Transformations in Global Economic Governance: Integration via Free Trade Agreements

Lead Research Organisation: Keele University
Department Name: Faculty of Humanities & Social Sciences

Abstract

The seminar series aims to generate new research, create networks, foster capacity building and user engagement by providing an interdisciplinary forum for debate and discussion on: (a) the regulatory, economic and social aspects of regional integration through FTAs; (b) what FTAs bring to partner countries; and (c) the current state of play in FTA activity in the EU, USA and Asia. By providing a wide geographical spread of seminars that focus on specific themes of regional trading agreements, its effects and the move towards a common regulatory framework, we propose to engage with academics, early career and established researchers from all over the world to create new research networks and build on existing works as well as engage with and bring together stakeholders, i.e. policy makers, small and medium sized businesses and civil society groups, that have an interest in FTAs being negotiated in and by Asia, EU and America.

Broadly the seminar series focuses on: first, understanding the rationales behind FTAs and how the EU, USA and Asian FTAs interact with one another; second, how FTAs under negotiation could affect the policy choices of governments and business environments around the globe; and third, gaining a comprehensive overview of how the move to common regulatory systems under bilateral FTAs are likely to determine future rules of global trade governance.

Seminar 1 highlights the general trends in FTAs. Main issues for discussion include: rationale for growing FTAs, and the recent developments that provide momentum for countries to negotiate FTAs. How are the EU and USA driving FTA negotiations in Asia? What are the economic and social impacts of FTAs? Is the internal and external environment important in setting trade policy agenda? Are the dynamics of negotiations driven by constructivist or neo-realist framework of international relations? (Seminar venue: Keele)

Seminar 2 looks at the EU's rationale for negotiating FTAs with Asia and USA. This includes a discussion on social, economic, political, geo-political and political economy aspects of FTAs, and how trading agreements are an integral part of 'Global Europe' strategy and foreign policy. (Seminar venue: London)

Seminar 3 offers a comprehensive analysis of Asian FTAs, its rationale, and comments on factors that drive FTA negotiations in the region. This sheds light on the growing inter-linkages between Asian and European global production networks, and comments why India unlike (China and ASEAN) has not been able to benefit from regional value chains. It also addresses the questions as to how can Indian firms integrate into FTA production chain activity? (Seminar venue: New Delhi)

Seminar 4 looks at the state of play of ongoing bilateral FTA talks between EU and USA. The seminars takes stock of the current state of negotiations and comments on contentious issues that have emerged in ongoing talks. This also examines how and why the Transatlantic Partnership is driven by aim of eventual regulatory convergence between the trading partners. (Seminar venue: Bath)

Seminar 5 evaluates EU and US FTAs including those with Asian countries, commenting on areas of differences/commonalities in FTAs negotiated and the general move towards regulatory convergence/divergence. This provides a comprehensive, comparative and systematic research on the scope and enforceability of regulatory norms negotiated under FTAs. The seminar also highlights the importance of labour and social standards within FTAs and the relevance of addressing these issues within the context of global trade governance. (Seminar venue: Brussels)

Seminar 6 examine the emerging dynamics of FTAs, debates whether such agreements can be a stepping stone to future multilateral liberalisation or whether this could lead to fragmentation in world trade. It also comments on what role the EU and USA play as global actors in shaping a functioning multilateral order. (Seminar venue: London)

Planned Impact

The seminar series and outputs will benefit three distinct groups of stakeholders:
1. Policy-makers, particularly EU trade negotiators and policy-makers, as well as EU Member States' policy-makers
2. Civil society groups and think tanks
3. European business community, especially SMEs and European Business Associations

Policy-makers will be able to refine future policies and negotiating strategies on the basis of the knowledge generated throughout the seminar series, with an emphasis on the understudied business and social consequences of economic integration through FTAs.

Civil society groups, including environmental groups, trade unions, NGOs, community groups, consumer groups will have access to the same information as policy-makers regarding the benefits and pitfalls of economic integration, thus broadening their perspectives on these matters and enabling them to enhance their engagement in the policy-making process. Further, the findings will feed into think tanks work on FTAs.

Businesses, especially SMEs, are the stated targets of economic integration policies. However, they often lack the knowledge and resources to follow developments in FTAs and take advantage of new market access and trade facilitation measures that have been negotiated by policy-makers. Thus, the seminar series will transfer up-to-date information on FTAs and business practices to SMEs.

After each seminar, a brief indicating the main discussions and their conclusions will be prepared by the PI and CO-I, and published on the project website. Participants will be asked to facilitate updated bibliography on register their projects (if any) on the project website so that resources are readily available to the policy makers, practitioners, academics, and the general public.

The list below provides an overview of some government and non-government organisations which have been identified as having a potential interest in the findings of this seminar series as well as in the (further) activities generated in and by the website:
Government agencies: Department of Trade and Investment; European Commission Trade directorate, trade negotiators of USA, EU and Asian countries.
Institutions: European Commission DG Trade, European Parliament International Trade Committee, ECIPE, Temasek Foundation Centre for Trade & Negotiations. Centre for Sciences Humaines in New Delhi, which is a French government institution for research, has expressed a keen interest in the seminar series and has offered to provide local assistance in hosting the seminar in New Delhi (in June 2015). This highlights the significance of our seminar series for businesses and the wider academic community in Asia.
NGOs: OXFAM (UK); FRIDE (Belgium); CUTS (India); Medecins sans Frontiers (France); WIDE-Network (Netherlands).
Business Associations: Confederation of British Industries; Business Europe; EuroChambres; AmCham; European Services Association; Asian Business Federations.

Publications


10 25 50
Khorana S (2016) India and the Indian Ocean region in Journal of the Indian Ocean Region

Related Projects

Project Reference Relationship Related To Start End Award Value
ES/M002586/1 31/12/2014 31/07/2015 £28,411
ES/M002586/2 Transfer ES/M002586/1 01/08/2015 31/03/2017 £20,972
 
Description The seminar series has successfully achieved its aims of generating new research, creating networks, fostering capacity building and user engagement by providing an interdisciplinary forum for debate and discussion on:

(a) Regulatory, economic and social aspects of regional integration through FTAs (free trade agreements) [workshops 1 and 2];
(b) What FTAs bring to partner countries [workshops 1 and 2];
(c) Current state of play in FTA activity in the EU, USA and Asia [workshops 1 and 2]

We have held 2 workshops in Keele and London in January and June 2015, respectively. Main developments from research funded on this grant are:

A. Contribution of interdisciplinary knowledge on FTA issues, focussing mainly on:
(i) Services liberalisation in FTAs and indirect migration
(ii) Developmental aspects of FTAs (including asymmetric power and negotiation tactics)
(iii) Econometric analyses of FTA consequences (including FTA effects on labour standards)
(iv) FTA integration through law
(v) Social norms and labour standards in trade agreements
(vi) Recent innovations in EU trade agreements and changes in negotiation dynamics
(vii) The Transatlantic Trade and Investment Partnership (TTIP)
(viii) Drivers of trade policy
(ix) Econometric tools and monitoring the effects of trade agreements

A total of 65 researchers attended the workshops. Out of these, 18 were PhD students. The geographical spread of attendees include Belgium, Germany, Switzerland, Greece, Austria, Belgium, France, Hungary, Poland (from Europe), and Malaysia, India, USA (outside Europe). Practitioners also participated from UK, Hungary, Belgium.

B. Establishment of interdisciplinary and international research network and setting up project website, called GIFTA (www.giftaproject.org). The website went live on 29 January 2015. The network has 57 members spanning Europe, the USA, South and East Asia and Australasia. The seminar series is succeeding in its aim of fostering dialogue with policy circles and in bringing together emerging and established scholars from various disciplines interested in economic governance and FTAs.

The workshops in New Delhi and Brussels should further the links with international researchers and policy-makers. A representative from the European Commission DG Trade has committed to participate at the New Delhi workshop, and it is likely representatives of the EU Delegation in India will attend as well.

C. KEY FINDINGS: that emerged from the various presentations, and from the discussions and exchanges amongst participants, at the two workshops held in Keele and London in January and June 2015, respectively can be classified under the following four categories:

1. Role of business choices and international/regional supply and value chains in free trade agreements (FTAs): The sessions highlighted the importance of value chains in altering the politics of trade policy, with new sectors of the economy adding pressure for the negotiation of FTAs, such as import-dependent businesses (be it retail or for further processing for export), particularly in the case of negotiations with Asian states (Eckhardt and Poletti). The importance of supply and value chains is also present in determining the motivation for the inclusion of controversial investment chapters in trade agreements, as the international nature of production and value chains has led to greater diversification of firms' investments and a desire for guarantees when dealing with states with less robust regulatory systems (Bruhn). The literature on FTA formation has taken a broadly macro-approach to the subject focusing on state-level rationales for entering into FTAs. Domestic pressures have typically been conceptualised as a contestation between pro-liberalisation exporters and anti-liberalisation non-exporting sectors, however the discussions at the workshops have shown the need to refine explanations by incorporating micro-level analysis of how corporate decisions and the changed nature of production, supply and value chains is creating new incentives for the negotiation of FTAs.

2. Role of private corporations and Corporate Social Responsibility (CSR) and private standards & consumer activism: Much of the existing research on FTAs has placed the state (or organisations with state-like attributes like the European Union) at the centre of the analysis. Policy-makers too, have concentrated on negotiating international trade standards, be it multilaterally at the World Trade Organization (WTO) or at the regional or bilateral level through myriad legal trade agreements. Research seminar series presentations revealed the limitations of labour standards in FTAs to achieve genuine changes on the ground in terms of labour rights. This derives variously from the fact that in many cases labour clauses in FTAs are promotional (EU, New Zealand, Canada) rather than legally enforceable (Gammage, Martinez-Zarzoso, Van der Putte and Orbie); and the challenges of monitoring the application of agreements and labour rights conditions on the ground. Novel research presented at the Seminar on Central American banana and pineapple industry reveals that producers on the ground have various approaches to improve working conditions, although these are often linked to the employer rather than to institutionalised rules. More crucially, producers are focusing their attention on gaining certification from private standard setting bodies (e.g. Fair Trade, environmental certification) which can facilitate their access to international supply chains, rather than standards agreed through FTAs (be these bilateral standards or following international standards such as those set out by the ILO) (Martens). Presentations of the effects of free trade agreements by developed states on developing states of the Commonwealth reiterated the dangerous potential of FTAs diverting trade away from developing states and reducing their international competitiveness (Vickers). Developing states are also more concerned with remaining within international supply chains, and as demands for sustainably sourced products increases in the developed world, developing states, at the behest of international corporations, are working towards achieving higher labour and environmental standards on the ground to attain the levels required by private certification bodies.
The interesting conclusion of these discussions is that while states (especially the EU) is especially committed to improving standards through free trade agreements, changes are being instigated by markets rather than international regulations. Consumer demand, greater pressure on corporations to behave in more sustainable manners (crystallised in CSR charters) and the fear of being left out of supply networks is having a greater impact on the ground. The challenge, for us, therefore, is to conceptualise how these levels of governance interact, and whether private certification standards and private actors in the market can ensure the sustainability of improved labour and environmental standards.

3. Need to adapt to changing world and to rise of the so-called emerging powers and their preferences: A common theme that transpired in all discussions and all panels is that FTAs are being negotiated in the backdrop of changes in the relative power of actors in the international arena. The EU and USA no longer leverage the same asymmetrical power vis-à-vis other large economies, especially in Asia. They have become interdependent with many of these economies, and trade and investment negotiations with these partners are therefore proving more challenging than in past negotiations with states heavily dependent on the EU and USA for their trade. There is strong evidence that the European Union is adapting to this new reality already, with moves towards bilateral negotiations (Meissner, Schade) to exploit greater leverage in negotiations and to favour quicker resolution of negotiations than would be the case in interregional negotiations. The attitude and strategies of EU negotiators in other negotiations, where the negotiators are also 'selling' the counterpart's position back to the increasing number of stakeholders and veto players within the EU (e.g. explaining how India has been making accommodations on political clauses to the European Parliament), is already taking into account this more complex world (Frennhoff-Larsen). The agenda here is to further explore the extent to which, and the mechanisms through which, emerging powers are interacting directly and indirectly with various veto players in the European arena, and how EU negotiators' positions are being affected by the interaction with interlocutors.
The interests, aims and policies of Asian rising powers will be explored further at the 3rd Workshop in the Series on Asian FTAs scheduled to take place in New Delhi on 16-17 November 2015.

4. Lasting legacy of Transatlantic Trade and Investment Partnership (TTIP) controversies:
Discussions inevitably also covered the controversial Trade and Investment Partnership currently under negotiation between the European Union and USA. Apart from the complex challenges of reaching some sort of regulatory convergence in several issues where approaches vary greatly, participants highlighted the increased challenge civil society opposition to the negotiations is posing. The question will be whether the level of activity and commitment can be sustained or whether it will wane as in previous occasions, although the crucial point lies in the fact the increased comprehensiveness of FTAs and their intrusion in other ambits of regulation and policy has pitted competing visions of state-market-society relations against each other (Siles-Brugge). As this normative conflict is unlikely to disappear, policy-makers would be wise to take this into account when designing policies and trade negotiation strategies.
The broader implications of TTIP and its 'game-changing' potential in terms of economic integration and governance and the future of FTAs will be probed further at the 4th Workshop in the Series, provisionally scheduled to take place at the University of Bath on 28-29 January 2016.
Exploitation Route The findings will be put to use by four distinct groups of stakeholders:
1. Policy-makers, particularly EU trade negotiators and policy-makers
2. Post graduate research (PGR) students and academic community
3. CSOs, NGOs and think tanks
4. European business community, especially small and medium enterprises (SMEs).

European Commission (Deputy Head, Chief Economist Unit, DG Trade European Commission) and Commonwealth (Deputy Trade Advisor, Commonwealth Secretariat) participated in the 2nd seminar held on 30 June and 1 July 2015 in London. The findings of the seminars will be of use to the policy makers who will be able to refine future policies and negotiating strategies on the basis of the knowledge generated throughout project deliberations, with an emphasis on the understudied business and social consequences and rationale for FTAs, and in 'new' areas of trade and economic integration.

The seminars focus on building research capacity among PGR students and generating new research ideas from an interdisciplinary perspective. With PGR students in mind, we invited Adrian Smith, editor-in-chief of the Journal European Urban and Regional Studies, and Khalid Nadvi from Manchester University, to provide advice on publishing (particularly aimed at the PhD students) and all participants engaged in a lively and fruitful discussion on publication and on what kind of publication outputs could be generated by the seminar series. Thus, the academic community will benefit from: (a) research in the cross-cutting areas of FTAs that will lead to cross fertilisation of ideas between different disciplines; (b) help identify areas with potential for research cooperation.

The fourth Seminar series event in Bath in January 2016 proposes to actively involve businesses, especially SMEs. We will aim to transfer up-to-date information and research on FTAs and business practices and how these impact on SMEs to a group of SMEs at the seminar workshop.

To facilitate dissemination of information the Seminar series has a dedicated website: www.giftaproject.org

Selected presentations from Workshops 1 and 2 have been uploaded onto the GIFTA website for open access dissemination (some presenters did not wish to have their papers and videos of their presentations online)
A project Twitter account has been created @GIFTAproject and is used to announce calls for papers, publications, policy briefs and uploads onto website.

OUTOUTS THAT WILL BE USED BY ALL STAKEHOLDERS (LISTED As ABOVE):
1. Policy Briefs:
Policy briefs series published online:
i. Migration in FTAs (Philip Hanke, ETH) - published
ii. EU's negotiating tactics with Latin America (Daniel Schade, LSE) - published
iii. Two policy briefs have been commissioned after the London workshop. These are on: Labour Standards and FTAs (Jan Orbie, Ghent University) and (Magdalena Frennhoff Larsen, University of Westminster). Both these briefs will be made available online shortly.

2. Handbook on the European Union and International Trade (accepted)
PI, CI and member of the advisory board Jan Orbie prepared an outline for an edited volume to disseminate project findings. The book is entitled "Handbook on the European Union and International Trade". This has been accepted by Edward Elgar and due date for submission of the Handbook to the publishers is March 2017. This edited volume has contributions from workshop participants. The Handbook includes a holistic vision of trade policy from a political, economic and legal perspective, taking advantage of the multidisciplinary character of the network and workshops. It also focuses on some areas that have been highlighted in discussions as problematic in current research: the effect of Lisbon Treaty changes in the internal politics and implantation of EU trade policy; and the effect of the financial crisis and changes in global economic power dynamics on the way third parties interact with the European Union's trade negotiators.

3. Recent publications by PI and CI:
i. Khorana, S., N. Perdikis & W.A. Kerr (2015) 'Global economies of scale in the EU-India trade agreement: are they the key to a return to economic growth?' Asia-Europe Journal, 13/1: 41-55.
ii. Khorana, S. & J. Orbie (2015) 'Normative versus market power Europe? The EU-India trade agreement' Asia-Europe Journal, OnlineFirstDOI: 10.1007/s10308-015-0427-9
iii. Garcia, M. & A. Masselot (2015) 'EU-Asia Free Trade Agreements as tools for social norm/legislation transfer' Asia-Europe Journal, OnlineFirstDOI: 10.1007/s10308-015-0423-0

In addition, more outputs are under preparation.
Sectors Agriculture, Food and Drink,Government, Democracy and Justice,Security and Diplomacy,Other
URL http://giftaproject.org/index.php/publication-hub/
 
Description Following the plan detailed in the pathways to impact section of the proposal, concerted efforts have been made to publicise events and findings from the discussions to a broad audience in order to promote incorporation of ideas and findings in policy-making and academic thinking. The findings from the project have been disseminated through policy briefs and academic papers published on the project website. Evidence of the usefulness of the project, and broader interest in the project, is emerging in social media too. The project's Facebook and Twitter has growing numbers of followers, including some prominent policy makers and international institutions. Workshops have been publicised to the media through the Universities' press offices, and various journalists have expressed a keen interest in attending the TTIP workshop next year, which should bolster the societal impact of the project. The contract with Edward Elgar to publish a collection of academic papers in an edited volume entitled "Handbook on the EU and International Trade", will serve to disseminate outcomes of discussions and workshops to a broader academic and policy community in the EU and beyond, impacting future research agendas. Presentations, policy briefs, videos and papers from the workshops and the general body of research conducted on FTAs will feed into teaching curricula at the Masters' programmes at Bath and Bournemouth Universities. Other network members will also be using some of the materials to support their classes on International Political Economy, International Trade and Law at their home institutions. Finally, and most significantly, given that European Commission and Commonwealth secretariat officials are involved through their active participation in the project workshops, we anticipate that the findings and workshop discussions will influence policy-makers ways of thinking about the consequences of free trade agreements, and that ideas about how to refine certain aspects of the drafting and implementation of trade agreements will be operationalised in the medium to long term. Wide publicity of the network (GIFTA) suggests that the project will indeed fulfil the remit of establishing international networks for research on trade agreements and create a publications hub for reference for policy makers and think tanks.