Lessons from the Multilateral Trading System for Reforming the Architecture of the International Environmental Regime

Recent studies on environmental regimes suggest that important lessons and policy recommendations may be drawn from the functioning of the multilateral trading regime. This brief compares the needs and goals of the trade and environment regimes, and discusses how insights from over sixty years of experience of the multilateral trading system might provide ideas for redesigning the architecture of the international environmental regime. It further calls for a better dialogue and improved complementarities between the two fields in order to enhance coherence within international law.

The Design of International Trade Agreements: Introducing a New Dataset

Preferential trade agreements (PTAs) have been proliferating for the last twenty years. A large literature has studied various aspects of this phenomenon. Until recently, however, many large-N studies have paid only scant attention to variation across PTAs in terms of content and design. Our contribution to this literature is a new dataset on the design of trade agreements that is the most comprehensive in terms of both variables coded and agreements covered. We illustrate the dataset’s usefulness in re-visiting the questions if and to what extent PTAs impact trade flows. The analysis shows that on average PTAs increase trade flows, but that this effect is largely driven by deep agreements. In addition, we provide evidence that provisions that tackle behind-the-border regulation matter for trade flows. The dataset’s contribution is not limited to the PTA literature, however. Broader debates on topics such as institutional design and the legalization of international relations will also benefit from the novel data.

Trade versus Culture : The Policy of Cultural Exception and the World Trade Organization

This chapter is a contribution to the Palgrave Handbook of European Media Policy (co-edited by Pauwels, Donders & Loisen). It is the chapter’s purpose to examine the proponents of the cultural exception policy, their strategies and demands, and to explore how they came to be reflected in the law and policy of the World Trade Organization (WTO). The chapter also looks at the current state of affairs, as although WTO law has not undergone any substantial amendments since its entry into force in 1995, the media landscape has in the meantime been truly transformed, in some aspects in a revolutionary manner. The broader picture of global governance has not remained still either, with new and emergent powers, changing mechanisms of rule-making and taking.

Can the World Trade Organization Ensure that International Food Aid is Genuine?

The Doha Round negotiation mandate proposes to minimise trade distortions and commercial displacement under the cover of international food aid, without preventing genuine food aid from reaching people in need. This paper presents problematic aspects of food aid for trade and competition, an overview of the international governance of food aid, and the present rules on food aid embodied in Article 10.4 of the WTO Agreement on Agriculture. The latest available Draft Modalities for Agriculture (December 2008) are seen as an only halfway successful implementation of the Doha mandate. A new text with better targeted disciplines and a political food aid commitment as part of the Doha Round Final Act are proposed in the conclusions.

Essays on behavioral aspects of the design and disclosure of compensation contracts

This thesis consists of four essays on the design and disclosure of compensation contracts. Essays 1, 2 and 3 focus on behavioral aspects of mandatory compensation disclosure rules and of contract negotiations in agency relationships. The three experimental studies develop psychology- based theory and present results that deviate from standard economic predictions. Furthermore, the results of Essay 1 and 2 also have implications for firms’ discretion in how to communicate their top management’s incentives to the capital market. Essay 4 analyzes the role of fairness perceptions for the evaluation of executive compensation. For this purpose, two surveys targeting representative eligible voters as well as investment professionals were conducted. Essay 1 investigates the role of the detailed ‘Compensation Discussion and Analysis’, which is part of the Security and Exchange Commission’s 2006 regulation, on investors’ evaluations of executive performance. Compensation disclosure complying with this regulation clarifies the relationship between realized reported compensation and the underlying performance measures and their target achievement levels. The experimental findings suggest that the salient presentation of executives’ incentives inherent in the ‘Compensation Discussion and Analysis’ makes investors’ performance evaluations less outcome dependent. Therefore, investors’ judgment and investment decisions might be less affected by noisy environmental factors that drive financial performance. The results also suggest that fairness perceptions of compensation contracts are essential for investors’ performance evaluations in that more transparent disclosure increases the perceived fairness of compensation and the performance evaluation of managers who are not responsible for a bad financial performance. These results have important practical implications as firms might choose to communicate their top management’s incentive compensation more transparently in order to benefit from less volatile expectations about their future performance. Similar to the first experiment, the experiment described in Essay 2 addresses the question of more transparent compensation disclosure. However, other than the first experiment, the second experiment does not analyze the effect of a more salient presentation of contract information but the informational effect of contract information itself. For this purpose, the experiment tests two conditions in which the assessment of the compensation contracts’ incentive compatibility, which determines executive effort, is either possible or not. On the one hand, the results suggest that the quality of investors’ expectations about executive effort is improved, but on the other hand investors might over-adjust their prior expectations about executive effort if being confronted with an unexpected financial performance and under-adjust if the financial performance confirms their prior expectations. Therefore, in the experiment, more transparent compensation disclosure does not lead to more correct overall judgments of executive effort and to even lower processing quality of outcome information. These results add to the literature on disclosure which predominantly advocates more transparency. The findings of the experiment however, identify decreased information processing quality as a relevant disclosure cost category. Firms might therefore carefully evaluate the additional costs and benefits of more transparent compensation disclosure. Together with the results from the experiment in Essay 1, the two experiments on compensation disclosure imply that firms should rather focus on their discretion how to present their compensation disclosure to benefit from investors’ improved fairness perceptions and their spill-over on performance evaluation. Essay 3 studies the behavioral effects of contextual factors in recruitment processes that do not affect the employer’s or the applicant’s bargaining power from a standard economic perspective. In particular, the experiment studies two common characteristics of recruitment processes: Pre-contractual competition among job applicants and job applicants’ non-binding effort announcements as they might be made during job interviews. Despite the standard economic irrelevance of these factors, the experiment develops theory regarding the behavioral effects on employees’ subsequent effort provision and the employers’ contract design choices. The experimental findings largely support the predictions. More specifically, the results suggest that firms can benefit from increased effort and, therefore, may generate higher profits. Further, firms may seize a larger share of the employment relationship’s profit by highlighting the competitive aspects of the recruitment process and by requiring applicants to make announcements about their future effort. Finally, Essay 4 studies the role of fairness perceptions for the public evaluation of executive compensation. Although economic criteria for the design of incentive compensation generally do not make restrictive recommendations with regard to the amount of compensation, fairness perceptions might be relevant from the perspective of firms and standard setters. This is because behavioral theory has identified fairness as an important determinant of individuals’ judgment and decisions. However, although fairness concerns about executive compensation are often stated in the popular media and even in the literature, evidence on the meaning of fairness in the context of executive compensation is scarce and ambiguous. In order to inform practitioners and standard setters whether fairness concerns are exclusive to non-professionals or relevant for investment professionals as well, the two surveys presented in Essay 4 aim to find commonalities in the opinions of representative eligible voters and investments professionals. The results suggest that fairness is an important criterion for both groups. Especially, exposure to risk in the form of the variable compensation share is an important criterion shared by both groups. The higher the assumed variable share, the higher is the compensation amount to be perceived as fair. However, to a large extent, opinions on executive compensation depend on personality characteristics, and to some extent, investment professionals’ perceptions deviate systematically from those of non-professionals. The findings imply that firms might benefit from emphasizing the riskiness of their managers’ variable pay components and, therefore, the findings are also in line with those of Essay 1.

Labour Migration, Trade and Investment: From Fragmentation to Coherence

Trade, investment and migration are strongly intertwined, being three key factors in international production. Yet, law and regulation of the three has remained highly fragmented. Trade is regulated by the WTO on the multilateral level, and through preferential trade agreements on the regional and bilateral levels – it is fragmented and complex in its own right. Investment, on the other hand, is mainly regulated through bilateral investment treaties with no strong links to the regulation of trade or migration. And, finally, migration is regulated by a web of different international, regional and bilateral agreements which focus on a variety of different aspects of migration ranging from humanitarian to economic. The problems of institutional fragmentation in international law are well known. There is no organizational forum for coherent strategy-making on the multilateral level covering all three areas. Normative regulations may thus contradict each other. Trade regulation may bring about liberalization of access for service providers, but eventually faces problems in recruiting the best people from abroad. Investors may withdraw investment without being held liable for disruptions to labour and to the livelihood and infrastructure of towns and communities affected by disinvestment. Finally, migration policies do not seem to have a significant impact as long as trade policies and investment policies are not working in a way that is conducive to reducing migration pressure, as trade and investment are simply more powerful on the regulatory level than migration. This chapter addresses the question as to how fragmentation of the three fields could be reme-died and greater coherence between these three areas of factor allocation in international economic relations and law could be achieved. It shows that migration regulation on the international level is lagging behind that on trade and investment. Stronger coordination and consideration of migration in trade and investment policy, and stronger international cooperation in migration, will provide the foundations for a coherent international architecture in the field.

Legal Aspects of Sino-­African Tied Aid: The Art of Playing with a Legal Grey Area

Sino-African trade has seen a fifty-fold increase in the years 1999 to 2008. In some African regions, particularly in sub-Saharan Africa, China has even replaced the US as the most important trading partner today. But China holds not a single FTA on the African continent, while other major trading partners of African economies rely on an extensive framework of different trade agreements. What is, thus, the legal basis of the recent increase of Sino-African trade? Interestingly, Sino-African trade has seen a particularly strong increase in countries that have entered into tied aid agreements with China. These agreements are commonly known under the term ‘Angola-Model’ and consist of a multifaceted network of barter-trading-systems, aspects of tied aid and concessions for oil and other commodities linked with a state loan. It is likely that these agreements have an impact on the trade-flows between African countries and China. This paper discusses the legal character of this new form of economic cooperation, or modern version of tied aid. Critical legal aspects related to this form of tied aid refer to violation of the principle of most-favoured nation (MFN), illegitimate export subsidies, market access, public procurement and transparency in the international trading system. However, despite the recent outcry of the foremost Western community against the strategy of the Chinese government on the African continent, the practice of the Angola-Model based tied aid is not entirely new, and neither is it against the law. The case of tied aid is situated in a legal grey area that should be examined thoroughly in order to strengthen the international trading system and to support developing countries in their attempt to gain from tied aid arrangements.

Towards a spatial understanding of trade-offs in sustainable development: A meso-scale analysis of the nexus between land use, poverty, and environment in the Lao PDR

In land systems, equitably managing trade-offs between planetary boundaries and human development needs represents a grand challenge in sustainability oriented initiatives. Informing such initiatives requires knowledge about the nexus between land use, poverty, and environment. This paper presents results from Lao PDR, where we combined nationwide spatial data on land use types and the environmental state of landscapes with village-level poverty indicators. Our analysis reveals two general but contrasting trends. First, landscapes with paddy or permanent agriculture allow a greater number of people to live in less poverty but come at the price of a decrease in natural vegetation cover. Second, people practising extensive swidden agriculture and living in intact environments are often better off than people in degraded paddy or permanent agriculture. As poverty rates within different landscape types vary more than between landscape types, we cannot stipulate a land use–poverty–environment nexus. However, the distinct spatial patterns or configurations of these rates point to other important factors at play. Drawing on ethnicity as a proximate factor for endogenous development potentials and accessibility as a proximate factor for external influences, we further explore these linkages. Ethnicity is strongly related to poverty in all land use types almost independently of accessibility, implying that social distance outweighs geographic or physical distance. In turn, accessibility, almost a precondition for poverty alleviation, is mainly beneficial to ethnic majority groups and people living in paddy or permanent agriculture. These groups are able to translate improved accessibility into poverty alleviation. Our results show that the concurrence of external influences with local—highly contextual—development potentials is key to shaping outcomes of the land use–poverty–environment nexus. By addressing such leverage points, these findings help guide more effective development interventions. At the same time, they point to the need in land change science to better integrate the understanding of place-based land indicators with process-based drivers of land use change.

Linking livelihood strategies with a regional level landscape mosaic to explore trade-offs between forest conservation and human wellbeing in a Madagascar biodiversity hotspot

The north-eastern escarpment of Madagascar contains the island’s last remaining large-scale humid forest massifs surrounded by diverse small-scale agricultural mosaics. There is high deforestation mainly caused by shifting cultivation practiced by local land users to produce upland rice for subsistence. Today, large protected areas restrict land users’ access to forests to collect wood and other forest products. Moreover, they are no more able to expand their cultivated land, which leads to shorter shifting cultivation cycles and decreasing plot sizes for irrigated rice and cash crop cultivation. Cash crop production of clove and vanilla is exposed to risks such as extreme inter-annual price fluctuations, pests and cyclones. In the absence of work opportunities, agricultural extension services and micro-finance schemes people are stuck in a poverty trap. New development strategies are needed to mitigate the trade-offs between forest conservation and human well-being. As landscape composition and livelihood strategies vary across the region, these strategies need to be spatially differentiated to avoid implementing generic solutions, which do not fit the local context. However, up to date, little is known about the spatial patterns of shifting cultivation and other land use systems at the regional level. This is mainly due to the high spatial and temporal dynamics inherent to shifting cultivation, which makes it difficult to monitor the dynamics of this land use system with remote sensing methods. Furthermore, knowledge about land users’ livelihood strategies and the risks and opportunities they face stems from very few local case studies. To overcome this challenge, firstly, we used remote sensing data and a landscape mosaic approach to delineate the main landscape types at the regional level. Secondly, we developed a land user typology based on socio-ecological data from household surveys in 45 villages spread throughout the region. Combining the land user typology with the landscape mosaic map allowed us to reveal spatial patterns of the interaction between landscapes and people and to better understand the trade-offs between forest conservation and local wellbeing. While shifting cultivation systems are being transformed into more intensive permanent agricultural systems in many countries around the globe, Madagascar seems to be an exception to this trend. Linking land cover information to human-environmental interactions over large areas is crucial to designing policies and to inform decision making for a more sustainable development of this resource-rich but poverty-prone context.

Towards a new balance of trade in agriculture

Trade in agriculture is linked to a whole range of economic, environmental, societal and future interests. For this reason, international regulation of trade in agricultural goods is highly contentious. While mainly directed towards an opening of markets, the WTO Agreement on Agriculture also has some entry points for ‘non trade concerns’. However, the agreement still looks like a casual patchwork that allows rather unsystematic ally for exemptions, without explicitly exposing the grounds that allow for them. The question arises of how the agreement could be drafted in a more structured way, in order to make sure that the economic objectives are efficiently pursued, and at the same time that human rights and environmental concerns are adequately taken account of? The concept of sustainable development provides for a methodical ‘seven step’ framework that gives guidance on integrated decision making processes. In this paper, this framework is partially applied to the Agreement on Agriculture. This working paper served as an introductory note to a brainstorming workshop on the subject that took place on 27 March 2009 at the World Trade Institute, University of Bern.

Physiological Responses to Environmental Variation in Intertidal Red Algae: Does Thallus Morphology Matter?

Morphological variation within and among many species of algae show correlated life history traits. The trade-offs of Life history traits among different morphs are presumed to be determined by morphology. Form-function hypotheses also predict that algae of different morphological groups exhibit different tolerances to physiological stress, whereas algae within a morphological group respond similarly to stress. We tested this hypothesis by comparing photosynthetic and respiratory responses to variation in season, light, temperature, desiccation and freezing among the morphologically similar fronds of Chondrus crispus and Mastocarpus stellatus and the alternate stage crust of M. stellatus. Physiological differences between fronds of the 2 species and crusts and fronds were consistent with their patterns of distribution and abundance in the intertidal zone. However, there was no clear relationship between algal morphology and physiological response to environmental variation. These results suggest that among macroalgae the correlation between Life history traits and morphology is not always causal. Rather, the link between life history traits and morphology is constrained by the extent to which physiological characteristics codetermine these features.