{ "id": "S12", "slug": "market-access-opening", "title": "A cross-regional market access compact redirects investment", "version": "0.5.0", "status": "active", "orientation": "upside", "family": "A", "short_title": "Market access opening", "thematics": [ "economic-security-supply-chains", "demographics-human-capital" ], "likelihood_type": "systemic", "likelihood_note": null, "scores": { "likelihood_2y": { "band": 3, "rationale": "Large compacts already operate: the Regional Comprehensive Economic Partnership entered into force in 2022 and the CPTPP admitted the United Kingdom in December 2024. Tariff increases by large importers since 2025 have given other economies a reason to open to each other. A Standard Severe event needs more: advanced and emerging members together, mutual recognition beyond tariffs and entry into force within a year. Few agreements of this breadth have been ratified that quickly." }, "likelihood_10y": { "band": 4, "rationale": "Over ten years the conditions accumulate. Regional agreements have deepened steadily, services and digital trade are growing faster than goods trade and traceability requirements push partners towards mutual recognition. Existing agreements could be linked or enlarged to meet the definition without a negotiation from the start. The main obstacle is domestic consent in protected sectors, which has halted comparable agreements before." }, "impact_systemic": { "level": 3, "rationale": "Level 3 as a gain. With members at about a third of world output, a 20 per cent rise in member trade and a 30 per cent rise in productive investment imply a change of 1 to 2.5 per cent of global output over five years. World Bank modelling of the African Continental Free Trade Area put income gains at 7 per cent by 2035, most of it from trade facilitation and not from tariff removal." }, "impact_national": { "level": 4, "rationale": "Level 4. For a member that qualifies suppliers and connects new plants, the compact brings a step change in investment, formal employment and export capacity; Mexico's goods exports to the United States more than tripled in the decade after 1994. For a closely competing non-member, or a member whose protected sectors cannot adjust, the loss of investment and market share is lasting. The highest dimension reached is economic." }, "confidence": { "level": "medium", "reason": "The effects of past agreements are well measured. The speed assumed here and the scale of investment diversion from non-members have fewer precedents." }, "priority": 12, "tier": "II", "source": "model-panel-v0.5" }, "scorecard": { "onset": "months", "duration": "3 years", "warning": "months", "scope": "global", "origin": "negotiated", "external_support": "partial", "policy_response": "current plans executed", "recovery_horizon": "structural" }, "summary": "Large emerging and advanced economies, together about a third of world output, bring a trade and investment compact into force within one year of signature. It removes most tariffs among members and mutually recognises selected services qualifications, digital trade rules and product traceability systems. Over three years member trade rises 20 per cent and productive foreign investment into members 30 per cent, both relative to the prior path. New corridors become commercially viable. Nations must qualify suppliers, expand infrastructure and mobilise workers quickly. Protected incumbents inside the compact lose market share, and non-members face investment diversion and not an automatic share of the gains.", "distribution": { "gains": [ "Competitive exporters in member states that qualify suppliers quickly", "Young workers and holders of recognised qualifications in connected labour markets", "Members with spare port, power and industrial land capacity", "Logistics, standards and digital trade service providers along the new corridors", "Consumers in member states, through lower prices for traded goods" ], "loses": [ "Protected incumbent producers inside the compact", "Non-members that compete directly with members for investment", "Poorer members that lose nurses and engineers to richer partners", "Governments that relied on tariff revenue" ] }, "narrative": { "dateline": "March 2032", "text": "The compact was signed in February 2028 by 31 governments on four continents and entered into force on 1 January 2029, once the minimum number of ratifications had been deposited. Its members accounted for about a third of world output. On the first day, nine tariff lines in ten among them went to zero or began a five-year reduction. The clauses that mattered more took effect over the following year: one rule of origin that let inputs from any member count towards qualifying content; mutual recognition of engineering, nursing and accounting qualifications; common rules on data transfers and electronic documents; and acceptance of each other's product traceability records.\n\nFirms responded before governments did. Within eighteen months, announced factory, logistics and data-centre investment into members ran 30 per cent above its earlier path, and most of it went to a small number of places. A textile and electronics corridor formed between South Asian ports and East African processing zones. Vehicle component makers moved lines from non-member suppliers to member states in South-East Asia and Latin America so that finished vehicles would qualify. By the end of 2031, trade among members was 20 per cent higher than the projection made before the compact.\n\nThe gains followed capability, not membership alone. Members whose standards laboratories were accredited and whose customs systems accepted electronic certificates saw suppliers qualify within months. In others, exporters waited more than a year for test results that buyers would accept, and investment committed to them was reassigned to neighbours. Ports that could not add berths turned vessels away. Two members rationed industrial power connections. Training colleges in the faster-growing corridors could not supply enough technicians, and recognised qualifications allowed nurses and engineers to leave poorer members for richer ones.\n\nThere were losses inside the compact as well. Protected producers of steel, sugar and vehicles in several members lost market share within two years, and three governments used the safeguard clause. Tariff revenue fell in members that had relied on it and two revised their budgets during the year. Capital inflows raised exchange rates in the main recipient economies and made their other exports less competitive.\n\nNon-members did not share in the gains by default. Economies that competed directly with new members for assembly work recorded foreign investment about a tenth below earlier levels, and their exporters faced tariffs that their rivals no longer paid. Six applied to join in 2031. The list of applicants, and the conditions set for them, became the compact's main source of influence over economies outside it." }, "anchors": [ { "shock_id": "regional-comprehensive-economic-partnership-2022", "date": "1 January 2022", "event": "Regional Comprehensive Economic Partnership", "what_happened": "Signed in November 2020, the agreement entered into force on 1 January 2022 for ten of its 15 signatories, which together account for about 30 per cent of world output. A single rule of origin lets inputs from any member count towards qualifying content", "calibrates": "the scale of membership assumed here and the time from signature to entry into force; the rule of origin as the clause that moves supply chains" }, { "shock_id": "african-continental-free-trade-area-2021", "date": "1 January 2021", "event": "African Continental Free Trade Area", "what_happened": "Trading began under an agreement signed by 54 states, but tariff schedules and rules of origin were incomplete. A Guided Trade Initiative began in October 2022 with eight countries. The World Bank estimated income gains of 7 per cent, about US$450 billion, by 2035, most of it from trade facilitation", "calibrates": "the gap between entry into force and usable market access; why customs and standards capacity carry the High loads" }, { "shock_id": "north-american-free-trade-agreement-1994", "date": "1 January 1994", "event": "North American Free Trade Agreement", "what_happened": "The agreement joined an emerging economy to two advanced ones. Mexico's goods exports to the United States more than tripled within a decade and assembly investment concentrated in its northern states. A currency crisis followed in December 1994", "calibrates": "national impact for an emerging member; uneven gains within a member; the macro-financial channel" }, { "shock_id": "eu-eastern-enlargement-2004", "date": "1 May 2004", "event": "European Union enlargement of 2004", "what_happened": "Ten states with about 75 million people joined the single market, with recognition of professional qualifications. The United Kingdom, Ireland and Sweden opened their labour markets at once; other members phased access over up to seven years", "calibrates": "investment into new members, and the movement of skilled workers from poorer to richer members once qualifications are recognised" }, { "shock_id": "china-after-wto-accession-2001", "date": "2001–2010", "event": "China after WTO accession", "what_happened": "Growth averaged about 10 per cent a year and goods exports grew more than fivefold", "calibrates": "the upper bound on the response to secure market access; the effect on incumbent producers elsewhere" }, { "shock_id": "supply-chain-diversification-2018", "date": "2018–2025", "event": "Supply-chain diversification", "what_happened": "Assembly and component production moved from China towards Vietnam, Mexico, India and Indonesia after tariffs and the pandemic. Mexico became the largest source of United States goods imports in 2023", "calibrates": "how quickly productive investment relocates when relative market access changes; the diversion faced by locations outside the preferred set" } ], "parameters": { "common": { "severity": { "major": "major", "severe": "severe", "extreme": "extreme" }, "duration": { "major": "3 years", "severe": "3 years", "extreme": "5 years" }, "onset": { "major": "years", "severe": "months", "extreme": "months" }, "warning": { "major": "months", "severe": "months", "extreme": "months" }, "scope": { "major": "regional", "severe": "global", "extreme": "global" }, "origin": { "major": "negotiated", "severe": "negotiated", "extreme": "negotiated" }, "external_support": { "major": null, "severe": "partial", "extreme": "none" }, "concurrency": { "major": "standalone", "severe": "standalone", "extreme": "plus one named scenario" }, "policy_response": { "major": null, "severe": "current plans executed", "extreme": null }, "recovery_horizon": { "major": "years", "severe": "structural", "extreme": "structural" } }, "specific": [ { "name": "Members' share of world output", "default": "33 per cent", "range": "25 to 50", "unit": "per cent", "note": "Not fixed by the panel specification; set so that the systemic impact reaches level 3" }, { "name": "Time from signature to entry into force", "default": "12 months", "range": "6 to 24", "unit": "months", "note": "Longer at Standard Major" }, { "name": "Rise in trade among members over three years", "default": "20 per cent", "range": "10 to 35", "unit": "per cent", "note": "Relative to the path projected before the compact" }, { "name": "Rise in productive foreign investment into members over three years", "default": "30 per cent", "range": "15 to 50", "unit": "per cent", "note": "Greenfield and expansion investment; excludes mergers and portfolio flows" }, { "name": "Share of tariff lines liberalised among members", "default": "90 per cent", "range": "80 to 97", "unit": "per cent", "note": "Immediate removal or a phased reduction over five years" }, { "name": "Scope of mutual recognition", "default": "selected services qualifications, digital trade rules and product traceability systems", "range": "options: tariffs only / full regulatory recognition", "unit": null, "note": "Tariffs only at Standard Major" }, { "name": "Fall in foreign investment into closely competing non-members", "default": "10 per cent", "range": "5 to 20", "unit": "per cent", "note": "A GINC assumption; the specification states diversion without a figure" } ] }, "transmission": [ "Ratifications reach the threshold and the compact enters into force within a year of signature, removing most tariffs among members.", "A single rule of origin and mutual recognition of qualifications, digital trade rules and traceability systems lower the cost of trading and producing across members.", "Firms redirect productive investment to member locations that can qualify suppliers, and new trade corridors become commercially viable.", "Ports, power, industrial land and standards bodies in recipient members reach capacity; investment moves on to members that can connect it.", "Demand for technicians and recognised professionals rises; young workers enter formal jobs and skilled staff move from poorer to richer members.", "Protected incumbents inside the compact lose market share, tariff revenue falls and governments face safeguard requests and adjustment costs.", "Non-members lose investment and market share to members and apply to join; accession conditions extend the compact's rules." ], "loading": [ { "dimension": "Hard", "domain": "defence-security", "load": "Low", "channel": "customs and border agencies handle higher volumes; little direct call on defence capability" }, { "dimension": "Hard", "domain": "strategic-infrastructure", "load": "High", "channel": "ports, power, roads and industrial land limit how much redirected investment a member can take" }, { "dimension": "Hard", "domain": "critical-technology", "load": "Medium", "channel": "traceability systems and digital trade rules; technology absorbed through supplier links" }, { "dimension": "Soft", "domain": "government-effectiveness", "load": "High", "channel": "customs, standards bodies, permitting and recognition of qualifications must work at the pace of the compact" }, { "dimension": "Soft", "domain": "human-capital", "load": "High", "channel": "technical skills, recognised qualifications and the movement of young workers into formal jobs" }, { "dimension": "Soft", "domain": "influence-cohesion", "load": "Medium", "channel": "negotiating weight among members; adjustment costs in protected sectors test consent" }, { "dimension": "Economic", "domain": "macro-financial", "load": "Medium", "channel": "capital inflows, exchange-rate pressure and lost tariff revenue need managing" }, { "dimension": "Economic", "domain": "industry-trade-supply", "load": "High", "channel": "supplier qualification, rules of origin and export capacity decide who captures the new corridors" }, { "dimension": "Economic", "domain": "energy-resources", "load": "Medium", "channel": "new plants raise industrial power demand; resource exporters gain processing investment" } ], "stakeholders": { "government": { "exposure": "Whether the nation captures redirected investment depends on customs, standards bodies, infrastructure and skills being ready when the compact enters into force. Non-members face diversion.", "actions": [ "Accredit standards laboratories and accept electronic certificates before entry into force", "Add port, power and industrial land capacity on the corridors that become viable", "Fund adjustment for protected sectors and replace lost tariff revenue" ], "watch": [ "Ratification count and the date of entry into force", "Supplier qualification times and use of tariff preferences", "Tariff revenue and requests for safeguard measures" ], "relevance": 3 }, "technology": { "exposure": "Digital trade rules and traceability requirements create demand for interoperable systems. Firms outside the recognised systems lose access.", "actions": [ "Build traceability and electronic documentation to the standards the compact recognises", "Locate data and service operations where the digital trade rules apply", "Train and certify technicians alongside new plants" ], "watch": [ "Adoption of electronic certificates of origin", "Data transfer rules among members", "Technician vacancy rates in corridor economies" ], "relevance": 4 }, "investors": { "exposure": "Productive investment is redirected towards qualifying members, with currency pressure in recipient economies and lower returns on protected incumbents and bypassed non-members.", "actions": [ "Assess members on infrastructure and administrative capacity, not on membership alone", "Test holdings in protected sectors for loss of market share", "Reassess assets in non-members that compete with member locations" ], "watch": [ "Greenfield investment announcements by destination", "Real exchange rates in the main recipient economies", "Accession applications and safeguard actions" ], "relevance": 4 }, "public": { "exposure": "More formal jobs and lower prices where investment arrives; job losses in protected sectors and the departure of nurses and engineers from poorer members.", "actions": [ "Obtain qualifications that the compact recognises", "Use retraining and adjustment support where protected sectors contract", "Hold local authorities to account for housing and services in growing corridor cities" ], "watch": [ "Formal job creation among young workers", "Emigration of health and engineering staff", "Consumer prices for traded goods" ], "relevance": 4 } }, "regions": [ { "region": "north-america", "exposure": "Medium", "rationale": "Mexico is a candidate member and gains assembly; protected producers in the larger economies face member competition" }, { "region": "europe", "exposure": "Medium", "rationale": "Machinery and services exporters gain access; protected farm and vehicle producers lose share" }, { "region": "china", "exposure": "Medium", "rationale": "Chinese firms invest in member states to qualify under the rule of origin; some assembly moves to member neighbours" }, { "region": "indo-pacific", "exposure": "High", "rationale": "South-East Asian members take redirected component and electronics investment; advanced members supply capital and services" }, { "region": "south-asia", "exposure": "High", "rationale": "Large young workforces and port corridors to East Africa; standards and customs capacity decide the gain" }, { "region": "gulf-middle-east", "exposure": "Medium", "rationale": "Supplier of capital, energy and transhipment to the new corridors" }, { "region": "africa", "exposure": "High", "rationale": "Processing zones and young workforces gain where suppliers qualify; the widest gap between members and bypassed neighbours" }, { "region": "latin-america", "exposure": "High", "rationale": "Component, food-processing and services investment for members; closely competing non-members lose investment" }, { "region": "russia-eurasia", "exposure": "Low", "rationale": "Largely outside the compact; little new investment and some loss of transit trade" } ], "indicators": [ { "name": "Regional trade agreements signed, ratified and notified as in force", "source": "WTO Regional Trade Agreements Database", "threshold": "A compact whose signatories exceed a quarter of world output reaches its ratification threshold", "cadence": "continuous" }, { "name": "Trade-restricting and trade-facilitating measures by large economies", "source": "WTO Trade Monitoring Report", "threshold": null, "cadence": "twice a year" }, { "name": "Greenfield foreign investment announcements by destination", "source": "UNCTAD World Investment Report", "threshold": "Announced investment into prospective members rises 15 per cent above its three-year average", "cadence": "annual" }, { "name": "Restrictions on services trade and recognition of foreign qualifications", "source": "OECD Services Trade Restrictiveness Index", "threshold": null, "cadence": "annual" }, { "name": "Customs, logistics and border performance in prospective members", "source": "World Bank Logistics Performance Index", "threshold": null, "cadence": "periodic" }, { "name": "Applied tariffs among prospective members", "source": "WTO, ITC and UNCTAD World Tariff Profiles", "threshold": null, "cadence": "annual" }, { "name": "Young people not in employment, education or training", "source": "ILO ILOSTAT", "threshold": null, "cadence": "annual" } ], "compounds": { "triggers": [ { "id": "S18", "note": "digital trade and traceability rules push members to adopt interoperable public digital systems" }, { "id": "S01", "note": "excluded powers may answer a compact they read as a bloc with restrictions of their own" }, { "id": "S15", "note": "new industrial load and lower tariffs on equipment bring standardised clean power projects forward" } ], "triggered_by": [ { "id": "S13", "note": "lower barriers between the two largest economies make a broad compact politically possible" }, { "id": "S01", "note": "economies outside the rival blocs open to each other in response" }, { "id": "S11", "note": "restored fiscal room lets members fund infrastructure and absorb lost tariff revenue" }, { "id": "S14", "note": "reliable shipping access makes cross-regional corridors viable" }, { "id": "S16", "note": "Mutual recognition of seed approvals and new farm export corridors give members a working model for wider market access." } ], "amplified_by": [ { "id": "S15", "note": "cheaper firm power lowers production costs at new member sites" }, { "id": "S16", "note": "higher farm output gives agricultural members more to export" } ], "triggered_by_other": [ "A sustained rise in tariffs by a large importer that leads other economies to open to each other" ], "amplifying_trends": [ "Regional trade agreement deepening", "Trade corridor competition", "Foreign investment slowdown & selectivity", "Digital & services trade growth", "Non-tariff compliance & traceability", "Shifting economic weight", "Africa's demographic & economic rise", "Technical & occupational skill shortages" ] }, "open_questions": [ "The specification does not name the members. The regional exposures assume membership concentrated in the Indo-Pacific, South Asia, Africa and Latin America, with partial participation by advanced economies.", "Whether entry into force within one year is credible for a compact of this breadth, when few comparable agreements have been ratified that quickly.", "How to score a non-member: by the investment diverted from it, or as unaffected unless it competes directly with a member.", "Whether the 20 per cent trade and 30 per cent investment effects add to world totals or are largely diverted from non-members." ], "commentary": null, "overview": { "source": "model-panel-v0.5", "lenses": { "political": "Six non-members applied to join in 2031. **The conditions set for applicants** became the compact's main source of influence over economies outside it.", "economic": "Member trade ran **20 per cent above** its prior path by 2031 and announced productive investment 30 per cent above. Most of it went to a small number of places.", "social": "Recognised qualifications let **nurses and engineers leave** poorer members for richer ones. Training colleges in the new corridors could not supply enough technicians.", "technological": "Members whose customs systems accepted **electronic certificates** and traceability records saw suppliers qualify within months; others waited more than a year.", "legal": "**One rule of origin** let inputs from any member count towards qualifying content. Three governments used the safeguard clause for protected producers.", "environmental": "Two members **rationed industrial power connections** as new plants arrived. Shared traceability records made the origin of products and inputs auditable across members." }, "regions": { "north-america": "Mexico gains qualifying assembly work as a candidate member. **Protected producers** in the larger economies lose share to member exporters.", "europe": "Machinery and services exporters gain access to growing markets. **Protected farm and vehicle producers** face stronger competition from members.", "china": "Chinese firms **invest inside member states** to qualify under the rule of origin. Some assembly moves to member neighbours.", "indo-pacific": "South-East Asian members take **vehicle component and electronics lines** moved from non-member suppliers. Advanced members supply capital and services.", "south-asia": "Ports on the corridor to East Africa fill. **Standards laboratories and customs** decide which exporters qualify in months and which wait a year.", "gulf-middle-east": "A **supplier of capital, energy and transhipment** to the new corridors between South Asia, Africa and Europe.", "africa": "East African processing zones join a corridor from South Asia. The **widest gap** opens between members that qualify suppliers and neighbours that are bypassed.", "latin-america": "Members gain component and food-processing investment. **Closely competing non-members** record lower investment and face tariffs their rivals no longer pay.", "russia-eurasia": "Largely outside the compact. **Little new investment** arrives and overland transit loses some trade to the new sea corridors." }, "evolution": { "lead_indicators": "A compact whose signatories exceed a quarter of world output **reaches its ratification threshold**. Announced greenfield investment into prospective members rises 15 per cent above its three-year average.", "triggers": "The compact **enters into force within one year of signature** among economies holding about a third of world output. Nine tariff lines in ten go to zero or begin reduction.", "immediate": "Over the first year one rule of origin and mutual recognition of qualifications, digital rules and traceability take effect. **Firms redirect investment** to members that can qualify suppliers.", "post_immediate": "Ports, power and standards bodies in recipient members reach capacity; investment moves on. **Protected incumbents lose market share** within two years; tariff revenue falls and skilled staff leave poorer members.", "stabilisation": "After three years member trade is **20 per cent above its prior path** and productive investment 30 per cent. Closely competing non-members record about a tenth less foreign investment.", "long_term": "The change is structural: new corridors and supplier bases stay in place. Non-members apply to join and **accession conditions extend the compact's rules** to economies outside it." } }, "history": [ { "edition": 2027, "rank": null, "L2y": 3, "L10y": 4, "impact_systemic": 3, "impact_national": 4, "confidence": "medium" } ], "changelog": [ { "version": "0.5.0", "date": "2026-10-09", "change": "Rebuilt in the second pass from Emerging-market growth breakout: recast from a five-year growth run into a compact that enters into force, with onset shortened to months, non-member diversion made explicit and the macro-financial load lowered to Medium." } ], "citation": "GINC (2027). Scenario S12 A cross-regional market access compact redirects investment, Scenario Library v0.5. scenarios.ginc.org/scenarios/market-access-opening" }