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RESEARCH & ANALYSIS

World Trade Report 2005
Trade, standards and the WTO

The attention given to the trade impact of standards has sometimes obscured the important role that standards play in increasing economic efficiency and dealing with market failures. It is in performing these functions that they create societal benefits. The World Trade Report 2005 seeks to shed light on the various functions and consequences of standards.

> Previous World Trade Reports

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> Press release

An important point to emerge from economic theory is that there is no monotonic relationship between welfare and trade volumes. Changes in trade flows do not always bear a matching relationship to changes in welfare. The empirical evidence also suggests that standards can have both positive and negative effects on trade flows.

An important and recurring theme in the Report concerns the role of international cooperation in managing trade and the public policy challenges facing standards regimes, whether these emanate from the trade rules or from rules and processes involved in the setting and administration of standards.

The Report focuses on three key areas: (i) the economics of standards in relation to international trade; (ii) the institutional setting in which standard-setting and conformity assessment occurs; and (iii) the role of WTO agreements in reconciling the legitimate policy uses of standards with an open, non-discriminatory trading system. While much of the analysis deals with product standards, a large number of the issues discussed also apply in the field of services.

The 2005 Report includes analytical essays on “offshoring services”, “air transport services” and “the use of quantitative economic analysis in dispute settlement”.