The political economy of emergency safeguard measures in trade in services agreements

Although escape clauses and safeguard measures found in most international agreements are theoretically deemed as uncertainty management devices that help to facilitate cooperation among states, this thesis shows that whether or not a safeguard measure can do so depends on the degree of complexity of the negotiating environment. This thesis presents the case based on the prolonged negotiations on Emergency Safeguard Measures (ESM) in concluding the services trade agreement at the World Trade Organization (WTO) and compares that case with progress made on ESM negotiations in bilateral and regional trade agreements. As uncertainty management devices, ESMs can help to mitigate the adverse political consequences of liberalization that cannot be fully predicted due to the informational and cognitive uncertainties surrounding services liberalization. Empirical evidence is gathered from primary interviews with trade representatives to the WTO in Geneva, ASEAN Secretariat official, policymakers and national trade negotiators of the bilateral and regional trade agreements, as well as documentary sources. The findings show that the level of acceptance of ESM for services trade differs at different levels of negotiations because of the different degrees of complexity at multilateral, regional and bilateral negotiations, which compound the informational and cognitive uncertainty associated with both services liberalisation and the use of ESM. The high degree of uncertainty surrounding the ESM has contributed to deadlock in ESM negotiations at the WTO. At the WTO, because of the high degree of complexity given by the large number of countries involved in the negotiations, the diversity of negotiating countries, and the multi-faceted and technical nature of services trade negotiations, an escape clause such as ESM itself acts as a source of uncertainty for developed countries in particular who are thus unwilling to agree to including ESM for services trade at the WTO. However, at regional and bilateral negotiations, ESM can act as an uncertainty management device because of the reduced complexity and thus lower degree of uncertainty at these negotiations. At the same time, developed countries seem willing to forgo the uncertainty generated by the ESM due to the anticipated non-economic longer-term gains from these bilateral and regional trade agreements, provided the ESM clauses in these agreements are ambiguously worded such that they create flexibility for both/all parties to the agreement. Whether or not the flexible ESM in these agreements is ultimately workable, remains to be seen.