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Global SwinG StateS workinG PaPer 2012
Global SwinG StateS and the trade order
Jennifer hillman
http://www.cnas.org/http://www.gmfus.org/7/30/2019 Global Swing States and the Trade Order
2/13
2012 Te German Marshall Fund o the United States. All rights reserved.
No part o this publication may be reproduced or transmitted in any orm or by any means without permission in writing
rom the German Marshall Fund o the United States (GMF). Please direct inquiries to:
Te German Marshall Fund o the United States
1744 R Street, NW
Washington, DC 20009
1 202 683 2650
F 1 202 265 1662
E ino@gmus.org
Tis publication can be downloaded or ree at www.gmus.org/publications.
G Sg Ss Pjc
Tis working paper is part o an ongoing project undertaken by the German Marshall Fund o the United States (GMF)
and the Center or a New American Security (CNAS). Te project, co-led by Daniel M. Kliman and Richard Fontaine,
examines how the United States and its European allies can partner more closely with Brazil, India, Indonesia, and urkey to
strengthen international order. Te views expressed here are those o the author and do not necessarily represent the views
o the project leaders or their respective institutions.
au Gmf
Te German Marshall Fund o the United States (GMF) strengthens transatlantic cooperation on regional, national, and
global challenges and opportunities in the spirit o the Marshall Plan. GMF does this by supporting individuals and institu-
tions working in the transatlantic sphere, by convening leaders and members o the policy and business communities,
by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to oster renewed
commitment to the transatlantic relationship. In addition, GMF supports a number o initiatives to strengthen democra-
cies. Founded in 1972 as a non-partisan, non-prot organization through a gi rom Germany as a permanent memorial to
Marshall Plan assistance, GMF maintains a strong presence on both sides o the Atlantic. In addition to its headquarters in
Washington, DC, GMF has seven oces in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF
also has smaller representations in Bratislava, urin, and Stockholm.
Gmfs as Pg
Te German Marshall Funds Asia Program addresses the economic, oreign policy, and security implications o Asias rise
or the United States and Europe through research, publications, commentary, conerences, ellowships, study tours, and
collaborations with other GMF programs. Te Programs initiatives include the Stockholm China Forum, India rilateralForum, the Global Swing States Project, the Young Strategists Forum, rilateral Forum okyo, ransatlantic Workshop on
Pakistan, and high-level conversations at GMFs major conerences. Te program also publishes independent analysis by
more than 15 in-house experts on Asia and externally commissioned papers looking at American and European approaches
to the Asia-Pacic and on deepening cooperation between democratic Asia and the West.
au C n ac Scuy
Te mission o the Center or a New American Security(CNAS) is to develop strong, pragmatic and principled national
security and deense policies. Building on the expertise and experience o its staf and advisors, CNAS engages policy-
makers, experts and the public with innovative, act-based research, ideas and analysis to shape and elevate the national
security debate. A key part o our mission is to inorm and prepare the national security leaders o today and tomorrow.
Cover photo: traveler1116
http://www.gmfus.org/publicationshttp://www.gmfus.org/http://www.cnas.org/http://www.cnas.org/http://www.gmfus.org/http://www.gmfus.org/publications7/30/2019 Global Swing States and the Trade Order
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Global Swing States and the Trade Order
Global Swing States Working Paper
November 2012
Jf H
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Global Swing States and the Trade Order 1
The collective actio
of the swing states
have deepened the
polarization within
the WTO, pitting the
developed countrie
against an increasimonolithic bloc of
developing countrie
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7/30/2019 Global Swing States and the Trade Order
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The German Marshall Fund of the United States2
The WTOs dispute
settlement system
has been particularly
successful.
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Global Swing States and the Trade Order 3
The WTO is under t
by the perception,
particularly in the
developing world, t
the rules of the sys
are tilted in favor o
developed countrieand large multinati
corporations.
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The Role of the Global Swing States in the
Trading System
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7/30/2019 Global Swing States and the Trade Order
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The German Marshall Fund of the United States4
Brazil is increasingly
ooked to for leadership
in ongoing efforts to
conclude the Doha
Round.
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Global Swing States and the Trade Order 5
small commercial aircraft manufacturer,Embraer, that resulted in Brazil being
forced to significantly alter its export
support program.
Unlike many other members of the
WTO, Brazil has engaged in fairly
limited trade arrangements outside
of the WTO the major exception
being its membership in the customs
union MERCOSUR. Brazil is also
a member of the Latin American
Integration Initiative, an association
established in 1980 with the goal of
creating a Latin American common
market. The initiative gives Brazil
some enhanced associations with the
rest of South America and Mexico but
has not resulted in changes in tariff
policies. Because of significant limits on the scope
and coverage of MERCOSUR, it is fair to say that
Brazils trade policies remain primarily influenced
by its membership in the WTO.
In the years leading up to the establishment of
the WTO, Brazil did much to lower its barriers
to trade, in particular its tariffs on imports, with
average duties of 57.5 percent in the 1980s being
brought down to an applied rate of 13.7 percent
on average. However, Brazil never agreed to legally
bind its tariffs to those applied rates, leaving itself
considerable room often referred to as tariff
water to raise rates in the future without
violating its WTO commitments. Recently, Brazil
did just that, announcing an increase in import
duties to 25 percent on 100 products. According
to Brazil, this was done to compensate for price
differences on products caused by continued
doldrums in top economies around the world, but
the action was seen by many others as a move to
return to the days of greater protection and support
for its domestic industries.4 When coupled with
recently announced Brazilian packages of incentives
and subsidies to develop its off-shore oil reserves,
it is clear that Brazil will not be shy in fending off
foreigners and boosting domestic manufacturing.
India
Like Brazil, India has been an active and
increasingly important member of the WTO.
Because of its concern that lowering its tariffs
would invite even more imports from China,
India has joined Brazil and others in working to
lessen the tariff cuts that would be expected of
developing countries in the Doha Round. India
was also one of the four countries invited to the
July 2007 meeting in Potsdam tasked with putting
the Doha negotiations back on track. Similarly,
India was included in all of the key meetings in
2008 from the acrimonious breakdown in July
to the December sessions trying to restart the talks.
Indeed, India was cited by many as the one country
of the seven members of the inner-most circle (the
United States, the EU, Brazil, India, Australia, and,
4 Luciana Otoni, Brazil to boost import taxes again to helplocal industry, Reuters, September 4, 2012.
BRAZIL
Totalexportsofgoodsandservices:$232.2billion
Totalimportsofgoodsandservices:$250.9billion
TradetoGDPratio(2008-2010):23.8%
TradeBalance:$47.32billion
Rankinworldtrade: Exports Imports
Goods #22 #20
Services #31 #17
Primarilyexportsto:EuropeanUnion(21.8%oftotal),China
(15.6%),UnitedStates(9.7%),Argentina(9.3%)
Primaryexports:transportequipment,ironore,soybeans,
footwear,coffee
Primarilyimportsfrom:EuropeanUnion(21.2%oftotal),UnitedStates(15.1%),China(14.2%),Argentina(8.0%)
Primaryimports:machinery,electricalandtransport
equipment,chemicalproducts,autoparts
Source: WTO, Trade Profile: Brazil, http://www.stat.wto.org/countryprofile
http://www.stat.wto.org/countryprofilehttp://www.stat.wto.org/countryprofile7/30/2019 Global Swing States and the Trade Order
9/13
The German Marshall Fund of the United States6
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5 Pu Bu,Misadventures of the Most Favored Nations:Clashing Egos, Inflated Ambitions, and the Great Shambles of theWorld Trade System (N Y: PucAff B, 9), 65.
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INDIA
Totalexportsofgoodsandservices:$342.9billion
Totalimportsofgoodsandservices:$466.4billion
TradetoGDPratio(2008-2010):47.7%
TradeBalance:$51.79billion
Rankinworldtrade: Exports Imports
Goods #20 #13
Services #7 #7
Primarilyexportsto:EuropeanUnion(18.8%oftotal),United
ArabEmirates(12.4%),UnitedStates(10.7%),China(7.9%)
Primaryexports:textiles,gemsandjewelry,engineering
goods,chemicals,leather
Primarilyimportsfrom:EuropeanUnion(12.1%oftotal),China
(11.8%),UnitedArabEmirates(8.8%),Switzerland(6.3%)
Primaryimports:crudeoil,machinery,gems,fertilizer,
chemicals
Source: WTO, Trade Profile: India, http://www.stat.wto.org/countryprofile
http://www.stat.wto.org/countryprofilehttp://www.stat.wto.org/countryprofile7/30/2019 Global Swing States and the Trade Order
10/13
Global Swing States and the Trade Order 7
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INDONESIA
Totalexportsofgoodsandservices:$174.3billion
Totalimportsofgoodsandservices:$161.9billion
TradetoGDPratio(2008-2010):49.5%
TradeBalance:+$5.642billion
Rankinworldtrade: Exports Imports
Goods #28 #29
Services #40 #33
Primarilyexportsto:Japan(16.3%oftotal),EuropeanUnion
(10.9%),China(9.9%),UnitedStates(9.1%)
Primaryexports:oil,gas,plywood,textiles,rubber
Primarilyimportsfrom:China(15.1%oftotal),Singapore
(14.9%),Japan(12.5%),EuropeanUnion(7.3%),UnitedStates(6.9%)
Primaryimports:machineryandequipment,chemicals,fuels,
foodstuffs
Source: WTO, Trade Profile: Indonesia, http://www.stat.wto.org/country profile
http://www.gmfus.org/doc/GMF_MesserlinBrief_NAMA_Final.pdfhttp://www.gmfus.org/doc/GMF_MesserlinBrief_NAMA_Final.pdfhttp://www.stat.wto.org/country%20profilehttp://www.stat.wto.org/country%20profilehttp://www.gmfus.org/doc/GMF_MesserlinBrief_NAMA_Final.pdfhttp://www.gmfus.org/doc/GMF_MesserlinBrief_NAMA_Final.pdf7/30/2019 Global Swing States and the Trade Order
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The German Marshall Fund of the United States8
ASEAN f C (7), J (8), Au (),
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TURKEY
Totalexportsofgoodsandservices:$147.8billion
Totalimportsofgoodsandservices:$203.8billion
TradetoGDPratio(2008-2010):49.3%
TradeBalance:-$47.59billion
Rankinworldtrade: Exports Imports
Goods #33 #21
Services #28 #38
Primarilyexportsto:EuropeanUnion(47.1%oftotal),Iraq
(5.3%),Russia(4.1%),UnitedStates(3.3%)
Primaryexports:textilesandclothing,ironandsteelproducts,
chemicals,pharmaceuticalsPrimarilyimportsfrom:EuropeanUnion(39%oftotal),Russia
(11.6%),China(9.3%),UnitedStates(6.6%)
Primaryimports:machinery,chemicals,semi-finishedgoods,
fuels,transportequipment
Source: WTO, Trade Profile: Turkey, http://www.stat.wto.org/country profile
http://www.stat.wto.org/country%20profilehttp://www.stat.wto.org/country%20profile7/30/2019 Global Swing States and the Trade Order
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Global Swing States and the Trade Order 9
It is more importan
than ever that the
United States not
allow these four sw
states to drift away
from the WTO and
multilateral systeminto purely regional
arrangements.
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7/30/2019 Global Swing States and the Trade Order
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