Think Piece

Who Captures the Value in the Global Value Chain? High Level Implications for the World Trade Organization

By Peter Draper, Andreas Freytag, 
September 2014
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Global value chains (GVCs) have burst onto the trade policy scene in recent years as a key analytical device. Given their obvious relevance to economic development strategies, there is also substantial interest in applying the analytical lessons to trade negotiations, especially with reference to the WTO. However, perspectives on the developmental impacts of global value chains vary substantially. Similarly, opinion is divided as to the desirability of incorporating the policy agenda associated with the “GVC narrative” into WTO negotiations. Accordingly, we briefly review the meanings of GVCs in relation to the debate over their developmental impacts. We then sketch high level trade policy implications, and conclude with a brief assessment of the implications for negotiations in the WTO. In essence we argue that those countries which wish to proceed with negotiations on the basis of embracing the GVCs agenda should be free to do so, provided this does not impinge on the rights of those not wishing to do so. In other words we advocate an explicitly plurilateral approach to negotiating modalities in the WTO.

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