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61. A Post-Brexit Trade Policy for Development and a More Integrated Africa

Author:
Kimberly Ann Elliott
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
The United Kingdom will confirm its departure from the European Union on 31st January 2020. As part of its independent trade policy, the government has committed to improve access to UK mar- kets for the poorest countries. This note sets out three ways it can do so: expanding duty-free market access while avoiding piecemeal trade agreements that undermine Africa’s own trade integration ef- forts; using an alternative framework for those trade agreements it does negotiate with developing countries; and supporting a “back-to-basics” multilateral negotiation at the World Trade Organiza- tion that could help to rebuild confidence in that institution and thus protect the interests of small and vulnerable countries. After a brief review of the background and context, it sets out specific pro- posals in each of these areas.
Topic:
Development, International Cooperation, International Trade and Finance, European Union, and Brexit
Political Geography:
Africa, United Kingdom, and Europe

62. The Impact of Disintegration Dynamics on EU Trade Policy: An Institutional Analysis

Author:
Konstantinos J. Hazakis
Publication Date:
12-2020
Content Type:
Working Paper
Institution:
Centre for Global Political Economy, University of Sussex
Abstract:
Safeguarding access to international markets requires an effective EU international trade policy. Equally important, preserving an open, rules-based world trading system presupposes strong EU capability as well as consensus of EU states on the scope and targets of EU international trade policy. The paper presents a policy oriented analytical framework of EU international trade policy taking into consideration the impact of disintegration dynamics and emerging trade protectionism. Initially, the analysis sets the problem while section two offers the major tenets of the politicization of EU international trade policy. Section three presents the key arguments of the institutional analysis on the issue while section four analyses the content of an alternative policy framework for understanding disintegration - EU trade policy interaction. Section five concludes and reaches useful policy implications. It is suggested that there is a need for more Europe on international trade meaning enhanced, effective and inclusive EU trade institutional action.
Topic:
International Trade and Finance, European Union, Global Markets, Rule of Law, and Trade Policy
Political Geography:
Europe

63. Remolding China’s ‘Empty’ Belt and Road Initiative: An Opportunity for the EU

Author:
Jasper Roctus
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
EGMONT - The Royal Institute for International Relations
Abstract:
China’s controversial Belt and Road Initiative (BRI) has been subject to ample scrutiny since its inception in 2013. Practical results could be said to be severely lacking in contrast to the project’s ambitious plans. Chinese engagement abroad has irrefutably intensified since Xi Jinping assumed power in 2012, but whether this can be classified as the fruits of BRI remains unclear. China, in fact, is developing BRI on the go. That gives the EU an opportunity to engage with BRI and remold it into a more desirable form. Because China increasingly sees Europe as BRI’s “final destination”, the EU has a lot more leverage than it commonly assumes.
Topic:
International Trade and Finance, Infrastructure, Hegemony, European Union, and Belt and Road Initiative (BRI)
Political Geography:
China, Europe, and Asia

64. Toward a Robust Architecture for the Regulation of Data and Digital Trade

Author:
Dan Ciuriak and Maria Piashkina
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The rapid digital transformation occurring worldwide poses significant challenges for policy makers working within a governance framework that evolved over centuries. Domestic policy space needs to be redefined for the digital age, and the interface with international trade governance recalibrated. In this paper, Dan Ciuriak and Maria Ptashkina organize the issues facing policy makers under the broad pillars of “economic value capture,” “sovereignty” in public choice and “national security,” and outline a conceptual framework with which policy makers can start to think about a coherent integration of the many reform efforts now under way, considering how policies adopted in these areas can be reconciled with commitments under a multilateral framework adapted for the digital age.
Topic:
International Trade and Finance, Reform, Digital Economy, Multilateralism, and Digitization
Political Geography:
United States, China, Europe, Asia, and North America

65. The Importance of the Western Balkans in China’s Foreign Policy

Author:
Marcin Przychodniak
Publication Date:
06-2020
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
China’s cooperation with the Western Balkans through the “17+1” format and Belt and Road Initiative (BRI), among others, is primarily political. In the economic sphere, Chinese investments are to a large extent only declarations, and trade is marginal in comparison to cooperation with the EU or others. China’s goals are to gain political influence in future EU countries and limit their cooperation with the U.S. Competition with China in the region requires more intense EU-U.S. cooperation, made more difficult by the pandemic.
Topic:
Foreign Policy, International Trade and Finance, Belt and Road Initiative (BRI), Investment, and Strategic Competition
Political Geography:
China, Europe, Asia, and Balkans

66. Tariffs and Monetary Policy: A Toxic Mix

Author:
Michael D Bordo and Mickey D. Levy
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The ratcheting up of tariffs and the Fed’s discretionary conduct of monetary policy are a toxic mix for economic performance. Escalating tariffs and President Trump’s erratic and unpredictable trade policy and threats are harming global economic performance, distorting monetary policy, and undermining the Fed’s credibility and independence. President Trump’s objectives to force China to open access to its markets for international trade, reduce capital controls, modify unfair treatment of intellectual property, and address cybersecurity issues and other U.S. national security issues are laudable goals with sizable benefits. However, the costs of escalating tariffs are mounting, and the tactic of relying exclusively on barriers to trade and protectionism is misguided and potentially dangerous. The economic costs to the United States so far have been relatively modest, dampening exports, industrial production, and business investment. However, the tariffs and policy uncertainties have had a significantly larger impact on China, accentuating its structural economic slowdown, and are disrupting and distorting global supply chains. This is harming other nations that have significant exposure to international trade and investment overseas, particularly Japan, South Korea, and Germany. As a result, global trade volumes and industrial production are falling. Weaker global growth is reflected in a combination of a reduction in aggregate demand and constraints on aggregate supply.
Topic:
International Trade and Finance, Monetary Policy, Economic Growth, Tariffs, and Industry
Political Geography:
Japan, China, Europe, Asia, South Korea, Germany, North America, and United States of America

67. Work for Others, not Yourself: Globalization, Protectionism and Europe’s Quest for Strategic Autonomy

Author:
Fredrik Erixon
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Protectionism and mercantilism are yet again at the centre of global economic policy. “America First” is the guiding ethos in a good part of US international economic policy. Beijing is taking a larger stake in China’s economy and hand out privileges to domestic firms. Europe is increasingly occupied by achieving “strategic autonomy” and to create European champions at the expense of competition. Old and disreputed economic doctrines are getting a new lease on life. Behind this new orientation in international economic policy stands the old idea that a strong economy is an economy not dependent on others. Human prosperity – our story of rags to riches – tells a very different story. Prosperity is generated when people collaborate and improve our collective intelligence. Open economies are much better at creating wealth because they operate by the principle that people should work for others, not themselves. They specialize – and in the process, they get far more dependent on others. Dependency is a factor of success; economic sovereignty is a sure way of depriving people of opportunity and prosperity.
Topic:
International Political Economy, International Trade and Finance, Global Markets, and Strategic Competition
Political Geography:
United States, China, and Europe

68. Globalization Comes to the Rescue: How Dependency Makes Us More Resilient

Author:
Florian Forsthuber and Oscar Guinea
Publication Date:
09-2020
Content Type:
Research Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
A new consensus is growing across the European Union – and other parts of the world too: that globalization has gone too far. The argument goes as follows: as an exchange for higher efficiency and lower prices, Europe has sacrificed its ability to take care of itself and protect its own citizens. The Covid-19 crisis has revealed how much Europe depends on the rest of the world for products like medical goods and medicines. Therefore, if Europe does not want to live through another shortage of essential supplies, the lesson of the Covid-19 crisis is that the EU has to produce these products itself. This conclusion may sound intuitive but it is fundamentally wrong. Europe is not overly dependent on the rest of the world because most trade in the EU is done within its own borders. New evidence presented in this paper shows that there were only 112 products, making just 1.2% of the value of EU total imports, for which the four largest suppliers were non-EU countries as compared to more than two thousand products for which the four largest suppliers were from EU member states. And while not every product is equally important in the face of a global pandemic, there is not a single Covid-19 related good for which all EU imports only came from non-EU countries. This paper debunks the idea that the EU is too reliant on other countries. Instead, our analysis shows that imports from the rest of the world make every EU member state more resilient by diversifying its sources of supply. Because of their geographical location and economic integration, if there was to be a shock like a pandemic, a plague, or a nuclear disaster, groups of EU countries are likely to be hit simultaneously. Having sources of supply outside the EU is therefore critical to reduce Europe’s vulnerability to these shocks. Europe’s recent experience has shown that international trade is a strength, not a weakness, and the EU was blessed to be able to tap into the manufacturing capacity of the rest of the world to buy urgently needed medical goods from abroad during the hardest months of the pandemic. Preparing for future crisis like Covid-19 is extremely complex. Nobody knows which type of shock will come after Covid-19, which economic activities will be impacted, or what kind of goods will be needed to protect our citizens. Yet, any debate about the merits of re-shoring should be based on figures and not on narratives. This paper analyzes EU imports on more than 9,000 products and concludes that Europe should not build its resilience by the mandatory re-shoring of economic activities. That is the opposite of diversification. Besides, re-shoring will increase costs and hit citizens in the poorest countries the hardest. An economy that is served by multiple firms across multiple locations is more resilient to random shocks than one where goods are produced by fewer firms in the same location. While re-shoring may bring the illusion of control, in reality, the EU will be more vulnerable and dependent on fewer and larger companies. This is why globalization and the EU’s reliance on the rest of the world is what makes the EU more resilient.
Topic:
Globalization, International Political Economy, International Trade and Finance, and Economic Development
Political Geography:
Europe

69. Discrimination, Exclusion and Environmental Harm: Why EU Lawmakers Need to Ban Freight Transport Restrictions to Save the Single Market

Author:
Matthias Bauer
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU’s Mobility Package 1 legislative proposal was once intended to improve the working conditions of truck and small-van drivers in the EU. Initially, the European Commission also aimed at securing a smooth and non-discriminatory functioning of the Single Market. Some provisions of the current package may indeed have a positive impact on drivers’ working conditions, e.g. limits on working time and obligatory rest periods. However, over the past three years, the legislative procedure towards the current draft of the Mobility Package 1 was hijacked by the protectionist agenda of Western Europe’s haulage and logistics businesses. Spearheaded by the French government, some national governments and Members of the European Parliament called for tighter freight cabotage and return-to-home provisions to shield Western European transport markets against competition from other EU Member States. The proposed restrictions to cross-border trade in the European Single Market are up for a vote in the European Parliament in mid-2020. Learnings from the Covid-19 situation in the Single Market: In its response to Covid-19 border measures, the European Commission called on EU governments “to act immediately to temporarily suspend all types of road access restrictions in place in their territory (weekend bans, night bans, sectoral bans, etc.) for road freight transport and for the necessary free movement of transport workers.” These actions are step in the right direction and should continue even once the Covid-19 crisis is over, yet they are the exception not the rule in the EU. The rise of protectionist measures to Member States’ national transport markets vividly demonstrates the need to abolish freight cabotage restrictions in defence of the Single Market. For the sake of a greener, more inclusive and better functioning of the European Single Market, lawmakers need to abandon all existing restrictions on freight cabotage services in the EU27 and vote against new restrictions such as cooling-off periods and return-to-home policies. Maintaining legal restrictions on the freedom to provide transport services in the EU’s Single Market would increase tensions between economically less-developed countries in Central and Eastern Europe and more developed Western European countries – economically, mentally and politically. Discrimination on the basis of EU passport: Cabotage restrictions infringe upon the fundamental values stipulated in the Lisbon Treaty. Furthermore, data on transport flows and employment demonstrate that cabotage regulations disproportionately discriminate against Eastern European companies and citizens. Available data shows that Polish (4,574 enterprises), Romanian (1,864), Lithuanian (519), Hungarian (398), Slovakian (347), and Dutch (309) haulage companies are disproportionately affected by current EU-imposed cabotage restrictions. By contrast, only a very small number of French freight transport companies (an estimated number of 70 enterprises) directly depend on intra-EU cabotage services. In France, only about 800 workers employed in road freight transport services are directly affected by the restrictions. The numbers are substantially higher for other, particularly Central and Eastern European, countries: 20,100 persons in Poland, 9,800 in Romania, 6,300 in Lithuania, 3,400 in the Netherlands, 2,300 in Portugal, 2,200 in Hungary, and 2,100 in Germany. Exclusion from economic opportunity: Freight cabotage restrictions increase the administrative burden for internationally operating haulage companies across the EU. Industry assessments indicate that additional limitations on international freight transport services within Europe’s Single Market would raise the prices of transporting goods in Western Europe. Negative impacts are estimated for employment, wage growth and the process of economic convergence in Central and Eastern Europe. In addition to the EU’s existing freight cabotage restrictions, new limits on cross-border freight transport in the EU – such as EU law-imposed return-to-home trips and EU-mandated cooling-off periods – would deprive many Eastern European households of economic opportunities and impede the process of economic convergence and converging standards of living in the EU. Environmental harm: The return-to-home policies proposed in the latest Mobility Package 1 would require companies to send drivers back to operational centres or the driver’s place of residence. Return-to-home provisions would substantially increase the number of empty trailers on European roads. Accordingly, and adding to the adverse environmental impacts caused by existing freight cabotage restrictions, new EU-imposed return-to-home obligations would deteriorate Member States’ carbon emission footprints. The highest increases would take place in the EU’s major transit countries such as Germany, the Netherlands, Belgium and France. While this is recognised by the European Commission, the majority of the European Parliament’s Transport Committee is still pushing for such policies to be implemented as the EU law. How to save the EU’s fundamental values and the freedoms of the Single Market – lessons from aviation: In 1993, the EU completed the EU’s internal aviation market for passenger cabotage. Guided by the European Commission, EU lawmakers should follow the same rationale for freight cabotage services to render the Single Market more single and less discriminatory. In the process towards a real, more inclusive Single Market, EU lawmakers must abstain from catering Western European companies’ vested commercial interests, which stifle economic opportunity across the EU and stand in opposition to the EU’s fundamental principles for international trade and a competitive and social market economy.
Topic:
International Political Economy, International Trade and Finance, Law, European Union, Global Markets, Legislation, Shipping, and Protectionism
Political Geography:
Europe

70. Learning to Love Trade Again

Author:
Frank Lavin and Oscar Guinea
Publication Date:
06-2020
Content Type:
Research Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
We are at the moment, the first in seventy-five years, where there is no international consensus in support of trade. Indeed, trade is unloved, unsupported, and even unwanted. There is no shortage of topics in the rhetoric of trade complaints: from the rapid rise of China to Coronavirus as a metaphor for the evils of greater connectivity. Regardless of the validity of these complaints, none of them negate the central truth of trade: countries that engage in trade move ahead, and those that do not, stagnate. Our political leaders disagree. Anti-trade positions are held by leaders across the political spectrum, from Donald Trump to Bernie Sanders. And yet, the public is increasingly warm to the idea of trade. When Gallup asks Americans, “Do you see foreign trade more as an opportunity for economic growth through increased U.S. exports or a threat to the economy from foreign imports?” a record high of 79% see trade as an opportunity, with 18% viewing it as a threat. How did the world arrive at this moment where the benefits of trade are clearly evidenced while trade has become politically toxic? We identify four main factors: (i) U.S. absenteeism from the leadership role; (ii) detachment between trade and security architecture; (iii) no alternative leadership in Europe or elsewhere; and (iv) the cumbersome WTO process. Against this background we put forward five initiatives that will be big enough to count but unobjectionable enough to be adopted. The Big Three. The U.S., EU, and Japan, should establish a consultative body on trade to forge a new approach that allows trade to move ahead in the absence of universal consensus. No harm, no foul. Each of the Big Three should commit to zero tariffs on any item not produced in each particular market. A de minimis strategy. Tariffs should be eliminated on all products where the current tariff is less than 2%. At that level tariffs are simply a nuisance fee. Mind the social costs. Expand the Nairobi Protocols to include health products and green tech. Scrapping import tariffs on medical and green goods would not only encourage additional trade but will also provide health and environmental benefits. Harmonize down. The Big Three should commit that on every tariff line each of the three will be no worse than the next worse. In other words, each of the Big Three will agree to reduce its tariff on every product where it has the highest tariff of the three. These actions will spur the WTO, not undermine it. The measures we propose can be set up on a plurilateral basis that would allow other trading powers to participate. By breaking away from the tyranny of universal consensus, these actions will encourage the trading community – including the WTO – to get back in forward motion. In some respect, convergence between the Big Three is already happening. The EU and Japan signed an FTA that lowers import tariffs between these two economies, while the U.S. and Japan agreed to negotiate a comprehensive FTA. And if China is willing to step up? China should be welcomed into this group if it supports the four initiatives, changing the Big Three to the Big Four.
Topic:
International Political Economy, International Trade and Finance, Global Markets, Trade, and WTO
Political Geography:
United States, Japan, China, Europe, and Global Focus

71. The Role of Trade Policy in Promoting Sustainable Agriculture

Author:
Philipp Lamprecht and Fredrik Erixon
Publication Date:
01-2020
Content Type:
Research Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
There is now a long history of countries improving sustainability standards in most parts of the economy while at the same time pursuing the ambitions of rules-based international trade and economic integration with other countries. It is not surprising that countries at the vanguard of sustainability also tend to be the countries that are most open to trade. This Report looks closer at the interplay between the formulation of domestic standards and provisions in Free Trade Agreements that either acknowledge domestic standards or establish standards in a direct way. This interplay is crucial for two reasons: first to establish market access arrangements that help to promote sustainability standards, second to provide the policy basis to make standards and possible market access restrictions conducive to basic trade rules. It lays a focus particularly on the growing importance of sustainability standards in international trade agreements, or Free Trade Agreements (FTAs) – in particular for the food sector. Such standards are relevant for all new high-ambition Free Trade Agreements – from the EU-Japan Economic Partnership Agreement to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between eleven trans-pacific nations. The Report considers especially nine modern FTAs. The purpose of the Report is to investigate how governments with high sustainability ambitions approach the issue of trade and sustainability – in particular how they work with, on the one hand, specific provisions in FTAs and, on the other hand, the development of domestic standards and their linkage to trade. The Report also looks directly at how these standards are designed, and what lessons that can be learned for governments that want to raise sustainability ambitions. It puts the results of the analysis in the context of Norwegian ambitions to improve its sustainability standards for food placed on the Norwegian market. The analysis of how trade and sustainability have been made compatible starts with the rules of the World Trade Organisation (WTO). These rules are important in their own right, but they also carry political significance. WTO-rules form the basis of the bilateral free trade agreements that countries sign with each other – and that now make up the main plank of international trade negotiations. In the language of the WTO, basic trade rules serve to protect the principles of national treatment and non-discrimination. Sustainability policies that are grounded on solid evidence and that follow international scientific norms will be compatible with WTO rules. Sustainability policies that confer advantages to domestic producers or that are arbitrary will get a harsh treatment. Consequently, the bilateral free trade deals that the European Union or the European Free Trade Area (EFTA) have concluded with other parts of the world are not just compatible with WTO rules, they rely on these rules as the foundation stone. Moreover, these rules inform governments how they should organise their sustainability policy if they also want the opportunity to take part in modern trade agreements. If countries aren’t willing to play by these rules, they should also accept that they won’t be able to enjoy the benefits of trade agreements. What member countries of the WTO have agreed in past multilateral trade accords are not a blockage of sustainability policy, but they bar countries from pursuing such policies in a way that would lead to unequal application of trade rules – between home and foreign producers, or between different foreign producers. In addition, it is of interest – also to the Norwegian policy discussion – to consider how EU policies are likely to change in the forceable future. The analysis provides a discussion of issues that are likely to remain very high on the agenda of the next European Commission. These include possible improvements in the TSD Chapters of trade agreements in particular with regard to enforcement mechanisms, the engagement of civil society, and climate action. Further policy highlights include a possible introduction of a carbon border tax, as well as the discussions related to due diligence of supply chains, and multilateralism. In terms of conclusions, the Report identifies four main observations that should inform future policy development in Norway: First, there is clearly a case to be made for aligning Norwegian trade policy to EU trade policy when it comes to provisions on trade and sustainability in Free Trade Agreements. Second, there is a substantial body of scientific evidence, risk assessments and international experience of standards in areas that are related to sanitary and phyto-sanitary standards and to environmental standards which any government that want to raise sustainability standards can draw on. Third, many countries struggle to formulate their domestic sustainability standards in a structured way. Arguably, this is a critical point for governments that are considering to introduce higher standards with consequence for market access for foreign producers. To avoid confusion or accusation of standards being a disguised trade restrictions, countries like Norway would have to structure and systematise its standards if the ambitions were to be raised and formed part of market access policy. A first step for a policy that seeks to condition import on the compliance with a stand is to make the standard clear and explicit. Fourth, there are direct and indirect relations between domestic standards and provisions in FTAs. FTAs often deal with policies that cannot be directly formulated in a domestic standard, like some aspects of labour laws. They also deal with other forms of standards that need policy convergence in order to guarantee smooth trade between the contracting parties. Generally, it cannot be said that the EU or other entities use FTAs to “regulate” or to establish the standard. That rather happens bottom-up – through domestic regulations that later get reflected in trade agreements.
Topic:
International Political Economy, International Trade and Finance, Partnerships, Global Markets, Free Trade, Trade, and Sustainability
Political Geography:
Europe and Global Focus

72. The Investment Screening Regulation and its screening ground "security or public order": how the WTO law understanding undermines the Regulation's objectives

Author:
Jens Velten
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
The EU adopted Regulation 2019/452 (Regulation) as part of a more robust Common commercial policy to strengthen and defend its interests in a shifting global order. More concretely, the Regulation has two objectives: protecting domestic assets from harmful foreign investor interests, and equipping the EU with leverage to achieve more favourable treatment of EU investors abroad. Therefore, the Regulation provides Member States with an option to adopt foreign direct investment (FDI) screening mechanisms on the grounds of “security or public order”. However, the Regulation misses its objectives. The Regulation’s vague screening ground “security or public order” must be interpreted in accordance with WTO law. A detailed analysis finds that the relevant WTO notions of essential security interests and public order are rather narrow. The Regulation’s screening ground “security or public order” therefore only allows the screening of a few, high-profile cases of FDI. Such a narrow scope undermines the Regulation’s objectives.
Topic:
International Political Economy, International Trade and Finance, Foreign Direct Investment, and WTO
Political Geography:
Europe and European Union

73. The US and Russian Resource Rivalry in the Context of the Contemporary Venezuelan Crisis Perils of the Rentier Petro-State

Author:
Anurag Tripathi and Girisanker S.B.
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:
Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:
Venezuela continues to face rampant inflation, poverty and diseases pilling up in light of the US sanctions against PDVSA (Petroleos de Venezuela,S.A), the Venezuelan state-owned Oil Company. Despite the crisis, Russia continues to play a key role in supporting the regime of Nicolas Maduro and sustaining oil production in the country. The research focuses on the role played by Russia is helping the current regime to survive against the US sanctions and the vested interest it brings along with it. The outcome of the research is to find out the role played by Russian oil industries in shaping Russia’s Foreign Policy in Venezuela and to know whether Moscow has any leverage over the energy sector in Venezuela. The paper gives prime importance to the Venezuelan economy and the Geopolitics of oil. The research aims to give a whole new outlook in the field of International Relations by exploring the nuances of oil giants in shaping relations between countries.
Topic:
International Trade and Finance, Oil, Natural Resources, Hegemony, Gas, and Rivalry
Political Geography:
Russia, Europe, North America, and United States of America

74. The (Re)emergence of the BRICS and the Reorganization of Power in Contemporary Geopolitics

Author:
Charles Pennaforte and Ricardo Luigi
Publication Date:
07-2020
Content Type:
Journal Article
Journal:
AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:
Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:
The two first decades of the 21 st Century were marked by the recrudescence of two powerhouses, Russia and China. Given their important role on global geopolitics, these two countries took advantage of the gaps resulted from yet another crisis on the structure of global capitalism, which influenced the relative decline of the United States capacity to impose its will on the international system as they had been able to do so since the end of World War II. This article’s objective is to analyze the global geopolitical rearrangement due to a weakened United States which opened the possibility for the BRICS nations to emerge as possible sources of power. To reinforce this analysis, the world-systems perspective, (here on referred to as WSP) elaborated mainly by Immanuel Wallerstein and Giovanni Arrighi is used, as well as a geopolitical approach to provide a link to international relations theories. Therefore, this paper is divided on to four sections. The first one interrelates the geopolitical theories and those of the WSP. The second section is guided towards understanding the origins and fundamentals of the WSP. On the third section, an approach is made towards the motivations and the effects of the rearrangement of power on the world’s geopolitics. Finally, on the last section, the roles and opportunities that have arisen from the emergence of the BRICS nations on the international system are presented.
Topic:
Development, International Trade and Finance, Geopolitics, and Capitalism
Political Geography:
Africa, Russia, China, Europe, India, Asia, South Africa, Brazil, and South America

75. Non-tariff Trade Policy Analysis: An Ex-post Assessment of the EU-Korea Agreement

Author:
Julia Grübler and Oliver Reiter
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Many different approaches have developed for the evaluation of non-tariff measures (NTMs) and free trade agreements (FTAs). Moving on from models using simple dummy variables, today a range of databases can capture different aspects of NTMs and FTAs. Some assess the depth of FTAs by extracting information from legal texts. Other data sources are based on surveys, on complaints by trading partners at the World Trade Organization (WTO) or notifications by companies or countries. This paper uses a gravity model to assess the value added of information on FTAs and NTMs by evaluating ex-post their ability to predict the trade effects of the EU-South Korea Free Trade Agreement, the first ‘second-generation’ FTA of the EU, applied since 2011. Our results show that, when accounting for information on the FTA components, no extra trade effect is attributable to the EU-South Korea FTA. The message from the evolution of NTMs differs considerably according to the indicator used, but trade predictions are hardly affected. On the aggregate country level, provisions on investments exhibit a particularly strong positive effect, while regulations on intellectual property rights seem to hamper bilateral trade. Most specifications, furthermore, point to a negative effect of differences in the number of technical barriers to trade (TBT) applied and sanitary and phytosanitary measures (SPS) against which trading partners issued complaints at the WTO.
Topic:
International Trade and Finance, European Union, Free Trade, WTO, and Non-Tariff Measures
Political Geography:
Europe and South Korea

76. Estimating Demand Spillovers of EU Cohesion Policy Using European Regional Input-Output Tables

Author:
Roman Römisch
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper develops a simple method to consistently break down world input-output tables to regional input-output tables. They are used to estimate Cohesion Policy-induced demand spillovers in the EU, covering the years 2007-2018. Results indicate that Cohesion spillovers from less developed regions to other regions exceed 40% of their initial EU support in some cases. In addition, spillovers from the more developed regions are equivalent to 24% of their initial EU support. This shows that the existing trade and investment linkages across the EU regions are strong and not only run from less developed to more developed regions but also vice versa. Our results are good news for the net paying regions in the EU. Taking into account capacity growth effects, Cohesion Policy spillovers might well be a multiple of the pure demand spillovers estimated in this paper. Thus, for net paying regions, Cohesion Policy is not only an act of European solidarity but also a rational long-run economic growth policy.
Topic:
Economics, International Political Economy, International Trade and Finance, European Union, Investment, and Economic Cooperation
Political Geography:
Europe

77. Greater than the Sum of its Parts?: How does Austria Profit from a Widening Network of EU Free Trade Agreements?

Author:
Julia Grübler and Oliver Reiter
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Political debates and economic analyses often focus on single free trade agreements and their potential economic effects on participating trading partners. This study contributes to the literature by shedding light on the significance of trade agreements in the context of countries’ positions in worldwide trade agreement networks, by combining network theory with gravity trade modelling. We illustrate, both numerically and graphically, the evolution of the global web of trade agreements in general, and the network of the European Union specifically, accounting for the geographical and temporal change in the depth of agreements implemented. Gravity estimations for the period 1995-2017 distinguish the direct bilateral effects of trade agreements from indirect effects attributable to the scope of trade networks and countries’ positions therein.
Topic:
Economics, International Political Economy, International Trade and Finance, Treaties and Agreements, Profit, and Models
Political Geography:
Europe and Austria

78. Does Asymmetric Nonlinear Approach Explain the Relationship Between Exchange Rate and Trade of Iran?

Author:
Mahdi Ghodsi, Mohammad Sharif Karimi, and Robert Stehrer
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Until 2012, the Central Bank of Iran (CBI) used its policy rate to stabilise the rial’s exchange rate and, given a persistent current-account surplus, had accumulated sizeable currency reserves. In 2012, however, international sanctions against Iran intensified and the value of the rial halved against the US dollar. Since then Iran has followed a dual interest rate policy, with both a market rate and an official rate applied by the CBI to major imports. In recent years, as sanctions have cut access to foreign reserves, the gap between the two rates has widened substantially. Given these important changes in the exchange rate regime, this paper investigates the impact of the real exchange rate on the trade balance in Iran over the period 1997-2017. For this purpose, an asymmetric model is used, as the speed of the effects of changes in the exchange rate can be asymmetric. The results of the nonlinear autoregressive distributed lag model (NARDL) indicate that this is indeed the case. Results are generally consistent with the Marshall-Lerner condition: an exchange rate depreciation improves the trade balance, whereas an appreciation worsens it. However, the trade balance reacts more strongly in the short run to depreciations of the rial than to appreciations. Although the government could easily improve the trade balance in the short run through currency depreciation, policymakers should in the longer run promote non-oil exports to reduce dependency on oil and to diversify the economy.
Topic:
Economics, International Political Economy, International Trade and Finance, Exchange Rate Policy, Central Bank, and Models
Political Geography:
Europe and Iran

79. Refugees’ Integration into the Austrian Labour Market: Dynamics of Occupational Mobility and Job-Skills Mismatch

Author:
Mahdi Ghodsi and Robert Stehrer
Publication Date:
10-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Eight multilateral rounds of negotiations under the General Agreement on Tariffs and Trade (GATT) and international agreements under the World Trade Organisation (WTO) have contributed significantly to the reduction of tariffs among WTO members. However, over the years legitimate reasons for the imposition of non-tariff measures (NTMs) within regulations have triggered their extensive use. Among these measures, technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures allow countries to impose restrictions on the import of low-quality products suspected of harming domestic consumers’ health, plant life or the environment. Such trade policy instruments may lead to higher standards in the import market, in addition to improving market efficiency through information requirements such as mandatory labelling. This paper analyses two types of regulative and standard-like NTMs – TBTs and SPS measures – and the quality improvement of traded products that is driven by their imposition, which might be a general underlying motive for the adoption of such regulations. Based on a model framework involving both the supply and the demand side of trade and using four types of measures of these NTMs, this paper assesses the impact of TBTs and SPS measures on the quality of traded products. A dummy variable measuring the existence of these NTMs and a count variable indicating their stringency are used in the analysis. Moreover, two other variables indicate flows of NTMs imposed in each year and stocks of these NTMs accumulated over years. The results indicate that TBTs and SPS measures do indeed imply a higher quality of traded products, which is also consistent with the model when NTMs enter as a specific trade cost. Stringent TBTs with more regulations imposed in each year (i.e. flows of count TBTs) have the largest impact on the quality of traded products. However, for SPS measures only the existence of a regulation (i.e. the dummy variable on flows of SPS measures) on a traded product has the strongest impact on its quality.
Topic:
Economics, International Political Economy, International Trade and Finance, WTO, Non-Tariff Measures, and GATT
Political Geography:
Europe and Global Focus

80. Primary Dealer Systems in the European Union

Author:
Jenny Preunkert
Publication Date:
06-2020
Content Type:
Research Paper
Institution:
Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo)
Abstract:
States require money to function and therefore every government has to continuously raise new funds. On the financial markets, governments cannot be sure that auctions of their debt will be sufficiently attractive to financial investors, which is why governments usually enter into cooperative agreements with selected banks. The best known and most widespread form of cooperation is the primary dealer system. Primary dealers are banks that agree to participate regularly in government debt auctions and to act as formalized market makers on government debt markets. The article analyzes European primary dealer systems and asks why banks are willing to participate in these systems. I will show that both domestic and foreign banks use their status as primary dealers to build long-term relationships with one or more European governments and to gain an advantage on the global stage. In Bourdieu’s terms, primary dealer banks use their financial capital to accumulate social and symbolic capital.
Topic:
Debt, Economics, International Political Economy, International Trade and Finance, Financial Markets, Banks, and Macroeconomics
Political Geography:
Europe and European Union