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Oct
07

Services In Free Trade Agreements

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Generally speaking, trade diversion means that a free trade agreement would divert trade from more efficient suppliers outside the area to less efficient suppliers within territories. On the other hand, the creation of trade implies that a free trade agreement creates trade that might not otherwise have existed. In any case, the creation of businesses will improve the national well-being of a country. [15] Both the creation of trade and the diversion of trade are essential consequences that are noted in the creation of a free trade agreement. The creation of businesses will lead to the relocation of consumption from an inexpensive producer to an inexpensive producer, which will increase trade. On the other hand, trade diversion will have the effect of shifting trade from a lower-cost producer outside the area to a more expensive one under the free trade agreement. [16] Consumers will not benefit from such a deferral under the free trade agreement, as they will be disinterested in the possibility of buying cheaper imported goods. However, economists find that trade diversion does not always harm aggregate national welfare: it can even improve aggregate national welfare if the volume of diverted trade is low. [17] The traditional operational implementations of ROOs, as they have developed over the years in the multilateral trading system through common tariff plans, consist of using the deferral of statistical classification in the tariff line of a physical product to constitute a displacement of the country of origin. At the same time, it is considered that the postponement of the classification of goods was caused by substantial transformation of the product. Such a method is based on the assumption that the physical product changes shape in the process of value creation.

The added value of different forms of service inputs, whether upstream, on-air or downstream, is, literally and figuratively speaking, much more subtle and more difficult to assess and measure; As a result, they do not always lead to a visible transformation of the product. Subsequently, the contribution of services to services is generally underestimated in production and trade statistics. Footnote 13 As long as the value added of services to the gross value of the product was marginal or, in the best case, modest, the problem of modified/unchanged statistical classification did not have a major impact on the trade practices of national customs authorities. However, with an increasing share of services in the gross production value of the physical finished product and in the pure service product, the contribution of services increasingly determines the country of origin and, therefore, the rules for processing a given product. This is particularly true now that “multilateral cumulation”, i.e. the composite value added of the final product produced in many countries, has become more normal than exceptional. Examples of service sectors contributing to “disguised” added value for physical products include research and development, IpR royalties, design, general management consulting services, quality control and various financial services, but almost all sectors offer cases along the same lines. Footnote 14 In summary, the EU-Singapore Free Trade Agreement should be seen in a broader global and regional trade context. Its future implementation will be directly linked to two main scenarios: first, in a situation where the PTPT and/or TTIP cannot be completed in the near future and where the FTAAP/RCEP initiatives still reflect long-term ambitions and not short-term measures, the ALER can serve as a model for designing a comprehensive trade and investment partnership. (z.B in an interregional agreement between the EU and ASEAN. Second, if the TTIP and TTIP negotiations are successful, the main objective of an ALER will be to address not only that this agreement is in line with TTIP and TTIP standards, but also aims to go beyond a “WTO Plus” framework. .

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