The current trends in the world economy that are fuelling globalization and generating closer economic cooperation among nations, are intensifying pressure on policy interaction in traditional areas of multilateral cooperation. The most obvious manifestations of this have involved governments in continuing efforts to remove tariff and non-tariff barriers to trade, to extend the coverage of liberalization efforts, and to sharpen trade rules including those relating to matters like safeguards, subsidies and countervailing duties, and antidumping. In addition, closer economic integration among nation states has “internationalized” a wide range of policy domains that previously were either simply neglected, or considered an exclusively national preserve, or else were subjected only to comity-like coordination and consultation arrangements. As a result, major multilateral initiatives have led to negotiations, and in some instances, agreements in new areas such as trade in services, protection of intellectual property rights and investments. The paper reviews the recent multilateral agreements on services and investment-related issues and analyzes their implications for Arab countries. The paper also identifies areas for increasing the level of obligations accepted by Arab governments without undertaking any adjustment to the structure of the GATS.

From the ASEAN Economic Community to various integration initiatives in Africa, global value chains have been recognized as an important vehicle, not only for greater economic efficiency and growth but also for inclusiveness within and across countries. This insightful, well-researched and practical book by Cusolito, Safadi, and Taglioni offers an excellent analysis of how small and medium enterprises benefit from links to global value chains, how constraints to integration can be overcome, and how local, regional, and international policy initiatives can facilitate the inclusion of small and medium enterprises and promote poverty reduction. Michael G. Plummer Director, SAIS Europe, Johns Hopkins University This timely volume identifies how supportive policy frameworks can enhance the participation of smaller firms in global value chains. It should be required reading for policy makers seeking guidance on good practices to make trade more inclusive. Bernard Hoekman Robert Schuman Centre for Advanced Studies, European University Institute This volume is a state-of-the-art analysis of the mechanics of participation in global value chains. The book s core value lies in its emphasis on small firms in low-income countries and on the ways that policy can help or hinder development through engagement in global value chains. The sweep of policy analysis goes from the broad-based trade, investment, infrastructure, and domestic policy environment to the particulars of multifaceted enabling and the supportive micro-policy. This is an invaluable source for anyone interested in doing the right thing. Patrick Low Visiting Professor, Hong Kong University; Fellow, Asia Global Institute Inclusive Global Value Chains examines the barriers that small and medium enterprises face as they participate in global markets for goods, services, investments, and ideas. The report makes the following key points: (1) participation in global value chains is heterogeneous and uneven, across and within countries; and (2) available data and survey-based evidence suggest that small and medium enterprises participate in global value chains mostly through indirect contribution to exports, rather than through exporting directly. Policy action, at the national and multilateral levels and through G20 leadership, can make a difference in achieving more inclusive global value chains through reforming trade, investment, and domestic policies holistically; expanding the statistical basis and analysis of global value chains; and sharing knowledge on best practices for enabling policies and programs. Three broad recommendations are being considered by the G20: 1. Establishing a trade and investment action plan for inclusiveness, defining clear and achievable objectives on trade and investment policy, and identifying the necessary complementary domestic policy actions 2. Complementing the trade, investment, and domestic policy actions by providing needed political leadership and support to enhance collaboration across the public and private sectors, establish global platforms for sharing best practices, and increase innovation and productivity 3. Providing political support for the establishment of a multiyear plan to expand and upgrade the statistical foundation necessary to increase the capacity of all countries to identify and implement policie

Explores determinants of successful integration of small and medium enterprises (SMEs) and firms in low-income countries into global value chains (GVCs), which include productive capacity, infrastructure and services, the business environment, the assurance of efficient trade and investment flows, and good connectivity. Furthering international trade openness involves the international community taking an active role in multilateral and regional negotiations, as well as assisting low-income countries in effectively implementing all aspects of Trade Facilitation Agreements (TFAs) to ensure genuine trade facilitation benefits for the trading community; trade and trade-related policies that reorder priorities, such as simplified export procedures, remain important. Building the necessary supporting measures for maximizing dynamic gains calls for a holistic, country-focused, multi-stakeholder approach to capacity building sustained over time. Global platforms for sharing best practices can help identify solutions that maximize productivity and economic growth; innovative financial instruments can encourage young and innovative SMEs and firms in low-income countries to participate in GVCs.

Demonstrates that firms aiming to integrate into global value chains (GVCs) or to strengthen and upgrade their participation in GVCs must increase productivity and access the necessary knowledge and technology to compete and move into the formal economy. Countries can achieve higher value added (and productivity growth and economic growth) through process upgrading, product upgrading, functional upgrading, and inter-sector upgrading. Investment in knowledge-based capital (KBC) constitutes a particularly important driver for upgrading in GVCs; three main categories include (1) computerized information (software and databases); (2) innovative property, including research and development (R&D) and non-R&D innovative expenditures, like copyrights, designs, and trademarks; and (3) economic competencies (brand equity, firm-specific technological and managerial skills, networks, and organizational structures). Internal factors affect the capabilities of small and medium enterprises (SMEs) to supply low and high value-added intermediate products at low cost, including innovation, technology adoption, managerial capacity, and workforce skills; external factors involve trade issues, the business environment, and the investment climate.

Indicates that in Organisation for Economic Co-operation and Development (OECD) countries, small and medium enterprises (SMEs), firms with fewer than 250 employees, represent the vast majority of the business population, and account for the majority of employment in all OECD countries. About 32 percent of the firms with 10–99 employees in a sample of developing countries report informality as one of the top five constraints they face in doing business. Other constraints for this class of firms include power, corruption, the tax rate, and political instability; this compares to the top constraints of power, worker skills, transportation, tax rate, and corruption for the largest firms (300+ employees). Firms can achieve participation in global value chains (GVCs) by directly participating in exports (of goods and services that feed into third countries' production) or by indirectly supplying other exporters, such as large local firms or multinational companies; some SMEs outperform large firms in some market segments.

The purpose of this paper is two-fold. The current trends driving the globalization process are first described. A key finding is the close connection between the emerging patterns of global foreign direct investment (FDI), those of world trade and those of international production networks. The internationalization of production stimulates trade flows between investment home and host countries and as cross-investments between countries proliferate. While intra-trade of countries of the Organization for Economic Co-operation and Development (OECD) still accounts for almost threequarters of world trade, and intra-OECD foreign direct investment (FDI) for roughly 65 percent of total OECD outward FDI, these shares are declining and should continue to drop as barriers to trade and investment fall in developing and transition economies (non-OECD countries). Trade and investment flows have also grown dramatically among non-OECD countries over the last decade.

The premise of the paper is that when the forces driving the globalization of the world economy are fully appreciated, the need for a new program of action in the MENA countries becomes very clear. We are going through a period of rapid and fundamental change that requires major adjustments in the way economic policy-making has been practiced so far. Decisions to trade and invest are increasingly an integral part of broader business strategies relating to the efficient organization and location of production and marketing activities. With international competition becoming increasingly intense, the ability of newly-developed and incorporated technology to enhance competitiveness provides incentives for firms to form strategic alliances or joint ventures and to seek economies of scale in production and marketing, thus reducing transaction costs, spreading the high cost of research and development and influencing trade and investment flows world-wide. What is then needed is a multi-policy, comprehensive approach that will promote the openness of markets to global competition in order to create truly internationally contestable markets in the MENA region. This can only be achieved by tackling the implications for international competition arising from government and private actions in the different policy fields. The strategy should lead to further market-openings and a deepening and broadening of rules affecting the conditions under which trade and investment will take place in the future. 4LoeJI sww &'y )L.ax9Y1 L.oJLc .JI Uil,41 LSiWJWLCI r,.a;Ji o,3A SJ' 9 'V_-'.J3 41"w ,.,03 w1 . L a,91 J Lo.:r9 4aW9 I jxut J3.) J" &.Uy. ju ro;j S,Ul y,4IwYI 4.sk uc,S vw sIyo.0 ULJai C_..,91 JL.o.cl CjUAjl,ZwI L.o I1 Y Iyj.Ij;.o J,Lc:-...iYt9 o,L Jl v`t:,. JLOXI eLl i o,,a.ao z.r.cv 14iI a.»;L Jt zLajl &o9 JW JS:Ij 9"'.Jl 4La,:i19 ZWYI Z91o 9 r l' u U i L 4.0191 plc ulr,+ JJ L 4.J 1; w 4.slJl AnJl cnia t,J13 ,LaYI 4a, LagJ.;Jl L?° J.l"a Lao ``9'9-x':119 lr iYl , .,SJI p ?e 11 ,;I,}99 I,9 Jl L5JA9 '4t,.s.,o vk9,,: 0 31 A,:%. S9r'0 k,tA.;:,.M,YI iiX3 o,Loe;JI `s yV3 4wMJl9 'wU 4u",aJI -AJLSWI CA46+ I ,LZ ". pu 4*o.JWI AiL;.oJt .,,k j19w. l rL;ijl &ot' CjL.)Lw.Jl a vao9 ., UL%+ JI 4Ls JL;O ujl r,JWI J9 °'»191 JL4.:,9 4a..,9 t g, :JI 4aWo ,4 4oJlc 4w.9Li o,a vI jI.9.WJ J 4rolxJl9 4r o9S.eJI utcty'lt cl>' rr° 4 .oJwt 4...9L+.oJt .Sc;i,UOJT CJt,.&-JI 4-%-JLxw YI J,41 `9. roxi sJ1 jli....f ZL YI J.o ja.Jl JI S v14awl,..,,Yl oua v`L. i X09 4isJ eaJl ul..)l.lt . ,aJl Yl9 o,Uc.;Jl LgLl ra'j}«r JI J9,J«JI k. c,igo,Jt a9101 4!""'9'9

Development issues are at the centre of the crisis confronting the WTO system since Seattle. While development objectives appear central to the WTO, in practice many provisions are in the form of best endeavours. The current WTO negotiations seem to give new impetus to addressing development issues, but much depends on implementation. While attention seems to be focused on patching the existing system, a more fundamental re-think of the trade and development agenda may be required.

• Tariffs still matter. • Full tariff liberalisation to 2010 would generate dynamic welfare gains of $1 200 billion (at 1995 prices), equivalent to 3 per cent of World GDP in 2010, from greater efficiency and higher productivity. • Developing countries stand to gain relatively more from multilateral tariff liberalisation, with aggregate gains amounting to nearly 5 per cent of their GDP in 2010. • The next WTO round will provide an opportunity for members to improve their living standards. Realising this potential, however, poses a major policy challenge to developing countries.

• Les droits de douane : une question toujours d’actualite. • Une liberalisation totale des droits de douane d’ici a 2010 – entrainant des progres dans l’efficacite et la productivite – se traduirait par des gains de bien-etre de l’ordre de 1 200 milliards de dollars (aux prix de 1995), soit 3 pour cent du PIB mondial en 2010. • Les pays en developpement pourraient sans doute retirer de la liberalisation multilaterale des droits de douane des avantages relativement plus importants que les pays de l’OCDE, le gain global representant pres de 5 pour cent de leur PIB en 2010. • Les prochaines negociations de l’OMC permettront aux pays participants d’ameliorer leur niveau de vie. Toutefois, pour les pays en developpement, recueillir les avantages d’une telle liberalisation sera un veritable defi politique.

The paper aims to identify the interests and concerns of MENA countries in the new round of multilateral trade negotiations (the WTO 2000 negotiations) with a view of helping these countries develop negotiation objectives and strategies. The introduction sets the stage by making the case for economic reforms in the MENA region and the role of the WTO in supporting these reforms. After dealing with market access issues for MENA countries' exports, the paper looks into the commitments in services MENA countries have undertaken in the context of Uruguay Round Agreements and considers issues related to FDI.

Implementation of the results of Uruguay Round will bring about significant increases in trade, investment, income and welfare for developing countries. This derives from increased market access to developed countries' markets and from enhanced efficiency originating from their own liberalization commitments, although the distribution of benefits will be uneven. Developing countries will also benefit from improved rules for trade and investment coupled with enhanced institutional enforcement of these rules, and greater exposure to global competition within a more predictable, secure and credible international trading environment. To maximize the benefits, however, developing countries will need to continue with recent unilateral reforms to improve their supply response.