessons for developing countries considering trade liberalisation.     

Liberalising Services Trade in the EU

The internal market for services, which are estimated to account for 60 to 70 per cent of economic activity in the European Union, is still rife with legal and administrative barriers to cross-border trade. The problems involved in integrating national services markets into one large internal market are highlighted by the ongoing fierce controversy over the Commission’s proposed services directive. The following contributions discuss some pertinent issues.

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*The article is based in part on a paper prepared for the World Trade Forum 2004 in Berne (“The Single Undertaking After Cancun: Diversity and Variable Geometry in the World Trading System”). All references in the following are to the European Communities, reflecting its membership status in the WTO, rather than to the European Union. The views expressed are those of the author and cannot be attributed to the WTO Secretariat.     

Trade Policy Making in a Small Island Economy: The WTO Review of the Maldives

The purpose of this paper is to examine trade policy regime and trade‐related development issues in the Maldives on the basis of the Trade Policy Review Maldives 2003 of the WTO. The key theme of the paper is that, given the narrow resource base and small domestic market, openness to foreign trade and investment remains the ‘natural’ policy choice for a small developing economy like the Maldives. Since the late 1980s, the Maldivian government has made considerable progress in implementing policy reforms driven by this conviction. However, the reform process is far from complete. High import tariffs maintained predominantly on revenue considerations, a large direct role played by the public sector in foreign trade and some key sectors of the economy, lack of transparency in duty concessions and other investment incentives, failure to incorporate environmental concerns as part of the national development policy, and delays in meeting reform commitments under the WTO are among the key items of the unfinished reform agenda.     

Liberalising Trends in Israel's Trade Policy: Trade Policy Review of Israel

Israeli authorities have been generally efficient in implementing gradual, mostly unilateral, liberalisation of their country's trade policy regime, with agriculture and related activities being the only major exceptions to the rule. This trend reflects a broad consensus among major political parties in Israel in pursuing liberal trade policy reforms. An alternative interpretation of the liberalising trend is that protectionist pressures from organised sectoral lobbies were either weak or inefficient.     

The Link Between Small Business Governance and Performance: The Case of the Ghanaian SME Sector

ABSTRACT

The present study set out to examine corporate governance practices of SMEs in Ghana and whether there is any linkage between these governance practices and financial performance. We employed two levels of interaction to achieve our objectives: The first is an interview for a general understanding of governance issues in the SME sector and the subsequent design of a questionnaire for an exploration of the linkages between governance issues and firm financial performance by employing a linear model. The study reveals that governance structures in SMEs are jointly influenced by credit providers and business ethical considerations. The regression results show that board size, size of audit committees, corporate ethics and the proportion of outsiders on the audit committees have negative impact on financial performance while independence of the board and the presence of audit committees enhance firms' financial performance. The findings have some policy implications in that it shows that exporting SMEs are relatively profitable. It is recommended that in an attempt to promote exports, the legal and regulatory environment should be conducive for these firms.     

Sweetening the Transition in EU Sugar Preferences: The Case of Fiji

The European Union grants preferential market access for sugar to a group of African, Caribbean and Pacific (ACP) countries. Sugar exported under these quotas receives between two and three times the world price. These trade preferences are intended as a form of aid, but they tend to stifle productivity growth in the recipient countries. The European Union could better assist ACP countries by providing direct development assistance in place of sugar subsidies, for example by investing the aid transfers into infrastructure or other essential public services. This paper tests this proposition for the case of Fiji using a computable general‐equilibrium model. It is found that significant gains in economic performance can be achieved by employing such alternative strategies for aid. These gains are particularly strong over the medium to long term when the aid funds are diverted to infrastructure development. However, there are issues of equity to consider since, in the case of Fiji, the rural poor would be the losers if trade preferences were to be removed. Moreover, the degree of benefit in alternative strategies such as infrastructure development will be contingent on the economy's flexibility, which in turn depends upon the country's regulatory regime and education performance.     

Trade Union Responses to Outsourcing in a Neo-Liberal Environment: A Case Study Analysis of the Australian Public Sector

Australia has witnessed a rapid growth in outsourcing over the past decade with the public sector being the clear leader in these initiatives. Explanations of the rise of outsourcing tend to emphasize economic and human resources management factors and neglect the political dimension. In particular, unions and collective labour relations have been a target of a neo-liberal reform agenda pursued by both Labour and conservative governments, which has included outsourcing as a means of individualizing the employment relationship and reducing union influence. This can be seen clearly from the experience of the state of Victoria both in its reform of local government and its electricity generation industry where a carefully implemented programme of downsizing and outsourcing played upon existing divisions in the workforce. In both cases a pragmatic, survival oriented response from the major unions was elicited.     

Formulating Trade Policy in a Small Hydrocarbon‐dependent Economy: The Case of Trinidad and Tobago

We examine the status of Trinidad and Tobago's trade policy regime based mainly on the WTO's Trade Policy Review 2005 and to a lesser extent the Review of 1998. The paper highlights the areas identified by the WTO that the country needs to address to ensure compliance with the rules, disciplines and commitments made under the Multilateral Trade Agreements and the existence of a trade regime characterised by little or no distortions. It undertakes this discussion against the background of Trinidad and Tobago's role as a founding member of CARICOM and the increasing influence of this body in determining its trade policies in particular and economic policies in general. The study highlights the progress made by Trinidad and Tobago in establishing an outward‐oriented trade regime since embracing reforms in the mid‐1980s. However, the need for much deeper reforms is stressed if the country is to realise its ambitious objective of becoming the manufacturing base and the commercial, trans‐shipment and financial hub of the western hemisphere. Further, it points to the inextricable link between the country's economic fortunes and international petroleum prices, and increasing over‐reliance on the hydrocarbons sector. Consequently, it stresses the need for getting its diversification strategy ‘right’ if it is to minimise the fallout effects associated with the bust that inevitably follows a petroleum boom.     

Trade Liberalisation: The Effects of Free Trade Agreements on the Competitiveness of the Dairy Sector

In recent years, preferential trade agreements (PTAs), free trade agreements (FTAs) in particular, have proliferated while WTO negotiations have stagnated. This paper contributes to the literature on trade liberalisation and the agricultural sector by analysing the effects of FTAs on the competitiveness of the dairy sector across 76 countries and over a 20‐year period from 1990 to 2009. With a longitudinal econometric model, the results demonstrate that when a country has a revealed comparative advantage in the dairy sector, FTAs positively influence several indicators of competitiveness in the dairy sector, such as production, market share and trade balance. The results also indicate that multilateral FTAs are more beneficial than bilateral FTAs. There is strong empirical evidence that FTAs are more beneficial to developed countries than to developing countries. There is no statistical evidence to support the hypothesis about a relationship between FTAs and farm‐gate price.     

The Small Business Sector in Recent Recoveries

Small businesses account for half of private GDP, half of the private workforce, and most new jobs. This paper documents that small businesses have fared unusually poorly in the current recovery, dragging down output and employment growth, even while large businesses and agriculture have prospered. The reasons for the poor performance of small business are documented and analyzed with data from surveys of the National Federation of Independent Business. The findings contradict much conventional wisdom relating to six broad aspects of small business activity: employment and hiring plans, expectations and investment, past sales and earnings, inventories, prices, and credit conditions. The implication of the findings is that a robust economic recovery for the entire U.S. economy will depend on public policy that is tailored to permit and encourage small business expansion.     

Trade Policy Issues in a Small African Economy: The Trade Policy Review of The Gambia 2004

The Gambia displays many of the classic characteristics of a small open economy, with the vulnerabilities that implies. The sum of its imports and exports are around 100 per cent of GDP, with a limited number of export commodities and a wide variety of imports, including some key staple foods. The Trade Policy Review of The Gambia 2004 provides a very helpful review and assessment of current trade patterns and policies. The latter rely predominantly on import and export taxes. While quite substantial trade reform measures have been implemented recently, these have led to only a very small reduction in the average tariff rate, and trade policy displays a substantial anti‐export bias. Other important issues highlighted by the Trade Policy Review include serious capacity constraints relating to trade policy, and a failure to discuss connections between trade policy and growth and poverty reduction – again common characteristics of many small economies.     

The Small Food Manufacturing Sector in the Irish Grocery Market

Abstract

This paper seeks to explain the continuing reduction in the number of small food manufacturing companies in Ireland by examining food manufacturers' self perceived performance and investment intentions in the context of retailers' supplier selection processes. The paper finds that the greatest and most immediate risk to small suppliers survival is their under—performance in generating retailers' sales andmargins. The paper also identifis a set of inconsistencies in suppliers' investment intentions. It is argued that small manufacturers, while appreciating their relative under—performance in commercial performance, are failing to divert resources into this area. The study also raises concerns about small food manufacturers understanding of their market and the principles that direct their innovation efforts.     

Marginal Intra-Industry Trade: The Case of Jamaica's Trade with CARICOM

Of the dearth of empirical studies on marginal intra-industry trade, there is a relative paucity of empirical evidence involving developing countries. The major contribution of this article is two-fold: Firstly, it measures to our knowledge for the first time the extent of Jamaica's marginal intra-industry trade with CARICOM. This study is warranted bearing in mind that Jamaica's involvement in recent integration efforts with CARICOM will have adjustment costs implications. Secondly, we compare the performance of various Jamaican export sectors with their CARICOM counterparts. The article concludes by proposing some recommendations for policy makers to ensure smoother functioning of the Jamaican labour market.     

Concentration Measurement Under Cross-ownership: The Case of the Spanish Electricity Sector

When major investors own shares in several firms in the same industry, the traditional approach to concentration measurement by the Hirschman–Herfindahl Index (HHI) fails to accurately reflect the level of competition in the market. To address this problem we derive a generalized HHI formula (GHHI) based on the investors degree of control over each firm. We test alternative definitions of this control with actual data from the Spanish electricity sector and show that recent decisions in this industry, particularly the failed merger between the largest firms, Endesa and Iberdrola, could have been affected had the GHHI been used by the competition agency.     

The Dismantling of CONASUPO,a Mexican State Trader in Agriculture

In the 1990s, Mexico gradually dismantled and ultimately liquidated CONASUPO, its state enterprise in agriculture. CONASUPO was a typical less developed country (LDC) parastatal, exacting control over an important component of Mexico's food chain. This paper examines the demise of CONASUPO in the context of domestic economic reforms and trade liberalisation. It documents the process by which CONASUPO was eleminated, the political environment that made this possible, and the implications for agricultural production and trade. The paper concludes by distilling lessons from Mexico's experience for other LDCs as the liberalisation of domestic and international markets continues to unfold.