Search

Begin New Search Topic Trade Political Geography European Union Publication Year within 10 Years

1. To Regulate, or Not to Regulate? Subsidies for Foreign Enterprises, Climate Change, and Currency Undervaluation

Author:
Cheon-Kee Lee, Min Ji Kang, and Minjoo Kim
Publication Date:
06-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In response to today’s rapidly changing global trade environment, countries have continued to make changes to their policy objectives and instruments to address new and emerging issues such as supply chain restructuring and reshoring, climate change, and currency undervaluation. To this end subsidies have been playing a particularly important role, and are expected to be used more broadly across different sectors in the coming years. While controversies over government subsidization are likely to continue at the international level, the United States and the European Union have proposed at the domestic level to expand the scope of subsidy regulation and to tighten regulation on newly emerging subsidy types beyond the traditional boundaries set by international trade rules. Among a number of the latest developments on subsidy regulation, this Brief intends to primarily focus on (i) transnational subsidies granted by a government to enterprises active in other foreign countries (“foreign subsidies”); (ii) green subsidies for climate change mitigation; and (iii) subsidies related to currency undervaluation.
Topic:
Climate Change, Business, Currency, Trade, and Subsidies
Political Geography:
Europe, North America, United States of America, and European Union

2. Trade Liberalization along the Firm Size Distribution: The Case of the EU-South Korea FTA

Author:
Sonali Chowdhry and Gabriel Felbermayr
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In 2011, the EU-South Korea Free Trade Agreement (EUKFTA) entered into force. With its focus on non-tariff barriers (NTBs), it is a leading example of a deep new generation agreement. Using detailed French customs data for the period 2000 to 2016, we investigate how exporters of different size have gained from the agreement. Applying a diff-in-diff strategy that makes use of the rich dimensionality of the data, we find that firms with larger pre-FTA sizes benefit more from the FTA than firms at the lower end of the size distribution, both at the extensive (product) and the intensive margins of trade. The latter finding is in surprising contrast to leading theories of firm-level behavior. Moreover, we find that our main result is driven by NTB reductions rather than tariff cuts. In shedding light on the distributional effects of trade agreements within exporters, our findings highlight the need for effective SME-chapters in FTAs.
Topic:
Economics, International Political Economy, Treaties and Agreements, Tariffs, and Trade
Political Geography:
Europe, South Korea, and European Union

3. The Trade Effects of the Economic Partnership Agreements between the European Union and the African, Caribbean and Pacific Group of States: Early Empirical Insights from Panel Data

Author:
Frederik Stender, Axel Berger, Clara Brandi, and Jakob Schwab
Publication Date:
01-2020
Content Type:
Special Report
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This study provides early ex-post empirical evidence on the effects of provisionally applied Economic Partnership Agreements (EPAs) on two-way trade flows between the European Union (EU) and the African, Caribbean and Pacific Group of States (ACP). Employing the gravity model of trade, we do not find a general EPA effect on total exports from ACP countries to the EU nor on total exports from the EU to ACP countries. We do, however, find heterogeneous effects when focusing on specific agreements and economic sectors. While the agreement between the EU and the Caribbean Forum (CARIFORUM), which concluded several years ahead of the other EPAs in 2008, if anything, reduced imports from the EU overall, the provisional application of the other EPAs seems to have at least partly led to increased imports from the EU to some partner countries. More specifically, the estimation results suggest an increase in the total imports from the EU only in the Southern Africa Development Community (SADC) EPA partner countries. On the sectoral level, by comparison, we find increases in the EU’s agricultural exports to SADC, Eastern and Southern Africa (ESA) and the Pacific. Lastly, in the area of manufactures trade, we find decreases of exports of the ESA and SADC countries to the EU, but increases in imports from the EU into SADC countries. While this early assessment of the EPA effects merits attention given the importance of monitoring future implications of these agreements, it is still too early for a final verdict on the EPAs’ effects and future research is needed to investigate the mid- and long-term consequences of these agreements.
Topic:
International Relations, Development, International Cooperation, Regional Cooperation, Treaties and Agreements, Manufacturing, and Trade
Political Geography:
Africa, Europe, South Africa, Caribbean, Asia-Pacific, and European Union

4. Between God and the Sugar Dates: Lessons for a "Geopolitical" EU from the US–Iran Crisis

Author:
Tommaso Emiliani
Publication Date:
04-2020
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
The killing of top Iranian General Qasem Soleimani by a US drone strike on 3 January 2020, followed by the Iranian retaliation on US military bases in Iraq, left many Europeans wondering how – if at all – the European Union can foster de-escalation in the Middle East. The EU is presently stuck between a deepening strategic rift with its US ally and its inability to advance its independent interests and policies vis-à-vis Iran. It is now clear that Europe cannot protect its relations with Washington while also salvaging the Joint Comprehensive Plan of Action (JCPOA), or Iranian nuclear deal. Borrowing from an old Persian proverb, Europe cannot have both God and the sugar dates.
Topic:
Sanctions, Military Affairs, Trade, Transatlantic Relations, and Coronavirus
Political Geography:
Europe, Iran, Middle East, United States of America, European Union, and Gulf Nations

5. The Impact of Sanctions Imposed by the European Union against Iran on their Bilateral Trade: General versus Targeted Sanctions

Author:
Mahdi Ghodsi and Hüseyin Karamelikli
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Economic sanctions are intensively used by international institutions to enforce political objectives. Since 2006 the EU has been implementing general sanctions against the whole economy of Iran, affecting their trade relations. Since 2007, and following the imposition of sanctions by the UN Security Council, the EU has also implemented smart sanctions targeting Iranian entities and natural persons associated with its military activities. In a non-linear autoregressive distributed lag (NARDL), this paper investigates the impact of general and targeted EU sanctions against Iran on quarterly bilateral trade values between the 19 members of the euro area (EA19) and Iran between the first quarter of 1999 and the fourth quarter of 2018. The results indicate that general sanctions have strongly hampered trade flows between the two trading partners. The impact of general sanctions on the total imports of the EA19 from Iran is more than four times stronger than on the total exports of the EA19 to Iran. Moreover, the EU’s general sanctions have hampered trade in almost all sectors, except for the primary sectors. Furthermore, our study finds that the impact of smart sanctions targeting Iranian entities and natural persons is much smaller than the impact of general sanctions on total trade values and the trade values of many sectors. Smart sanctions affect the exports of most sectors from the EA19 to Iran, while they are statistically insignificant for the imports of many sectors from Iran. Thus, this paper provides evidence on the motivations behind smart sanctions, which target specific individuals and entities rather than the whole economy, unlike general sanctions, which have a negative impact on ordinary people.
Topic:
United Nations, Sanctions, Trade, and Trade Policy
Political Geography:
Europe, Iran, United Nations, and European Union

6. The Future of (Negative) Emissions Trading in the European Union

Author:
Wilfried Rickels, Alexander Proelß, Oliver Geden, Julian Burhenne, and Mathias Fridahl
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Under the European Union Emissions Trading System (EU ETS), operators must surrender allowances corresponding to the emissions of greenhouse gases (GHG) from their installations. The supply of allowances in the EU ETS decreases linearly and, all else equal, is expected to end around 2057. An earlier cut-off date is likely to follow from the European Council’s recent decision that the EU should reach net-zero GHG emissions by 2050. Scenarios published by the European Commission even anticipate a net-negative cap in the EU ETS from 2045 onwards, generated through carbon dioxide (CO2) removals. Upholding emissions trading, in the long run, therefore entails significant use of credits resulting from atmospheric CO2 removal activities. However, in its current form, the ETS Directive does not contain any legal basis for generating CO2 removal credits. Integrating CO2 removal into the EU ETS would, thus, require fundamental amendments of the ETS Directive, waiving the currently mandatory association binding emitting activities to the adoption of emission abatement technologies. The next policy window for such amendments will open in 2021, following the decision on a more ambitious EU 2030 emission reduction target. This conceptual paper explores various design options for integrating negative emissions technologies (NETs) into the EU ETS. We discuss their potential implications for emissions trading at large and address the specificity of bioenergy with carbon capture and storage (BECCS); repealing the provision that installations exclusively using biomass are not covered by the ETS Directive, BE(CCS) installations could in principle fall within the scope of the ETS Directive. Theoretically, it would be possible to consider free allocation of biogenic credits to BE(CCS) installations. Bioenergy operators could avoid having to surrender these biogenic allowances through the use of CCS and instead sell them on the EU ETS market, having implicitly received credits for the removal of CO2 from the atmosphere.
Topic:
Climate Change, Green Technology, Trade, and Carbon Emissions
Political Geography:
European Union

7. Comparative Advantage in (Non-)Routine Production

Author:
Liza Archanskaia, Johannes Van Biesebroeck, and Gerald Willmann
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
We illustrate a new source of comparative advantage that is generated by countries’ different ability to adjust to technological change. Our model introduces substitution of workers in codifiable (routine) tasks with more efficient machines, a process extensively documented in the labor literature, into a canonical 2 × 2 × 2 Heckscher-Ohlin model. Our key hypothesis is that labor reallocation across tasks is subject to frictions, the importance of which varies by country. The arrival of capital-augmenting innovations triggers the movement of workers out of routine tasks, and countries with low labor market frictions become relatively abundant in non-routine labor. In the new equilibrium, more flexible countries specialize in producing goods that use non-routine labor more intensively. We document empirically that the ranking of countries with respect to the routine intensity of their exports is strongly related to labor market institutions and to cultural norms that influence adjustment to technological change, such as risk aversion or long-term orientation. The explanatory power of this mechanism for trade flows is especially strong for intra-EU trade.
Topic:
International Political Economy, Science and Technology, Innovation, Trade, and Trade Policy
Political Geography:
Global Focus and European Union

8. The Impact of the State on the Quality of an Economic System: A Cross-Country Analysis

Author:
Maciej Bałtowski and Piotr Kozarzewski
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Center for Social and Economic Research - CASE
Abstract:
The paper discusses the role of the state in shaping an economic system which is, in line with the welfare economics approach, capable of performing socially important functions and achieving socially desirable results. We describe this system through a set of indexes: the IHDI, the World Happiness Index, and the Satisfaction of Life index. The characteris-tics of the state are analyzed using a set of variables which describe both the quantitative (government size, various types of governmental expenditures, and regulatory burden) and qualitative (institutional setup and property rights protection) aspects of its functioning. The study examines the “old” and “new” member states of the European Union, the post-communist countries of Eastern Europe and Asia, and the economies of Latin America. The main conclusion of the research is that the institutional quality of the state seems to be the most important for creation of a socially effective economic system, while the level of state interventionism plays, at most, a secondary and often negligible role. Geographical differentiation is also discovered, as well as the lack of a direct correlation between the characteristics of an economic system and the subjective feeling of well-being. These re-sults may corroborate the neo-institutionalist hypothesis that noneconomic factors, such as historical, institutional, cultural, and even genetic factors, may play an important role in making the economic system capable to perform its tasks; this remains an area for future research.
Topic:
Demographics, Economy, Economic Growth, State, Economic Policy, Institutions, Trade, and Welfare
Political Geography:
Europe, Eastern Europe, Asia, Latin America, and European Union

9. WTO'ing a Resolution to the China Subsidy Problem

Author:
Chad P. Bown and Jennifer A. Hillman
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The United States, the European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It first provides a brief history of subsidy disciplines in the General Agreement on Tariffs and Trade and the World Trade Organization (WTO) predating any concerns introduced by China. It then describes contemporary economic problems with China’s approach to subsidies, their impact, and the apparent ineffectiveness of the WTO’s Agreement on Subsidies and Countervailing Measures to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems—in a manner analogous to how the Organization for Economic Cooperation and Development took on agricultural subsidies in the 1980s—before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.
Topic:
Economics, World Trade Organization, Tariffs, and Trade
Political Geography:
Japan, Europe, Asia, North America, United States of America, and European Union

10. Strengthening European Commercial Diplomacy: Prospects and Challenges

Author:
Andrea Maccanico
Publication Date:
12-2018
Content Type:
Commentary and Analysis
Institution:
Istituto Affari Internazionali
Abstract:
The EU is involved in economic diplomacy since the establishment of the Single Market and the ensuing negotiations for trade and economic partnership agreements conducted by the EU’s Directorate-General for Trade (DG Trade) for all EU member states (MSs). European economic diplomacy (EED) is a new EU venture that aims to improve the coordination between EU institutions and MSs in an effort to enhance their economic and trade relations and strengthen their ability to compete with major countries such as the US, China and Russia.
Topic:
International Political Economy, International Trade and Finance, Politics, Governance, Institutions, and Trade
Political Geography:
Europe and European Union