Now average duty rate introduced by world countries was equal to 9%. This index is 19% lower than the similar one (11.1%) fixed in 1996, a year after the WTO had been established. The index looks even smaller compared to a considerably higher tariff level acting between contracting parties of General Agreement on Tariffs and Trade (GATT) shortly after World War II. One estimation is that average duty rate in 1947 among industrial countries before the first post-war tariff decrease fluctuated at 20-30% [7]. Other estimation data states that average duty rate used by key GATT parties was equal to 22% [5]. Such considerable concessions became one of featuring displays of alteration of countries’ trade policies that had been formed under the influence of global trade system formation and further development. Therefore, in order to continue protecting their national economic processes efficiently, states’ governments must promptly react to modern challenges of the system where there is a rather distinctly observed number of tendencies which we will characterize below.
Currently, trade liberalization remains the key goal and trend in the global trade policy. Trade liberalization policy implies eliminating barriers for free goods and services exchange among countries [11]. Trade liberalization provides abolitions or reductions which may be characterized as simultaneous minimizing of tariff and non-tariff trade barriers (quotas, tariff quotas, sanitary and phytosanitary measures (SPM), technical barriers to trade (TBT), requirements to goods origin, licensing procedures, protective measures, etc.). Today, it is generally believed that over the last fifteen years the World Trade Organization itself has been the pillar which defines rules and monitors the course of cross-border trade processes liberalization.
At the same time, it is impossible not to consider the fact that trade inequality among global trade system parties has been deepened over the years. It happens due to asymmetry of trade regimes of GATT signatory countries and new WTO parties which entered the organization after 1995. Particularly, trade regimes of parties of so-called VRAMs (Very Recently Acceded Members) group are characterized by asymmetry. As a rule, such WTO members have bound tariff rates for 99-100% of their tariff lines. Similar market opening has taken place in service industries of such members. Thus, Moldova committed to provide free access in 147 out of 155 service subsectors, Kyrghyzia – in 140, Ukraine – in 134, Montenegro – in 130, Georgia – in 125, etc.
Not all developed parties that currently are global economic leaders have such an open access to goods and services markets. Therefore, 22 WTO members, in particular Albania, Armenia, Cabo Verde, China, Ecuador, North Macedonia, Georgia, Jordan, Kazakhstan, the Kyrgyz Republic, Moldova, Mongolia, Oman, Panama, the Russian Federation, Saudi Arabia, Seychelles, Chinese Taipei, Tajikistan, Tonga, Ukraine and Vietnam have started Article XII Members group, that is the article of the Agreement on the WTO Establishment which regulates joining process for new members. These group members seek a decrease in obligation gap and therefore equal and fairer trade system functioning conditions.
If in mercantilism epoch, for almost three centuries, the key trade policy tools aimed at regulating trade volumes were mostly tariff protectionist measures, in the early 19th century a notion of industrial protectionism appeared in scientific works [12]. The major goal of implementing such measures is stimulating industrial production development and export increase rather than reduction of import volumes and access of foreign producers to domestic markets.
Schemes of carrying out international trade are distinctly influenced by intervention of a government which defines a trade policy of a country. Indeed, there are particular concerns that a slow increase of trade volumes which is accompanied by populism and nationalism sentiments rise may turn into protectionism behaviour which will have considerable consequences for international trade and economic integration [3, 9]. However, currently, there is not enough evidence that trade policies of countries are decisively retreating from openness and foreseeability principles. Using protectionism policy – at least in its traditional conception – is neither substantially different from a regular one, nor widely spread to considerably favour trade weakening. At the same time, it’s hard to deny that over the past years a significant progress in trade liberalization process has not been observed, particularly in tariff liberalization within negotiations on WTO round of Doha Development Agenda issues. Nevertheless, there are hopes that Trade Facilitation Agreement (TFA) implementation by all WTO members may significantly decrease non-tariff trade expenditures which in its turn will be positively reflected in price reduction for imported products.
Recently, neo-protectionism measures have spread, particularly limitations of international trade additionally implemented by countries to traditional forms of undesirable import or export volumes reduction [10]. Apart from using the new tools of regulating international trade volumes, unusual justification of using such measures is becoming an extra component of trade policies. It must be stated that paragraph 1 (b) (iii) of Article XXI of 1994 General Agreement on Tariffs and Trade (GATT 1994 [10]) directly provisions the right of WTO members to retreat from their commitments for national security reasons, in particular: “Nothing in this Agreement shall not be construed…
(b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests…
(iii) taken in time of war or other emergency in international relations”.
At the same time, up until 2017 no WTO member used the above-mentioned exception as justification of violation of its obligations. In particular, among WTO members there has existed an unspoken rule not to use national security issues as an excuse for solely protectionism measures so as not to “open Pandora’s box” to abuse this exception and thus endanger functioning of the whole organization.
The necessity to face challenges connected with globalization and digitalization of the trade environment promotes using new neo-protectionism tools in trade policy as well as their justification mechanisms. However, currently it is too early to say that trade liberalization course has changed. At the same time, there is an observed shift from a priority to follow generally accepted multilateral trade regulating rules to a priority of regional and more flexible norms registered in corresponding agreements with a limited number of parties.
Analyzing the current situation of international trade and global trade policy, major tendencies must be pointed out [39-41]. In December 2021, 67 members accounting for over 90% of global services trade reached an agreement setting out common parameters for services domestic regulation. That deal will save businesses as much as $150 billion a year in reduced trade costs. MC12 is proof that the WTO can deliver results. Members have shown they are capable of reaching multilateral compromises and finding solutions to contemporary challenges – provided they have the political will to do so. The deal on fisheries subsidies – concluded after nearly 21 years of negotiations – is only the second new agreement WTO members have reached since 1995, and the very first WTO agreement to put environmental sustainability at its core. Importantly, it also means that WTO members have delivered on the mandate given to them in Sustainable Development Goal 14.6 [1, 6, 8].
In 2020, the value of world merchandise exports declined by 8% while services trade contracted by 21%. Trade began to recover as of mid-2020, but the effects of COVID-19 have varied significantly across countries and regions. The merchandise export volumes were up in Asia and Europe. They were down slightly in South and Central America and North America, and more substantially in Africa and the Middle East [2, 4, 9]. Across manufacturing sectors, the automotive sector suffered the most, with world exports dropping by 16% in 2020. Meanwhile global exports of textiles grew by 16%, driven by an increase in the production of personal protective equipment (PPE). Exports of medical products, including medicines, medical equipment and PPE, rose by more than 16%, underscoring how trade has been a lifeline for access to critical goods through the pandemic, after the initial disruptions. Global value chains were severely disrupted during the first half of 2020. World exports of intermediate goods decreased by 10% year-on-year. Trade was more resilient in value chains for high-tech goods and pharmaceutical/medical products. Trade in intermediate goods across countries started to recover in the third quarter of 2020. As of the first quarter of 2021, global trade in commercial services remained 9% lower than in the same period in 2020. The travel sector was the most affected, as border closures, quarantine requirements, lockdowns, and other restrictions caused global travel exports to decline by 62% in 2020. In contrast, demand for computer services was buoyant, reflecting the shift to remote work and the growth in digital platforms. Exports from least-developed countries (LDCs) were severely affected by the first wave of the pandemic in 2020. They suffered in particular from the drop in fuel prices and the impact of restrictions on the travel industry. These two sectors represent the largest source of LDCs’ export earnings. LDCs’ fuel exports have started to slowly stabilize since early 2021 but services trade continues to be weighed down by persisting weakness in the travel and transport sectors. The COVID-19 pandemic has accelerated digital transformation, including with regard to the international exchange of goods and services. This trend increases potential trading opportunities for micro, small and medium-sized enterprises (MSMEs) and women, provided they can overcome supply side barriers. It also emphasizes the need to tackle the digital divide. From a statistical standpoint, there is a strong need to improve the measurement of digital trade.
Many people are now talking about the possibility of Ukraine joining the European Union. European integration is a Ukrainian dream and a geopolitical choice enshrined in the country's constitution. Hundreds of politicians, government officials and public activists are working hard every day to make this happen. This year, despite the war, Ukraine has made major strides towards European integration, with citizen support for the idea reaching an all-time high. In return, the European Union has provided Ukraine with unprecedented aid, both financial and humanitarian, in response to the war. For the first time in the EU's history, it also financed the delivery of lethal weapons to a country under attack, showing that the movement's slogan "Europe in solidarity" has real relevance. In the long run, however, the road to the EU does not appear to be smooth sailing. The process presented many challenges, and it didn't look easy or quick. We all remember the history of the UK joining the EU and the subsequent Brexit referendum, the long wait for Turkey that ended in a political twist, the North-South clash over financial issues in Europe and the current opportunism of some Eastern European countries. What is the way for Ukraine? Will Ukraine succeed? Will it bring the expected benefits to the EU and Ukraine? [13-16].
In order for Ukraine's European integration to produce high-quality, mutually beneficial outcomes, EU institutions need to engage in dialogue not only with the Ukrainian government, but also with civil society. EU institutions also need to establish direct peer relationships at different levels, develop educational programs and strengthen synergies between donor projects. Of course, the EU must demand actual compliance with the accession criteria. It should not reward Ukraine for victories until reforms are implemented. The development of the rule of law and democracy in Ukraine should be the top priority of the EU-Ukraine dialogue in order to prevent the negative situations mentioned above. We stress the importance of efficient coordination of actions of the branches of power during adaptation of the Ukrainian legislation to the EU acquis.
The main tasks are finding solutions to longstanding development issues and addressing fact-based concerns about the full spectrum of subsidies. It also means leveraging the full power of trade and the WTO to accelerate a just, rapid, and cost-effective low-carbon transition; to articulate new rules for digital trade; and to expand opportunities for women-owned businesses and micro, small, and medium-sized enterprises to be included in regional and global value chains.
References:
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14.Tananaiko, T.; Yatsenko, O.; Osypova, O.; Nitsenko, V.; Balezentis, T.; Streimikiene, D. Economic Rationale for Manifestations of Asymmetry in the Global Trading System. Sustainability 2023, 15, 5316. https://doi.org/10.3390/su15065316
15.Bazaluk, O., Yatsenko, O., Reznikova, N., Bibla, I., Karasova, N., & Nitsenko, V. (2022). International integration processes influence on welfare of country. Journal of Business Economics and Management, 23(2), 382–398. https://doi.org/10.3846/jbem.2022.16228
16.Yatsenko, O., Reznikova, N., Karasova, N., Musiiets, T., Lavrinenko, O., and Nitsenko, V. (2020). Modernization of the Format of Ukraine’s Trade Integration with the EU in the Conditions of Implementation of the DCFTA. Problemy zarządzania - management issues 2020; 18 (4(90): 101-124. DOI: 10.7172/1644-9584.90.6
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