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Begin New Search Topic International Trade and Finance Content Type Policy Brief

31. A CO2-Border Adjustment Mechanism as a Building Block of a Climate Club

Author:
Felix Bierbrauer, Gabriel Felbermayr, Axel Ockenfels, Klaus M. Schmidt, and Jens Sudekum
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The EU steps up its efforts to curb its territorial CO2-emissions. It is planning to introduce a carbon border adjustment mechanism (CBAM) to level the playing field and to raise own resources. The authors point out that unilateral European climate policy action, whether shored up with a CBAM or not, can only play a limited role in reducing global CO2-emissions. A EU-CBAM cannot stop indirect leakage, it has ambiguous effects on other countries’ mitigation efforts, and it poses the risk of conflicts with trade partners. They propose that the EU, together with the US and other like-minded countries, should push hard to establish a climate club with a common minimum price of CO2 and a common CBAM applied to third countries. Such a framework would incentivize other countries to join while limiting leakage and reducing the risk of trade policy disputes.
Topic:
Climate Change, Environment, International Trade and Finance, Regional Cooperation, European Union, and Carbon Emissions
Political Geography:
Europe

32. Beyond trade war in Washington: The United States and our less global future

Author:
Lauri Tahtinen
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
“What worries me most, however, is the fact that the rules-based international order is being challenged. Quite surprisingly, not by the usual suspects, but by its main architect and guarantor: the US.” Tus spoke Donald Tusk, the President of the European Council in advance of the G7 Summit of 2018.1 In doing so, he was echoing the sentiments of many others. Sabre-rattling at friends and foes alike defned the Trump administration’s approach to trade policy, not unlike in many other policy felds. It also demonstrated Donald Trump’s preference for bilateral agreements, the most prominent of which was the so-called Phase One deal with China. Trade policy was a defnite pri- ority for the Trump administration, but it took some self-contradictory forms. Often Trump wanted to wreak havoc for its own sake, which both held back part of his “negative agenda”, such as confronting Chi- na, and the “positive” one of bilateral mini deals, as in the late 2020 trade-smoothing with Brazil. By contrast, trade has not been a priority for either the Biden administration or the 117th Congress thus far.2 Tere is little sign that President Biden would ei- ther immediately roll back Trump-era tarifs and re- classifcations – much less sanctions – or initiate his own positive trade agenda. Tis lack of initiative stands in contrast to rapid executive action on climate, Cov- id-19, US manufacturing and other policy priorities. Congress, too, has been conspicuously silent on trade. With organized labour a resurgent force within Dem- ocratic Party politics, any talk of new trade deals over assistance for the deindustrialized homeland will face some headwind. Te silence around trade suggests that while Biden will attempt to smooth over the worst rows over com- merce, the easiest course for his administration is, by and large, to underwrite a policy shift on trade. Te rest of the world must come to terms with this change, but also formulate cogent responses to it. Te stakes are high because a functioning and fex- ible trading system is essential for tackling the great- est challenges of our time, including the fght against climate change and the production of vaccines against COVID-19. Instead of turning against internation- al cooperation, these and many other priorities need to be integrated into the global trading system. First and foremost, the world needs a proudly pragmatic approach, in place of a “summit for democracy” or any such high-minded initiative which runs the risk of preventing partnerships and ringing hollow. An al- liance of democracies may be the outcome of cooper- ation but should not be positioned as its prerequisite. At the end of World War I, the United States fa- thered the Covenant of the League of Nations but rejected it at birth; Washington withheld its rec- ognition of the child, never joining the League. The United States received a second chance at the end of the World War, founding the United Nations and the Bretton Woods institutions, and a third one at the end of the Cold War when the World Trade Organization came to supersede the General Agreement on Tarifs and Trade (GATT). Now, America is edging closer to rejection, again. Te main argument of this Briefng Paper is that not only has US governmental policy on trade shifted, but also that the environment in which it is developed has altered radically – not least due to US policy itself. Tis means that, one, rules-based trading will need new champions and, two, others must coax the United States to come along when they can fnd shared rea- sons for doing so. The paper looks at both the worlds that the US chose to mould and the ones that it rejected: the US- MCA and the TPP. It also asks how Europeans might orient themselves in the direction of the United States, examines what trade without deals may mean and, f- nally, situates current policy in the longer trajectory of the US role on trade.
Topic:
International Trade and Finance, Trade Wars, Trans-Pacific Partnership, and USMCA
Political Geography:
North America and United States of America

33. Africa Megatrends: Looking over the Horizon into the Future

Author:
Olli Ruohomäki
Publication Date:
03-2021
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs
Abstract:
Africa is an enormous continent composed of several regions and 54 states, populated with more than 1.3 bil- lion people. Tere are more than 1,500 languages and diverse cultures. Both low-income and high-income countries and disparate levels of development are found on the continent. There is both concern and hope in the air regard- ing the trajectory that Africa’s development will take. Dwelling solely on negative news about confict, polit- ical turmoil, hunger and refugees is not constructive. Neither is seeing Africa through ‘rose-tinted glasses’ as a continent full of promise for trade and investment prospects. Rather, a balanced and realistic vision that looks over the horizon into the future is required. Talking about the diverse and vast continent as a whole is fraught with potential accusations of sweeping generalizations and even arrogance. Nonetheless, this is exactly what the business of forecasting is all about. To put it another way, predicting the future is essentially about painting the canvas with broad strokes and seeing the big picture. It is then up to area studies, sociology, anthropology, political science and similar disciplines to dwell on the more nuanced and detailed case studies. Hence, despite the complexity that forecasting the future of Africa entails, it is possible to outline the main contours of the trajectory of change that in- forms the course of developments on the continent.1 It is with this in mind that this Briefng Paper exam- ines seven megatrends that are shaping the future of Africa
Topic:
Climate Change, Democratization, Environment, International Trade and Finance, Regional Cooperation, Urbanization, Conflict, Regionalism, and Population Growth
Political Geography:
Africa

34. China's Ties with Southeast Asia : From Green Shoots to Sustained Recovery

Author:
Kensuke Tanaka
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
China's rebound happened relatively quickly owing to a large extent to timely macroeconomic policy responses to the crisis. Lagging somewhat behind China, most Southeast Asian countries have now entered the transition from recession to recovery. Some export-dependent Southeast Asian countries shifted their export destination to China to benefit from its early recovery. This switch of export destination to China illustrates China's important role in leading the recovery of the region. Enhancing regional macroeconomic co-operation would help reduce vulnerability of the region and ensure a sustained recovery. Regional macroeconomic co-operation remains at an early stage in Southeast Asia, but possibilities for further co-operation should be explored.
Topic:
Development, Economics, International Cooperation, International Trade and Finance, and Economic Recovery
Political Geography:
China, Asia, and Southeast Asia

35. The Impact of Unilateral Trade Policy on International Trade Structure

Author:
Moonhee Cho
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Uncertainty grows with the diffusion of unilateral trade policies. In particular, the average value of the World Uncertainty Index increased by four to fivefold compared to 1990. Recently, unilateral trade policies are spreading internationally. Non-tariff measures including anti-dumping, countervailing measures, SPS and TBT are increasing. Moreover, both developing and developed countries are adopting trade-disruptive measures and these are rapidly increasing. This report analyzes the widespread diffusion of unilateral trade policies and changes in trade structures.
Topic:
International Trade and Finance, Trade Policy, and Unilateralism
Political Geography:
Global Focus

36. The Impact of Intellectual Property Protection through FTA on International Trade

Author:
Hyunsoo Kim, Sangjun Yea, Hyeyoon Keum, and Min Ji Kang
Publication Date:
08-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The importance of intellectual property rights (IPRs) for innovation has grown and the protection of intellectual property in international trade has also been strengthened. AI-related patent applications have been increasing rapidly and many AI patents are being filed in various industries. Intellectual property also represents one of the main controversies of U.S.-China trade relations in the past three decades and remains one of the core issues behind the two countries’ recent trade conflicts. As a result, global protection for IPRs has been expanded in recent decades. This article investigates changes in the trend regarding the IP protection level in FTA and how the IP protection through FTAs has affected the composition of aggregate trade flows of member countries in order to provide basic findings necessary to formulate the FTA policies regarding the protection of IPRs in Korea.
Topic:
International Trade and Finance, Intellectual Property/Copyright, Economy, and Artificial Intelligence
Political Geography:
China, South Korea, and United States of America

37. The Crisis of the WTO and New Direction for Negotiation Strategies of Korea

Author:
Jin Kyo Suh, Cheon-Kee Lee, Jukwan Lee, Ji Hyeon Kim, and Myeonghwa Jung
Publication Date:
06-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The WTO is facing a historical crisis. Its main functions ‒ namely, providing a negotiating forum, administrating WTO trade agreements and monitoring national trade policies, and resolving trade disputes ‒ have been significantly paralyzed. Although the cause of the crisis is partly institutional, higher uncertainty is also a considerable problem aggravating the fate of the multilateral trading system. Such uncertainty comes from two factors: rising protectionism, and trade frictions between developed and developing countries including those between the United States and China. Meanwhile, the WTO also needs to respond to rapid structural changes in global trade. The center of the world’s trade is shifting towards trade in services. The development and spread of information and communication technology (ICT) are making it easier to supply services across borders. The regionalization or localization of global value chains (GVCs) continues and GVCs are shifting towards knowledge-based goods. Therefore, the WTO faces a historical challenge it is highly unlikely to survive without proper reflection on the new trends of global trade. With Korea no longer claiming for preferential treatments as a developing country, it could take relatively firm negotiating positions at the WTO concerning market expansion and improved access towards foreign markets. Moreover, Korea could contribute as a mediator to speak for balancing the interests of both developed and developing countries on conflicting issues, such as the developing country status. Korea also needs to establish a more precise give-and-take negotiation strategy in future WTO negotiations on agriculture, non-agriculture, and service sectors to maximize its national interests. In particular, Korea should put stress on services and TRIPs negotiations to ensure its international competitiveness on those sectors. Trade in services and IP will dominate trade in goods. Korea also should focus on how to raise the efficiency and stability of the East-Asian regional value chains by strengthening its co-operation with China, Japan, and Southeast Asia. At the same time, Korea needs to consider ways to become the bridgehead connecting East Asia’s value chains to either North America’s value chains or the EU’s value chains utilizing given FTAs with those economies. Finally, Korea should prepare for the emergence of various forms of plurilateral negotiations and where appropriate, take lead and reflect its national interests on the final outcome.
Topic:
Development, International Trade and Finance, Negotiation, Trade Policy, and WTO
Political Geography:
South Korea

38. Illicit Cigarette Consumption in Mexico

Author:
Oxford Economics
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
This research seeks to quantify the size and scale of the illicit consumption of cigarettes in Mexico, as well as the impact on government revenues, and how this has changed in recent years. This study shows that: In the first half of 2021, an estimated 18.8% of all cigarettes consumed in Mexico were of illicit origin. In volume terms, this was more than 38% higher than the same period in 2019 (pre-Covid level). The rise in Illicit Consumption has been driven by an increased presence of cigarettes without the SAT’s security code – particularly the brands ‘Economicos’ and ‘Link’ – with Domestic Illicit now accounting for around two thirds of total Illicit Consumption in Mexico (up from 50% in 2019). Non Domestic Illicit consumption – primarily consisting of cigarettes originating from China – has been relatively stable over the last few years. Foregone Excise Tax receipts amounted to an estimated 19.4% of total potential Excise Tax revenues in 2021 H1.
Topic:
International Trade and Finance, Tax Systems, Illegal Trade, and Consumption
Political Geography:
North America and Mexico

39. China and the Persian Gulf in the Aftermath of a U.S. Withdrawal

Author:
Steven Simon
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Quincy Institute for Responsible Statecraft
Abstract:
• Given longstanding U.S. economic ties to the Arab Gulf states, the withdrawal of the U.S. military would not mean the United States is departing from the region. Even if it did signify that, however, China would be unlikely to fill the vacuum. A U.S. decision to maintain a military presence in the region should therefore not be based on fear of a strategic vacuum that China will fill to America’s disadvantage. • The United States should leverage China’s interest in stable cross–Gulf relations by working in tandem with Beijing to encourage dialogue and confidence-building measures. • The United States should monitor Chinese military deployments to the Indian Ocean and work with Gulf partners to set limits on China’s military use of air and naval bases. This would serve as a confidence-building measure and ensure that the Gulf does not become an arena for competition amid heightened Sino–American tensions.
Topic:
Foreign Policy, International Trade and Finance, Military Affairs, and Strategic Engagement
Political Geography:
China, Middle East, Persian Gulf, and United States of America

40. Do Evolving Digital Trade Rules Create an Uneven Playing Field? Understanding Global Perspectives

Author:
Michael Pisa and Ugonma Nwankwo
Publication Date:
08-2021
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
This brief is based on a roundtable hosted by CGD as part of the Governing Data for Development project, which explores how governments can use data to support innovation, development, and inclusive growth while protecting citizens and communities against harm.
Topic:
Development, Economics, International Trade and Finance, and Digital Economy
Political Geography:
Global Focus