Reworking the NAFTA: departures from traditional frameworks

This paper reviews the treatment of intellectual property rights in the North American Free Trade Agreement (NAFTA) and considers the welfare-theoretic bases for innovation transfer between member and nonmember states. Specifically, we consider the effects of new technology development from within the union and question whether it is efficient (in a welfare sense) to transfer that new technology to nonmember states. When the new technology contains stochastic components, the important issue of information exchange arises and we consider this question in a simple oligopoly model with Bayesian updating. In this context, it is natural to ask the optimal price at which such information should be transferred. Some simple, natural conjugate examples are used to motivate the key parameters upon which the answer is dependent

Echoes of 1992: the NAFTA negotiations and North America now

Two decades ago, Canada, Mexico, and the United States created a continental economy. The road to integration from the signing of the North American Free Trade Agreement has not been a smooth one. Along the way, Mexico lived through a currency crisis, a democratic transition, and the rising challenge of Asian manufacturing. Canada stayed united despite surging Quebecois nationalism during the 1990s; since then, it has seen dramatic economic changes with the explosion of hydrocarbon production and a much stronger currency. The United States saw a stock-market bust, the shock of 9/11, and the near-collapse of its financial system. All of these events have transformed the relationships that emerged after NAFTA entered into force in 1994. Given the tremendous changes, one might be skeptical that the circumstances and details of the negotiation and ratification of NAFTA hold lessons for the future of North America. However, the road to NAFTA had its own difficulties, and many of the issues involved in the negotiations underpin today's challenges. NAFTA was conceived at a time of profound change in the international system. When Mexican leaders surveyed the world two decades ago, they saw emerging regional groupings in Europe, Asia, and South America. Faced with a lack of interest or compatibility, they instead doubled down on North America. How did Mexican leaders reconsider their national interests and redefine Mexico's role in the world in light of those transformations? Unpublished Mexican documents from SECOFI, the secretariate most involved in negotiating NAFTA, help illustrate Mexican thinking about its interests and role at that time. Combining those insights with analysis of newly available evidence from U.S. presidential archives, this paper sheds light on the negotiations that concluded two decades ago.

MFN status and the choice of tariff regime

The gradualist approach to trade liberalization views the uniform tariffs implied by MFN status as an important step on the path to free trade. We investigate whether a regime of uniform tariffs will be preferable to discriminatory tariffs when countries engage in non-cooperative interaction in multilateral trade. The analysis includes product differentiation and asymmetric costs. We show that with the cost asymmetry the countries will disagree on the choice of tariff regime. When the choice of import tariffs and export subsidies is made sequentially the uniform tariff regime may not be sustainable, because of an incentive to deviate to a discriminatory regime. Hence, an international body is needed to ensure compliance with tariff agreement.

Curbing agricultural exceptionalism: The EU's response to external challenge

From 1948 to 1994, the agricultural sector was afforded special treatment in the GATT. We analyse the extent to which this agricultural exceptionalism was curbed as a result of the GATT Uruguay Round Agreement on Agriculture, discuss why it was curbed and finally explore the implication of this for EU policy making. We argue that, in particular, two major changes in GATT institutions brought about restrictions on agricultural exceptionalism. First, the Uruguay Round was a 'single undertaking' in which progress on other dossiers was contingent upon an outcome on agriculture. The EU had keenly supported this new decision rule in the GATT. Within the EU this led to the MacSharry reforms of the Common Agricultural Policy (CAP) in 1992, paving the way for a trade agreement on agriculture within the GATT. Second, under the new quasi-judicial dispute settlement procedure, countries are expected to bring their policies into conformity with WTO rules or face retaliatory trade sanctions. This has brought about a greater willingness on the part of the EU to submit its farm policy to WTO disciplines.

If the British left: agricultural policy outside the CAP?

If the Conservative party wins Britain’s General Election in 2015 the incoming Government intends to negotiate a new settlement with the EU, and then hold an in-out referendum. Opinion polls suggest a narrow majority would vote to leave. To exercise an informed choice the electorate would need to know what feasible alternatives are available, so that these can be assessed and debated. Furthermore, in the event of a no vote the Government must be ready to implement its alternative strategy: Plan B. This implies that both a new EU settlement, and Plan B, need to be negotiated concurrently. There has been no serious attempt to explain what Plan B would mean for UK farm policy. Would, for example, British farmers continue to receive the level of support that they currently enjoy; would support be more focussed on environmental objectives? WTO rules on most-favoured-nation treatment and regional trade agreements would apply. Could a WTO compatible agri-food trade agreement be negotiated with its former EU partners, or would Irish and Brazilian beef face the same tariff barriers on imports into the British market? For the EU, the loss of a major net contributor to EU finances could result in a re-examination of the CAP budget.

From harmonisation to better, smart and fit food law

As the European Union (EU) approaches its 60th anniversary, it is worth assessing progress towards a key objective – the abolition of barriers to the marketing of food in the EU. Food has always created particular problems for the EU as national differences in diets, culture and geography make standardisation impossible. Early attempts focussed on direct measures to harmonise requirements or, later, to create an ‘internal market’. Subsequently a changed emphasis brought about the need to focus more clearly on the harmonisation of food safety. More widely, the recent recognition that too much legislation can itself create barriers has led legislators to attempt to consider more carefully the impact of their efforts. This paper reflects on the various stages in the creation of harmonised food controls and considers how case law has impacted the process. Today there are still differences and complete barrier-free trade seems some way off.

The politics of CAP reform: Trade negotiations, institutional settings and blame avoidance

In this article we argue that the conclusion of the GATT Uruguay Round Agreement on Agriculture and the subsequent role of the WTO has changed the international context of CAP policy-making. However, comparing the three latest CAP reforms, we demonstrate that pressures on the CAP arising from international trade negotiations cannot alone account for the way in which the EU responds in terms of CAP reform. The institutional setting within which the reform package was determined also played a crucial role. Contrary to conventional wisdom, the CoAM seems to be a more conducive setting than the European Council for undertaking substantial reform of the CAP. We suggest that the choice of institutional setting is influenced by the desire of farm ministers and of heads of state or government to avoid blame for unpopular decisions. When CAP reform is an integral part of a broader package, farm ministers pass the final decision to the European Council and when CAP reform is defined as a separate issue the European Council avoids involvement.

Glycogen phosphorylase inhibitors: a free energy perturbation analysis of glucopyranose spirohydantoin analogues

GP catalyzes the phosphorylation of glycogen to Glc-1-P. Because of its fundamental role in the metabolism of glycogen, GP has been the target for a systematic structure-assisted design of inhibitory compounds, which could be of value in the therapeutic treatment of type 2 diabetes mellitus. The most potent catalytic-site inhibitor of GP identified to date is spirohydantoin of glucopyranose (hydan). In this work, we employ MD free energy simulations to calculate the relative binding affinities for GP of hydan and two spirohydantoin analogues, methyl-hydan and n-hydan, in which a hydrogen atom is replaced by a methyl- or amino group, respectively. The results are compared with the experimental relative affinities of these ligands, estimated by kinetic measurements of the ligand inhibition constants. The calculated binding affinity for methyl-hydan (relative to hydan) is 3.75 +/- 1.4 kcal/mol, in excellent agreement with the experimental value (3.6 +/- 0.2 kcal/mol). For n-hydan, the calculated value is 1.0 +/- 1.1 kcal/mol, somewhat smaller than the experimental result (2.3 +/- 0.1 kcal/mol). A free energy decomposition analysis shows that hydan makes optimum interactions with protein residues and specific water molecules in the catalytic site. In the other two ligands, structural perturbations of the active site by the additional methyl- or amino group reduce the corresponding binding affinities. The computed binding free energies are sensitive to the preference of a specific water molecule for two well-defined positions in the catalytic site. The behavior of this water is analyzed in detail, and the free energy profile for the translocation of the water between the two positions is evaluated. The results provide insights into the role of water molecules in modulating ligand binding affinities. A comparison of the interactions between a set of ligands and their surrounding groups in X-ray structures is often used in the interpretation of binding free energy differences and in guiding the design of new ligands. For the systems in this work, such an approach fails to estimate the order of relative binding strengths, in contrast to the rigorous free energy treatment.

The lottery-panel task for bi-dimensional parameter-free elicitation of risk attitudes

We propose first, a simple task for the eliciting attitudes toward risky choice, the SGG lottery-panel task, which consists in a series of lotteries constructed to compensate riskier options with higher risk-return trade-offs. Using Principal Component Analysis technique, we show that the SGG lottery-panel task is capable of capturing two dimensions of individual risky decision making i.e. subjects’ average risk taking and their sensitivity towards variations in risk-return. From the results of a large experimental dataset, we confirm that the task systematically captures a number of regularities such as: A tendency to risk averse behavior (only around 10% of choices are compatible with risk neutrality); An attraction to certain payoffs compared to low risk lotteries, compatible with over-(under-) weighting of small (large) probabilities predicted in PT and; Gender differences, i.e. males being consistently less risk averse than females but both genders being similarly responsive to the increases in risk-premium. Another interesting result is that in hypothetical choices most individuals increase their risk taking responding to the increase in return to risk, as predicted by PT, while across panels with real rewards we see even more changes, but opposite to the expected pattern of riskier choices for higher risk-returns. Therefore, we conclude from our data that an “economic anomaly” emerges in the real reward choices opposite to the hypothetical choices. These findings are in line with Camerer's (1995) view that although in many domains, paid subjects probably do exert extra mental effort which improves their performance, choice over money gambles is not likely to be a domain in which effort will improve adherence to rational axioms (p. 635). Finally, we demonstrate that both dimensions of risk attitudes, average risk taking and sensitivity towards variations in the return to risk, are desirable not only to describe behavior under risk but also to explain behavior in other contexts, as illustrated by an example. In the second study, we propose three additional treatments intended to elicit risk attitudes under high stakes and mixed outcome (gains and losses) lotteries. Using a dataset obtained from a hypothetical implementation of the tasks we show that the new treatments are able to capture both dimensions of risk attitudes. This new dataset allows us to describe several regularities, both at the aggregate and within-subjects level. We find that in every treatment over 70% of choices show some degree of risk aversion and only between 0.6% and 15.3% of individuals are consistently risk neutral within the same treatment. We also confirm the existence of gender differences in the degree of risk taking, that is, in all treatments females prefer safer lotteries compared to males. Regarding our second dimension of risk attitudes we observe, in all treatments, an increase in risk taking in response to risk premium increases. Treatment comparisons reveal other regularities, such as a lower degree of risk taking in large stake treatments compared to low stake treatments and a lower degree of risk taking when losses are incorporated into the large stake lotteries. Results that are compatible with previous findings in the literature, for stake size effects (e.g., Binswanger, 1980; Antoni Bosch-Domènech & Silvestre, 1999; Hogarth & Einhorn, 1990; Holt & Laury, 2002; Kachelmeier & Shehata, 1992; Kühberger et al., 1999; B. J. Weber & Chapman, 2005; Wik et al., 2007) and domain effect (e.g., Brooks and Zank, 2005, Schoemaker, 1990, Wik et al., 2007). Whereas for small stake treatments, we find that the effect of incorporating losses into the outcomes is not so clear. At the aggregate level an increase in risk taking is observed, but also more dispersion in the choices, whilst at the within-subjects level the effect weakens. Finally, regarding responses to risk premium, we find that compared to only gains treatments sensitivity is lower in the mixed lotteries treatments (SL and LL). In general sensitivity to risk-return is more affected by the domain than the stake size. After having described the properties of risk attitudes as captured by the SGG risk elicitation task and its three new versions, it is important to recall that the danger of using unidimensional descriptions of risk attitudes goes beyond the incompatibility with modern economic theories like PT, CPT etc., all of which call for tests with multiple degrees of freedom. Being faithful to this recommendation, the contribution of this essay is an empirically and endogenously determined bi-dimensional specification of risk attitudes, useful to describe behavior under uncertainty and to explain behavior in other contexts. Hopefully, this will contribute to create large datasets containing a multidimensional description of individual risk attitudes, while at the same time allowing for a robust context, compatible with present and even future more complex descriptions of human attitudes towards risk.

The influence of plant species number on productivity, ground coverage and floral performance in grass-free lawns

The grass-free lawn is a novel development in modern ornamental horticulture where the traditional monoculture of grass is replaced by a variety of mowing-tolerant clonal forbs. It brings floral aesthetics and a diverse species approach to the use of lawn space. How the number of constituent forb species affects the aesthetic and structural performance of grass-free lawns was investigated using grass-free lawns composed of four, six and twelve British native clonal perennial forb species. Lawn productivity was seen to increase with increasing species number but the relationship was not linear. Plant cover was dynamic in all lawn types, varied between years and was not representative of individual species' floral performance. The behaviour of component species common to all lawns suggested that lawns with 12 species show greater structural stability than the lawns with a lower species number. Visual performance in lawns with the greatest species number was lower than in lawns with fewer species, with increasing variety in floral size and individual species floral productivity leading to a trade-off between diversity and floral performance. Individual species were seen to have different aesthetic functions in grass-free lawns either by providing flowers, ground coverage or both.