Global value chains and regional trade agreements. The case of Trans-Atlantic Trade and Investment Pact.

The global economy is increasingly structured around global value chains (GVCs) that account for a rising share of global production, international trade, investment and global GDP. Studies from a range of disciplines show that global value chains have become widely utilized and many international reports make use of them in tracing the shifting patterns of global production. The emergence of GVC has changed matters and gross trade data can be misleading on how value added is exchanged between countries. Recently many international organization have utilized the OECD/WTO TiVA database, to shed light on the scale, nature and consequences of this production network. Thus we have learned that gross trade is not equal to trade in value added, a fact known for some time, but now quantified. A gap that marks for differences in the global supply chain activity, across countries and over time. At the same time, supply chain analysis is the basis of trade agreements in progress, like Trans-Atlantic Trade and Investment Partnership (TTIP) to be negotiated between the European Union and the United States. It is assumed that this agreements, similarly to others in progress, have the largest impact if it covers as many dimensions of GVCs as possible. But comparing the economic and the business perspectives, this paper explores the coherence of regional production networks with preferential trade memberships, by looking at coordination problem that supply-chain trade pose and by taking TTIP as an example. First, after a short comparison of the positive but small estimates of the TTIP-gains from trade with the GVC perspective, the paper looks at economy-wide impact in scenarios of deeper integration. Second, the invoked harmonization of supply chain disciplines is examined, or the invoked need for strong coordination between production stages across countries, by ensuring with TTIP a new coherence among divergent regulatory regimes. Third, the paper evaluates whether or not harmonized global supply chains rules are inclusive or exclusive in terms of facilitating the upgrading of lower level firm in the chains. Results show on the one side, that the internal and external coherence of GVC and the TTIP is not so clearly cut and on the other side, that it what is crucial is the extent to which global supply chain disciplines harmonized by mega-regional agreements are inclusive or exclusive of small-medium enterprises of southern Europe.