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38 Denv. J. Int'l L. & Pol'y 313 (2009-2010)
21st Century Trade Agreements: Implications for Development Sovereignty

handle is hein.journals/denilp38 and id is 313 raw text is: 21ST CENTURY TRADE AGREEMENTS: IMPLICATIONS FOR DEVELOPMENT SOVEREIGNTY RACHEL DENAE THRASHER* AND KEVIN P. GALLAGHER This paper examines the extent to which the emerging world trading regime leaves nations the policy space to deploy effective policy for long-run diversification and development and the extent to which there is a convergence of such policy space under global and regional trade regimes. We examine the economic theory of trade and long-run growth and underscore the fact that traditional theories lose luster in the presence of the need for long-run dynamic comparative advantages and when market failures are rife. We then review a toolbox of policies that have been deployed by developed and developing countries past and present to kick-start diversity and development with the hope of achieving long-run growth. Next, we examine the extent to which rules under the World Trade Organization (WTO), trade agreements between the European Union (EU) and developing countries, trade agreements between the United States (US) and developing countries, and those among developing countries (South-South, or S-S, agreements) allow for the use ofsuch policies. We demonstrate that there is a great divergence among trade regimes over this question. While S-S agreements provide ample policy space for industrial development, the WTO and EU agreements largely represent the middle of the spectrum in terms of constraining policy space choices. On the far end, opposite S-S agreements, US agreements place considerably more constraints by binding parties both broadly and deeply in their trade commitments. I. INTRODUCTION Development is a long-run process of transforming an economy from concentrated assets based on primary products, to a diverse set of assets based on knowledge. This process involves investing in human, physical and natural capital in manufacturing and services and divesting in rent seeking, commerce, and * Rachel Denae Thrasher is a research fellow at the Frederick S. Pardee Center for the Study of the Longer-Range Future at Boston University. Her work focuses on international trade agreements and their implications for economic development in the developing countries of Latin America. She holds both a law degree and a master's degree in International Relations from Boston University. Kevin P. Gallagher is an associate professor of international relations at Boston University and faculty fellow at the Pardee Center for the Study of the Longer-Range Future. Most recently he is editor of the book Putting Development First: The Importance of Policy Space at the WTO and IFIs, and the co-author of The Dragon in the Room: China and the Future of Latin American Industrialization. 313

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