Understanding International Trade

Chapter 1: International Trade Environment 17
Section 1: The Significance of International Trade 17
1.1 Definition of International Trade/17 1.2 International Trade and International Trade/18
1.3 Characteristics of International Trade/20 1.4 Nature of International Trade/21
1.5 Subjects of International Trade/21 1.6 Objects of International Trade/22
Section 2: Characteristics of Changes in the International Trade Environment 24
2.1 Coexistence of Multilateralism, Regionalism, and Bilateralism/24
2.2 Servicization and Digitalization of World Trade/25
2.3 Restructuring Global Value Chains (GVCs)/26
2.4 The Establishment of New Protectionism/28 2.5 The Emergence of a New Trade Agenda/29
2.6 The Crisis of the Multilateral Trade System/29 2.7 The Deepening US-China Trade Dispute/30
Section 3: Changes in the International Trade System 31
3.1 The Two Key Tendencies of the International Trade System/31
3.2 The International Trade System after World War II/35
Chapter 2: International Trade Friction 39
Section 1: The Significance of International Trade Friction 39
1.1 Basic Concepts of Normal Friction/39 1.2 Background of Normal Friction/40
1.3 Types of Trade Friction/41 1.4 Trends in International Trade Friction/41
Section 2: Causes of International Trade Friction 43
2.1 Trade Imbalance/43 2.2 Delayed Industrial Restructuring/45
2.3 National Industrial Support/47 2.4 Structural Factors/49
Section 3: Methods for Resolving International Trade Friction 50
Chapter 3: International Trade Negotiations 55
Section 1: The Significance of International Trade Negotiations 55
1.1 Significance/55 1.2 Nature of International Trade Negotiations/56
1.3 The Importance of International Trade Negotiations/56 1.4 The Purpose of International Trade Negotiations/57
Section 2: Characteristics of International Trade Negotiations 59
2.1 National Power and Trade Negotiations/59 2.2 Long-Term and Repeated Negotiations/60
2.3 Multi-issue Negotiations/61 2.4 Conflicts Between Related Ministries/62
2.5 Domestic Interest Groups' Backlash/63 2.6 International Trade Negotiations and Cultural Differences/63
2.7 International Trade Negotiation Power/64
Section 3 Types of International Trade Negotiations 65
3.1 Bilateral Negotiations/65 3.2 Multilateral Negotiations/65
3.3 WTO Multilateral Trade Negotiations/67
Section 4: International Trade Negotiation Theory 68
4.1 Game-Theoretic Negotiation Theory/68 4.2 Two-Level Game/70
4.3 Strategic Trade Policy and International Trade Negotiations/72
Chapter 4: The Multilateral International Trade System 75
Section 1 General Agreement on Tariffs and Trade (GATT) 75
1.1 Overview of GATT/75
1.2 Multilateral Trade Negotiations under the GATT System/76
1.3 Achievements of GATT/78 1.4 Limitations of GATT/79
Section 2 Multilateral International Trade System under the World Trade Organization (WTO) 80
2.1 Background of the WTO System/80 2.2 Structure of the WTO Agreement/81
2.3 Purpose of the WTO Establishment/85 2.4 Functions of the WTO/85
2.5 Key Principles of the WTO/87 2.6 Organization of the WTO/92
2.7 WTO Legal Status/94 2.8 WTO Decision-Making Process/95
2.9 WTO membership/95
2.10 Comparison of the GATT and WTO Systems/96
Section 3 International Organizations Related to Trade 97
3.1 International Trade Organization/97 3.2 International Trade Consultative Organization/101
3.3 Specialized International Trade Organizations/107
Chapter 5: Regional Economic Integration and Free Trade Agreements (FTAs) 111
Section 1 Regional Economic Integration 111
1.1 Overview of Regional Economic Integration/111 1.2 Legal Basis for Regional Economic Integration/113
1.3 Motivation for Regional Economic Integration/114
1.4 Economic Effects of Regional Economic Integration/115
Section 2 Regional Economic Integration Theory 119
2.1 Regional Economic Integration Stage/119
2.2 WTO Classification of Regional Trade Agreements/122
Section 3 Major Economic Integration by Region 123
3.1.
European Union (EU)/123
3.2 North American Free Trade Area (USMCA, formerly NAFTA)/124
3.3 ASEAN/125
3.4 Southern Common Market (MERCOSUR)/126
3.5 African Free Trade Area (AfCFTA)/127
Section 4 Free Trade Agreements (FTAs) 127
4.1 FTA Concept/127
4.2 Structure and Composition of FTA Agreements/133
4.3 Mega FTA (Multilateral Free Trade Agreement)/134

Part 2: Multilateralism and WTO Trade Norms

Chapter 6: Tariffs and Trade in Goods Agreement 143
Section 1 Tariff Concessions and Valuations 143
1.1 The Meaning of Tariffs/143 1.2 Tariff Concessions/146
1.3 Customs Valuation/149
1.4 Tariff concessions under international norms other than the WTO/151
1.5 Evaluation and Outlook/151
Section 2 Agricultural Products 152
2.1 Background of the Agricultural Products Agreement/152
2.2 Key Contents of the WTO Agricultural Products Agreement/153
2.3 Evaluation of the WTO Agreement on Agriculture/159
2.4 Current Status and Prospects of the DDA Agricultural Negotiations/160
2.5 Case Study of Korea's WTO Rice Tariff Negotiations/161
Section 3 Textiles and Clothing 163
3.1 Background of the Textiles and Clothing Agreement/163
3.2 Key Contents of the WTO Textiles Agreement/164
Chapter 7: Trade Agreement on Non-Tariff Barriers 167
Section 1: Technical Barriers to Trade 167
1.1 The Significance of Technology Barriers/167
1.2 History of the Agreement on Technical Barriers to Trade/168
1.3 Key Contents of the WTO Agreement/169
1.4 Key Issues in the Future TBT Agreement/174
1.5 Technical Barriers to Trade (TBT) Trends/176
1.6 Evaluation and Outlook/181
Section 2 Sanitary and Quarantine Measures 182
2.1 Establishment of the WTO Sanitary and Phytosanitary Agreement (SPS)/182
2.2 Key Contents of the Sanitary and Quarantine Agreement/183
2.3 Relationship with the Technology Barriers Agreement (TBT)/186
2.4 The Meaning and Evaluation of the Agreement/187
Section 3 Government Procurement 188
3.1 The Significance of Government Procurement/188 3.2 Key Contents of the WTO Agreement/190
3.3 Results of Korea-US and Korea-EU FTA Government Procurement Negotiations/195
3.4 Evaluation and Outlook/195
Chapter 8: Industrial Damage Relief Agreement 199
Section 1 Anti-dumping 199
1.1 The Significance of the Anti-Dumping System/199 1.2 The History of the Anti-Dumping System/200
1.3 Key Contents of the WTO Agreement/201
1.4 Key Points of the DDA Anti-Dumping Negotiations/208
1.5 Evaluation and Prospects of the Anti-Dumping Agreement/211
Section 2 Subsidies and Countervailing Duties 212
2.1 Overview of Subsidies and Countervailing Duties/212
2.2 History of the Subsidies and Countervailing Measures Agreement/213
2.3 Key Contents of the WTO Agreement/214
2.4 Key Points of the DDA Subsidy Negotiations/221
2.5 The Significance of the Agreement and Response Measures/222
Section 3 Safeguards 224
3.1 Overview of Safeguards/224 3.2 History of Safeguards/225
3.3 Key Contents of the WTO Agreement/226 3.4 Evaluation and Outlook/231
Section 4 Fisheries Subsidies 233
4.1 Overview of the Fisheries Subsidy Agreement/233
4.2 Key Contents of the WTO Fisheries Subsidies Agreement/234
4.3 ratings/236
Chapter 9: Trade in Services 239
Section 1 Overview and Characteristics of Trade in Services and Agreements 239
1.1 Overview of Trade in Services/239
1.2 Background and History of Services Trade Negotiations/240
1.3 Significance of the Service Trade Agreement/243
1.4 Characteristics of the WTO Services Trade Agreement/244
Section 2 Key Contents of the WTO Services Trade Agreement 246
2.1 Composition of the Agreement/246 2.2 Types of Trade in Services/247
2.3 Basic Obligations of GATS Members/248
2.4 Exceptions to the Application of Basic Obligations/257
2.5 System-Related Regulations and Annexes/259
Section 3: Trends and Prospects for DDA Service Negotiations 260
Chapter 10: Intellectual Property Rights 264
Section 1 Overview of Intellectual Property Rights 264
1.1 The Meaning of Intellectual Property Rights/264 1.2 Types of Intellectual Property Rights/265
1.3 The Process of Establishing the Intellectual Property Agreement/268
1.4 TRIPs Dispute Trends/269
Section 2 Main Contents of the WTO Agreement 270
2.1 Basic Principles of the TRIPS Agreement/270 2.2 Industrial Property Rights/272
2.3 Copyright/276 2.4 New Intellectual Property Rights/279
2.5 Control of Anti-Competitive Practices in License Agreements/280
2.6 Enforcement of Intellectual Property Rights/280
Section 3: Trends in International Discussions on DDA Intellectual Property Rights 282
3.1 Biodiversity/282
3.2 Introduction of Non-Infringement Complaints Related to Intellectual Property Rights/283
3.3 Special Compulsory License System for Pharmaceuticals/284
3.4 Protection of Traditional Knowledge and Folklore/284
3.5 Geographical Indications/285 3.6 Parallel Imports and Exhaustion of Rights/286
Section 4: Results of Intellectual Property Rights Negotiations in Major Trade Treaties 286
4.1 Intellectual Property Rights Protection Provisions in the US-China Phase 1 Trade Agreement/286
4.2 Intellectual Property Protection Provisions in the USMCA/287
4.3 Intellectual Property Rights Protection in the CPTPP/287
Section 5: Evaluation and Outlook 288
Chapter 11: Trade Facilitation 291
Section 1: The Significance of Trade Facilitation 291
Section 2: Key Contents of the Trade Facilitation Agreement 292
2.1 Composition of the Trade Facilitation Agreement/292 2.2 Contents of the Trade Facilitation Agreement/293
Section 3: Evaluation and Outlook 296
3.1 WTO suggests possibility of resuming negotiations in other areas following Trade Facilitation Agreement conclusion/296
3.2 Emphasizing the Role of Trade Facilitation in Preparing for Trade Liberalization/297
3.3 WTO Binding Power and Dispute Settlement Procedures through Trade Facilitation/297
3.4 Trade Facilitation Agreement Expected to Expand Global Trade by Over $1 Trillion/298
Section 4 Trade Facilitation and AEO 298
4.1 Concept of the AEO System/298 4.2 Background of the AEO System/299
4.3 The Need for AEO Certification/300
4.4 Status of AEO System Operation in Major Countries/302
4.5 AEO Mutual Recognition/304
Chapter 12: Trade Dispute Resolution System 307
Section 1: Significance of the Trade Dispute Resolution System 307
1.1 Definition of the Trade Dispute Resolution System/307
1.2 History of the Trade Dispute Resolution System/308
1.3 Characteristics of the WTO Dispute Settlement System/309
1.4 Operation of the WTO Dispute Settlement System/311
1.5 WTO Dispute Resolution Trends/312
Section 2 Trade Dispute Resolution Procedures 313
2.1 Grounds for Complaint/315 2.2 Dispute Resolution Procedures Before the Panel/315
2.3 Panel Procedure/316 2.4 Appeal System/319
2.5 Implementation of Recommendations and Decisions/321
2.6 Trade Sanctions for Non-Compliance with Recommendations and Decisions/322
2.7 Disputes over non-violations of the Agreement/323
Section 3: Evaluation and Limitations of the Agreement 324
3.1 Protection of the Rights of Private Parties/325
3.2 Application to Non-Legal Disputes/325
3.3 Application to Trade Disputes with Non-Member Countries/326
3.4 Application of the Agreement to Trade Disputes Outside the Sector/326
Section 4: Reform of the WTO Dispute Settlement System 326
4.1 Overview/326
4.2 Discussion on Revision of the WTO Dispute Settlement Understanding (DSU)/327
4.3 Suspension of the Appellate Body's Functions/327
4.4 WTO Dispute Settlement System Reform Agenda/328
4.5 Evaluation of WTO Dispute Settlement System Reform/330

Part 3: New Issues in International Trade

Chapter 13: The Doha Development Agenda and the New Agenda for International Trade 335
Section 1 Doha Development Agenda 335
1.1 Overview of the Doha Development Agenda/335
1.2 Negotiation Progress of the Doha Development Agenda/339
1.3 Prospects for the DDA Negotiations/342 1.4 The WTO's Achievements, Limitations, and Future/344
Section 2 New Trade Agenda 349
2.1 Diversification of the Trade Agenda/349 2.2 Trade and Competition Policy/351
2.3 Trade and Investment/360 2.4 Trade and Labor Standards/369
2.5 Trade and Corruption/376
Section 3: Plurilateral Trade Agreements 383
3.1 Overview of Multilateral Trade Agreements/383
3.2 Conclusion of the Government Procurement Agreement (1993, revised in 2011)/384
3.3 Conclusion of the Multilateral Information Technology Agreement (ITA) (1996, 2015)/385
3.4 Multilateral Services Agreement (TiSA) in progress/386
3.5 Agreement on the Special Drawing Rights (SDR) between Plurinational Services (2021)/387
3.6 Environmental Goods Agreement (EGA) Negotiations in Progress/388
3.7 Investment Facilitation Agreement (IFD) Conclusion (2024)/391
3.8 Launch of the Trade and Environmental Sustainability Dialogue (TESD) (2020)/392
Chapter 14: Digital Trade and International Trade Norms 393
Section 1: The Concept and Current Status of Digital Trade 393
1.1 The Concept and Scope of Digital Trade/393
1.2 The Current State of Digital Trade/396
Section 2: Trends in International Discussions on Digital Trade Rules 399
2.1 Discussions in International Organizations/399 2.2 Positions of Major Countries/403
Section 3 Discussion on Free Trade Agreements 406
3.1 Digital Trade Standards under the Korea-US FTA/407
3.2 Digital Norms in the USMCA/408
3.3 Digital Trade Rules in the CPTPP/409
3.4 Discussions in a Separate Digital Trade Agreement/409
Section 4: Discussion Issues on Digital Trade 411
4.1 Digital Trade and Product Classification Issues/411
4.2 Digital Trade Rules as a Protectionist/411
4.3 Introduction of New Norms for Digital Trade/412
4.4 Cross-border Information Transfer/412 4.5 Localization of Computing Facilities/413
4.6 Source Code Disclosure/414 4.7 Digital Tax/414
4.8 Internet Service Provider (ISP) Disclaimer/415
4.9 Exceptions to Digital Trade/416
4.10 Artificial Intelligence and Blockchain/416
Section 5: Evaluation and Outlook for Digital Trade Standards 417
Chapter 15: Environment and International Trade Norms 421
Section 1: Background on Trade and the Environment 421
Section 2 Multilateral Environmental Agreements (MEAs) Affecting Trade 423
2.1 Montreal Protocol on Substances that Deplete the Ozone Layer (1987)/424
2.2 United Nations Framework Convention on Climate Change (UNFCCC) (1992)/424
2.3 Basel Convention (1989)/425
2.4 Convention on Biological Diversity (1992)/425
Section 3: Developments in International Discussions on the Links Between the Environment and Trade 426
3.1 Trends in WTO Trade and Environment Linkage Discussions/426
3.2 Trends in Discussions on Trade and Environment Linkages in FTAs/432
Section 4: Discussion of Environmental Trade Regulations 434
4.1 Status of Introduction of Environmental Trade Measures/434
4.2 Key Discussions on Environmental Trade Regulations/436
Section 5: Environmental Regulations by Major Countries 442
5.1 EU Carbon Border Adjustment Mechanism (CBAM)/442
5.2 The Clean Competition Act (CCA) of the United States/443
5.3 China's Carbon Neutrality Drive/444
Section 6: Evaluation and Outlook of Environment and Trade Linkages 445
·References 449
Index 453

The multilateral trading system, launched by the General Agreement on Tariffs and Trade (GATT), has driven an international trade order based on free trade for the past 30 years since the establishment of the World Trade Organization (WTO) in 1995. The WTO-centered multilateral trading system has significantly contributed to trade liberalization by expanding the scope of its rules beyond tariff reductions on manufactured goods to include areas such as agriculture, service trade, and intellectual property rights.

However, in recent years, the global trade environment has undergone unprecedented changes.
The international trade order centered on multilateralism and free trade established after World War II, centered on the GATT/WTO, is being shaken significantly, and existing trade norms such as guaranteeing free trade through the application of the principle of non-discrimination and prohibiting state subsidies are being ignored, while economic security is emerging as the top trade standard for each country.
In particular, with the deepening of protectionism since the 2008 global economic crisis, global trade growth has stagnated significantly, and the US-China hegemony competition has strengthened America first, and the WTO-based multilateral system has weakened, leading to a slowdown (slobalization) of the international division of labor and globalization trends that have continued for a long time since the GATT/WTO multilateral system.


Furthermore, with global supply chains disrupted by COVID-19 and the 2022 Russia-Ukraine War, major countries such as the US, EU, and China are not only restructuring their supply chains to prioritize safety and resilience over their own countries through industrial subsidy policies, but are also actively engaging in "friend shoring," a movement to build solidarity with allies and partner countries that share their values.
In addition, as the global trade sector rapidly undergoes digital transformation alongside the Fourth Industrial Revolution, existing non-trade concerns, such as digital trade, climate change response, human rights, forced labor, and competition, are being seriously discussed as subjects of new trade norms.
Competition among countries to establish leadership in establishing trade norms in these new areas is also intensifying through multilateral, regional, and bilateral negotiations and agreements, as well as the expansion of domestic laws to extraterritorial applications.
In particular, uncertainty is growing in the expansion of global trade due to the failure to establish global trade norms in new areas such as the environment and digitalization.


This uncertainty in the global trade environment poses a significant challenge to our country, which is open to the outside world and highly dependent on trade.
Even if domestic industries strive to produce and export competitive products through arduous research and development, if importing countries raise unfair trade barriers, the industries in question will inevitably suffer.
If there is a lack of understanding of international trade norms or insufficient human capacity to address the unfairness of these trade measures, this will lead to enormous losses not only for the relevant industry but also for the national economy.
Therefore, we must comprehensively understand and proactively address the theoretical background of international trade norms, historical developments, the effectiveness and limitations of various policy tools, changes in the international trade environment, and the expansion of economic integration.

Accordingly, the author not only directly experienced the global trade and commerce scene while working for KOTRA, Korea's trade and investment promotion agency, for 32 years, but also researched and lectured on international trade theory at a university for several years, and felt the need for a book introducing the current state and changes in international trade.
In particular, the author wrote this book based on the belief that a guide to international trade is necessary to systematically cultivate professionals equipped with theories and expertise in international trade, trade negotiation skills, international experience and sensibilities, and to strengthen the promotion of related research.


The features of this book are as follows:


First, it comprehensively covers the latest trends in trade friction, international trade negotiations, economic integration, the multilateral international trade system, international trade norms, and new issues in international trade, all of which are necessary for training international trade experts.
In particular, recent trends in each sector were reflected to the greatest extent possible, including the US-China trade dispute, mega FTAs ​​(CPTPP, RCEP), the Indo-Pacific Economic Framework (IPEF), the EU Carbon Border Adjustment Mechanism (CBAM), the Fisheries Subsidies Agreement, the Revised Government Procurement Agreement, the Investment Facilitation Agreement (IFD), and plurilateral trade agreements such as the Trade and Environmental Sustainability Framework (TESSD), digital tax, the Digital Economy Partnership Agreement (DEPA), and the future of the WTO.


Second, we have tried to explain the basic concepts for understanding international trade, trade norms by sector, and new agendas for international trade, including the background of the discussion, contents of international discussions, issues of discussion, and evaluation and prospects, in as simple a manner as possible.
Case studies from relevant fields have been included as much as possible to help readers understand the text.


Third, as new issues in international trade, such as digital, environment, investment, competition, labor, and corruption, the discussion background, issues, and prospects were explained, reflecting the latest content.
In particular, the trends in discussions regarding digital trade and environmental trade standards, which are actually being implemented and attracting our attention, were analyzed in more depth in a separate chapter.


Fourth, to help you progress through this textbook, key terms and practice problems have been added to each chapter.

This book is divided into three parts: Part 1 covers understanding international trade, Part 2 covers international trade norms by sector, and Part 3 covers new issues in international trade.
Looking at the chapters organized by department, they are as follows.


To facilitate understanding of international trade, Chapter 1 focuses on the international trade environment. Chapter 2 covers international trade friction, Chapter 3 covers international trade negotiations, Chapter 4 covers the multilateral international trade system, and Chapter 5 covers regional economic integration and free trade agreements.


In Part 2, we looked at the major sectoral norms that currently make up the WTO.
Accordingly, Chapter 6 examines the Agreement on Trade in Goods, which regulates trade in goods among international trade norms; Chapter 7 examines trade agreements related to non-tariff barriers; and Chapter 8 examines the industrial damage relief system, which aims to relieve damage to domestic industries that may occur during the course of trade in goods.
Chapters 9 and 10 analyze services trade and intellectual property agreements, which are areas other than trade in goods, while Chapter 11 analyzes trade facilitation, and Chapter 12 analyzes dispute resolution systems.


To examine new issues in international trade, Chapter 13 covers the Doha Development Agenda, the New Agenda for International Trade, and plurilateral trade agreements.
Among these, trade and investment, trade and competition policy, trade and labor, and trade and corruption were analyzed in depth as new international trade agendas.
Chapter 14, "Digital Trade and International Trade Norms," ​​and Chapter 15, "Environment and International Trade Norms," ​​are separate chapters, not included in Chapter 13, "New Agenda for International Trade," given the rapidly growing interest and importance of these fields. These chapters provide detailed coverage of the current status, concepts, background/trends/issues discussed by international organizations, and evaluations/prospects.