Podcast Summary: The CGD Podcast – “A TPPing Point on Trade?” with Harsha Singh

Date: July 21, 2014
Host: Lawrence MacDonald (Center for Global Development)
Guest: Dr. Harsha Singh (former Deputy Director at the World Trade Organization; affiliated with the International Centre for Trade and Sustainable Development and the International Institute for Sustainable Development)

Episode Overview

This episode explores the impact of mega-regional trade agreements—particularly the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), and the Regional Cooperation and Economic Partnership—on developing countries, with a particular focus on Brazil and India. Harsha Singh shares insights on how these deals, often negotiated away from the global spotlight, may reshape trade standards, market access, and development prospects for both emerging economies and smaller, poorer nations.

Key Discussion Points & Insights

1. The “Alphabet Soup” of Mega-Regional Deals

[02:23–03:37]

• The three main regional trade blocs discussed:
  • TPP: Mainly US, Japan, Vietnam, and other Pacific Asian nations (excluding China).
  • TTIP: Transatlantic agreement between the US and Europe.
  • RCEP: Regional Comprehensive Economic Partnership, including China, India, ASEAN, Korea, Japan, Australia, New Zealand.
• Singh: Emphasizes these agreements are focusing more on non-tariff measures—standards rather than tariffs.

2. Potential for Fragmentation vs. Multilateralism

[03:37–06:51]

• These regional agreements could fragment world trade unless the systems they set up are inclusive and standards are harmonized.
• Singh: "The only way they can merge is provided they are multilateralized, which is they come to the WTO.” (03:37)
• Stresses that strong multilateral systems are critical, especially as global challenges (food, financial, climate crises) require collective action.

3. Why Exclude Developing Giants?

[06:51–11:15]

• The US, as a central player in both TPP and TTIP, has excluded large developing economies like India, China, and Brazil.
• Singh explains: This exclusion is rooted in failed consensus at the WTO Doha Round:
  • Developed nations felt emerging economies should take on a bigger share.
  • Emerging economies argued the demands were too onerous and didn’t recognize their continuing development needs.
• The structure of multi- and bilateral agreements means if the US/EU opens its market multilaterally, all must benefit (Most Favored Nation principle), risking “free riders.”

4. Emerging Markets: Preparing, Not Complaining

[11:15–14:38]

• The response from Brazil and India, as detailed in papers from Singh and Ambassador Clodoaldo Huguenay, is pragmatic: these standards are coming, and countries should prepare rather than protest.
• Singh: "If these standards are there and you are unable to meet those standards, then the benefits from trade are denied to you...you will have to prepare." (13:38)

5. Deep Dive: How Standards Will Affect Developing Country Firms

[16:10–22:01]

• Mega-regionals affect firms in three ways:
  1. Tariffs – Already low, with limited impact.
  2. General Standards – Environment and labor standards, often applied to production processes, not directly to products.
     • Example (17:10): "I look at the product, I can't tell the difference, but...the factory's dumping mercury into the stream...this product can't come in. It hasn't met the standard.” — MacDonald
  3. Product-Specific Standards – Embodied in the product itself (e.g., food safety, chemicals).
• These deals may also include “inclusion by reference”: referencing global or private standards (e.g. OECD codes), raising the bar for compliance.
• Supply Chains Example: iPhones are assembled in China but most value is added in the US, illustrating the complexity and interdependence of global value chains (20:24–21:35).

6. Impact on Smaller, Poorer Countries

[23:59–27:21]

• Two concerns for countries like Bangladesh, Cambodia, Liberia:
  1. Market Diversion and Tariff Erosion: Preferences (e.g., via AGOA) may be eroded when the mega-regionals create new preferential treatments.
  2. High Standards as Barriers: Upgrading to meet new standards is a major challenge and can be exclusionary if systems are not inclusive.
  • Singh: "You cannot then have access to the markets unless you upgrade your capacities...the important thing is not just meeting the standards, but also the system...can often be exclusionary." (25:55–27:21)
• Cooperation among developed and large developing countries is needed to help least-developed countries upgrade skills and comply.

Notable Quotes & Memorable Moments

• Harsha Singh on Multilateralism [04:54]:

  "The multilateral trade system has to be kept strong. And the only way to do this is whatever new issues come up, you provide for certain kind of disciplines in such a way that they give you an inclusive framework."

• On Supply Chains and Value Addition [20:24]:

  "Interestingly, 60% of the value added is from the US in the value chain... and the value added from China is just 10%. But if you take the total value of trade, it will appear as if 100% of the product is produced in China. But it's produced through a combination of different efforts in different nations in a global value chain."

• On the New Standard-Driven Barriers [13:38]:

  "...if these standards are there and you are unable to meet those standards, then the benefits from trade are denied to you...you will have to prepare. And unless you do prepare, you will be unable to have those benefits in the future."

• On Inclusion and Fairness [25:55]:

  "The important thing is not just meeting the standards, but also the system which is used to determine that the standard actually is consistent with what is being demanded. And that system can often be exclusionary... another part of my project is to focus on how to make it inclusive..."

Timestamps for Key Segments

• 00:16 – 02:23: Introduction to topic and guest, nature of TPP/TTIP/RCEP
• 03:37 – 06:51: Potential for trade fragmentation and need for multilateralism
• 06:51 – 11:15: Why large developing countries are excluded; tensions in the multilateral system
• 11:15 – 14:38: Emerging market responses and need for preparation
• 16:10 – 22:01: Practical effects of new standards on developing country firms; case studies, supply chains
• 23:59 – 27:21: Impact on small countries; capacity building, standards as new barriers

Tone and Takeaways

The conversation is thoughtful, pragmatic, and forward-looking. Both speakers emphasize uncertainty, the importance of preparation by developing countries, and the potential perils if new international trade standards become exclusionary rather than drivers of broader development.

Summary Statement:
As global trade negotiations shift towards regional mega-deals with high standards, developing countries—large and small—face new challenges that demand preparation, collaboration, and vigilance to ensure inclusion in the evolving world trading system.