“Kenyan policymakers will want to maintain this access in trade negotiations with the United States,” the report said. “At the same time, U.S. negotiators will try to ensure that any agreement includes adequate reciprocal market access.” Dispute settlement systems (DMS) are dormant in many trade agreements because countries prefer to use the World Trade Organization (WTO) with its appeal mechanisms as an international dispute settlement forum. This could change in the coming years, as the wto`s confidence and reliability are slowly being crippled by the disruptive stance of the United States. The question is whether the use of EU dispute settlement mechanisms offers a faster and clearer approach to dispute settlement and could serve as a model for future regional trade agreements. (more…) Many economists argue that, given broader global economic factors, it makes little sense to focus on trade deficits in a bilateral context. What would be the impact of different versions of Brexit on the British economy? Are certain parts of the economy likely to be more affected than others? Will trade agreements with the rest of the world support the loss of BRITISH access to EU markets? A free trade agreement between the U.S. and Kenya would help U.S. companies be more competitive in Kenya and throughout the African region.
“Kenya is a long-standing strategic partner of the United States in Africa. A successful trade agreement between the two countries would be an important development of U.S. trade policy toward Africa in general and sub-Saharan Africa in particular,” said Witney Schneidman, president of Covington`s Africa Practice Group. The Economics of Deep Trade Deals: A New eBook Offshoring That Drives Expensive Standards suggests discrimination could be the main cause of inefficiencies associated with old trade agreements. Is extending national treatment to standards the solution? When each government sets a single standard, the result is never the best. However, allowing governments to set multiple standards subject to national treatment also cannot guarantee an effective result on a global scale. Governments have no incentive to offer an effective standard for foreign companies. The resulting Nash equilibrium of a free trade agreement with multiple standards based on national treatment provides an example of Sykes` (1999b) “neutral regulatory protectionism.” This new landscape of trade negotiations focuses on harmonizing, or at least convergence, regulatory measures.
Yet, as Sykes (1999a, 1999b, 2000) argues, international differences in income, cultures, risk preferences and tastes generally justify regulatory heterogeneity, even with the additional cost of complying with a variety of different rules. Lamy, P (2015), “The New World of Commerce”, Jan Tumlir Lecture. Grossman, G M, McCalman, P and R W Staiger (2019), “The `new` economics of trade agreements: From trade liberalization to regulatory convergence?”, CER-REGULATION Working Paper No. 13903. Solving this problem creates huge opportunities in the region. “The U.S.-Kenya Free Trade Agreement will serve as a model for other U.S. agreements on the continent,” Prasad added. An alternative to the negotiating rules for regulatory cooperation is a provision on mutual recognition. If each government sets a single standard and commits to mutual recognition, the result is not the best.
However, if governments can set multiple standards, an old trade agreement that includes a provision on mutual recognition can achieve effectiveness. In balance, each government announces (at least) two standards, one that maximizes profits for its companies in their local sales, and the other that maximizes profits for their companies in their export sales. If the importing government is forced to accept goods with these characteristics, the result is the same as it happens without any regulation, what we have argued is the best in a Venable world without consumer extraterities. Bown, C P and M A Crowley (2016), “The empirical landscape of trade policy”, in K Bagwell and R W Staiger (eds.) The Handbook of Commercial Policy 1A, North Holland. While the WTO`s 164 members have not been able to collectively agree on new rules at the multilateral level (Evenett and Baldwin 2020), they have all contributed to the development of new trade rules in bilateral and regional trade agreements. The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the United States-Mexico-Canada Trade Agreement (USMCA), the Regional Comprehensive Economic Partnership (RCEP), the African Continental Free Trade Area (AfCFTA) are just some of the most important agreements signed in recent years. Is a new trade agreement needed to achieve global efficiency? Or can an old trade agreement be modified to do the trick, perhaps with what Sykes (1999a) calls “supervised decentralization,” i.e., provisions such as national treatment that restrict general aspects of governments` regulatory decisions? It is estimated that full implementation of the TFA could reduce trade costs by an average of 14.3% and boost global trade by up to $1 trillion per year, with the greatest gains in the poorest countries. For the first time in the history of the WTO, the obligation to implement the agreement is directly linked to the country`s ability to do so. A Trade Facilitation Mechanism (FACE) has been established to ensure that developing and least developed countries receive the necessary support to take full advantage of the TFA. The business community has long recognized that governments can use their regulatory power to pursue mercantilist goals. If governments do not cooperate in setting their national policies and neglect the interests of consumers and businesses that are not part of their groups, then the resulting externalities can lead to global inefficiencies, even if there is no protectionist intent.
Today, trade agreements focus more on regulatory and other “non-tariff measures”, which were once exclusively within the purview of domestic policy. For these reasons, “deep” trade agreements, as trade experts call this new category of agreements, are fundamentally different from the previous generation of trade agreements. (Lamy, 2020).  We also show that an old “smart” trade agreement that maintains net trade taxes of zero, but includes positive import tariffs offset by equal export subsidies, can improve the outcome of a free trade agreement by introducing a concern about customs revenues that mitigates the reason for filing standard-setting. .