Trade, Standards and the WTO World Trade Report 2005

1
Trade, Standards and the WTOWorld Trade Report
2005

• Marion Jansen
• Economic Research and Statistics Division, WTO
• WTO Public Forum
• September 25, 2006
• Session International standards in the
  multilateral trading system a stakeholders
  discussion

2
A world of standards

• Language
• Software and hardware formats
• Plugs and sockets
• Safety standards for buildings/cars

3
Benefits from standards

• Ensure compatibility (network externalities)
• Compatibility standards create a larger network
  of users (e.g. mobile phones)
• Information Asymmetries
• Safety standards ensure quality and safety (e.g.
  safety of motor vehicles)
• Negative externalities
• Environmental standards allow society to curb or
  eliminate pollution (e.g. car emission standards)

4
Should harmonization of standards at the global
level be the ultimate aim?

• Harmonization lowers trade costs
• But, harmonization reduces product variety
• Sometimes desirable compatibility standards
  (e.g. plugs)
• But not always (safety, environment)
• Countries differ (consumer preferences, level of
  development)
• What is the optimal level of diversity?

5
Should standard setting be left to the private
sector ?

• Private standard setting is preferable because
• Closer to the market
• More flexible
• Less costly
• But
• Government intervention necessary to avoid
  deceptive practices (credence goods)
• Producers favour protectionist standards

6
Standards and the WTO

• WTO
• Deals with the rules of international trade
• And thus also with the role of standards in
  international trade
• Some important WTO disputes involved standards,
  e.g.
• EC-Hormones
• US-Shrimps
• EC-Sardines

7
Is the WTO adequately equipped to deal with
disputes on standards ?

• Disagreement usually on

• policy objective (e.g. public health)
• policy instrument (e.g. standard)
• tradable good (e.g. food)
• Is the WTO dispute settlement system
  well-equipped to deal with the (scientific)
  evidence used to analyse these questions?
• Which is the appropriate relationship between the
  WTO and international standard setting bodies?

8
How can developing countries benefit from
standards?

• What are the effects of developed country
  standards on developing countries exports?
• gt no general answer
• Making standard setting at the national level
  more market-focused
• Greater participation in international standard
  setting bodies
• Finding niches in global trade as high quality
  suppliers