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1. Mitigating Global Fragmentation in Digital Trade Governance: A Case Study

Author:
Douglas Lippoldt
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Digital trade is growing rapidly, and regulators are trying to keep up. Concerns about privacy, consumer protection and national security demand regulatory attention, but too much regulation risks stifling digital trade. Current-generation trade agreements need to find the right balance between regulatory and liberal approaches to e-commerce. This paper looks at how five leading digital economies (Canada, the European Union, Japan, Singapore and the United States) are using regional trade agreements to address concerns while enhancing trade.
Topic:
Economics, International Cooperation, International Trade and Finance, Governance, and Digitalization
Political Geography:
Global Focus

2. Can the World Trade Organization be saved? Should it?

Author:
Alan Wm. Wolff
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Heads of state, trade ministers, and academics have repeatedly called for reforming the World Trade Organization (WTO), the institution charged with the stewardship of the global trading system. The durability and worth of the WTO are being increasingly questioned despite the fact that by almost all objective measures, it has been a great success, with world trade growing much faster than global GDP over the last 75 years. However, past success does not guarantee future performance. This Policy Brief examines the institution’s most serious defects and the multitude of challenges it faces. It suggests the institution needs to evolve to reach broad-based international trade agreements, adding much needed new rules to the world trade rulebook and developing effective means to settle disputes that would render the rules of the system enforceable once again.
Topic:
Economics, International Trade and Finance, Treaties and Agreements, and World Trade Organization
Political Geography:
Global Focus

3. Saving the WTO from the national security exception

Author:
Warren Maruyama and Alan Wm. Wolff
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
For any member of the World Trade Organization (WTO) not making alternative arrangements, enforceability of the rules of the global trading system, a distinguishing feature of the WTO, ceased to exist on December 11, 2019, because the United States blocked appointments to the Appellate Body of the WTO dispute settlement mechanism. A major obstacle to the United States accepting any resolution of this impasse—thus permitting dispute settlement to once again be binding on all WTO members—is settling the issue of whether claims of national security to legitimize trade measures are reviewable. This is a red line for the United States, which argues this claim is nonreviewable. In the emerging area of great power competition, the United States is unlikely to accept a return to fully effective WTO dispute settlement absent a compromise that finds determinations of national security nonjusticiable. This paper offers a compromise: There would be no adjudication of whether a trade measure was justified under the WTO’s national security exception, but those WTO members adversely affected would have an immediate right to rebalance trade concessions themselves by imposing retaliatory trade measures against the WTO member invoking the exception.
Topic:
Economics, International Trade and Finance, National Security, and World Trade Organization
Political Geography:
Global Focus

4. Regulatory Convergence within Technical Barriers to Trade

Author:
Mahdi Ghodsi
Publication Date:
09-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper analyses how regulatory convergence in different categories of technical barriers to trade (TBTs) imposed on imports of goods in information and communications technology (ICT) globally affected the values, volumes, and unit values of imported goods during the period 1996-2019. Keywords cited in TBTs that are notified to the World Trade Organization (WTO) give an indication of the regulatory objectives behind the imposition of TBTs. MAST also classifies TBTs based on their applicability, procedural and administrative uses, factors which will also be taken into consideration in the analysis. However, objectives of TBTs may provide better insights to policymakers. TBTs are non-discriminatory measures that are imposed unilaterally on all trading partners and on domestic producers. It is not feasible to analyse unilateral TBTs in a gravity setting, as they are excluded by the introduction of country-product-time fixed effects that control for multilateral resistances. However, regulatory convergence in TBT categories is a bilateral time-varying variable that is analysed in a gravity model in this paper. The empirical results suggest that regulatory convergence between trading partners in some TBT categories stimulates import values and volumes. However, the impact is very heterogeneous across TBT objectives and classes and across ICT product categories.
Topic:
International Trade and Finance, Communications, World Trade Organization, Foreign Direct Investment, Regulation, Information Technology, and Competition
Political Geography:
Global Focus

5. Export impact on dividend policy for big Colombian exporting firms, 2006–2014

Author:
Federico Merchan
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper studies the impact of exogenous export demand shocks on firms’ dividend policy using firm specific real exchange rate variation as instrumental variable. IV exclusion restriction is plausibly satisfied because real exchange rate shocks were unanticipated -partly explained because of international oil price fluctuation-, and first stage results confirm relevance condition fulfillment. The results indicate that big private Colombian exporting firms decree dividends as a way to mitigate the agency cost generated by exogeneous exports variation via higher free cash flow and cash flow volatility, especially in poor managerial quality firms. Evidence supports agency cost theory and denies signaling.
Topic:
Development, Emerging Markets, Globalization, International Trade and Finance, and Exports
Political Geography:
Global Focus

6. Impact of the Regional Comprehensive Economic Partnership (RCEP): A Global Computable General Equilibrium (CGE) Simulation

Author:
Ken Itakura
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study estimates the potential economic effects of the Regional Comprehensive Economic Partnership (RCEP) by using a recursively dynamic computable general equilibrium (CGE) model, which incorporates the global supply chains (GSCs) structure, also referred as the global value chains (GVCs). The tariff reduction schedules for the RCEP agreement are incorporated in addition to other large FTAs, such as the CPTPP. Second, the structure of GSCs is included in the CGE model to take into account the importance of trade in intermediate goods and services. This study implements the RCEP simulation scenarios for tariff reductions, services trade liberalization, logistic improvements, and investment commitments. Results show that the real GDP of RCEP members increases by $675 billion in total, of which ASEAN grows by $160 billion
Topic:
Economics, International Trade and Finance, Tariffs, and Supply Chains
Political Geography:
Global Focus

7. Multilateral Trade Arrangements and Climate Provisions

Author:
Emily Benson, Sparsha Janardhan, and William Alan Reinsch
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
This new paper from the CSIS Scholl Chair in International Business assesses sectoral standards bodies, evaluates environmental provisions in trade agreements, and explores opportunities for addressing climate concerns in newer trade arrangements, such as the recent announcement to negotiate a deal on green steel and aluminum between the European Union and the United States. As this paper seeks to demonstrate, binding agreements with clear enforcement mechanisms are best suited for ensuring that parties meet their climate change obligations as outlined in various bilateral or multilateral agreements. Since concluding agreements that are both binding and have clear enforcement capabilities are not always possible or politically desirable, pursuing a mixed approach—one based on best practices from a diverse set of trade architectures—may be the most viable approach that produces the most tangible outcomes. This paper evaluates climate provisions in trade architectures and makes recommendations for including climate provisions, including sectoral standards, in trade arrangements in a way that encourages increased multilateral collaboration in a WTO-compliant manner.
Topic:
Climate Change, International Cooperation, International Trade and Finance, and Multilateralism
Political Geography:
Global Focus

8. Convergence and Divergence: Multilateral Trade and Climate Agendas

Author:
William Alan Reinsch and Emily Benson
Publication Date:
03-2022
Content Type:
Special Report
Institution:
Center for Strategic and International Studies
Abstract:
If the international community wants to make meaningful progress ahead of the 2030 deadline—which critics argue is still too late to avert global catastrophe—major global players should work together to reduce emissions at home and abroad. This paper discusses the politics of climate policy in the United States and how it is influenced by relationships with the European Union and China. It analyzes these international relationships through specific policies, namely subsidies, and assesses their reduction or removal in some cases and their reallocations in others. It also evaluates the politics and policy implications of carbon border adjustments, including their compliance with existing WTO rules. These trade policies allude to domestic industrial policies and how they can be adjusted to better combat climate change while complying with existing trade rules. In outlining policy options for the United States’ trade agenda, including how the European Union and China factor into these options, the paper assesses the probability that certain climate policies will ultimately materialize. The paper argues that unilateralism is insufficient and counterproductive in both trade and climate and that only through multilateral, legally compliant policy convergence can countries stave off environmental and economic collapse.
Topic:
Climate Change, Environment, International Trade and Finance, Multilateral Relations, and Multilateralism
Political Geography:
Global Focus

9. Measuring illicit financial flows: A gravity model approach to estimate international trade misinvoicing

Author:
Lourenço S. Paz
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Illicit financial flows have recently attracted the attention of academia, practitioners, and multilateral organizations who consider them harmful to economic development. Some observers suggest that many of these flows occur via the misinvoicing of international trade transactions. This study develops a novel methodology based on the gravity model of international trade to estimate illicit financial flows using publicly available product-level international trade data. It contributes to the literature by estimating product-level transportation and insurance costs and providing, for the first time, an estimation for all countries of an upper bound of the values of export and of import over- and under-misinvoicing separately, without resorting to assumptions about trade statistics reliability. Application of the methodology is illustrated using six-digit product-level UN Comtrade data for 2013–16. The results indicate that misinvoicing is not confined to a few products or countries but is a widespread phenomenon that deserves future research.
Topic:
International Trade and Finance, Transportation, Illicit Financial Flows, and Misinvoicing
Political Geography:
Global Focus

10. The Strategic Implications of the Tashkent Conference

Author:
Urs Unkauf
Publication Date:
01-2022
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
This essay is devoted to a consideration of a matter of fundamental geopolitical importance that has gone largely unnoticed in the West, to its detriment. The trigger event, so to speak, was a remarkable conference that took place not in Washington, Brussels, or Moscow—but in Tashkent. On 15‑16 July 2021, Uzbekistan’s capital hosted delegations from nearly 50 countries, among them China, Russia, India, Turkey, Azerbaijan, and all the Central Asia countries, at the level of foreign ministers or above. To understand the issues at play and the consequences thereof, we will need to spend some time discussing what actually took place during the conference itself, which was entitled “Central and South Asia: Regional Connectivity: Challenges and Opportunities.” In addition to relating the explicit agenda of the conference, we will also examine its broader agenda (whether intended or not) and conclude with an examination of its potentially far‑reaching geostrategic implications. The Tashkent conference was geared not only to government officials, but also towards leading scholars, experts, and media representatives from all over the world who follow developments in at least one of these two regions. In his opening address, Uzbekistan’s President Shavkat Mirziyoyev affirmed his country’s readiness to take up new leadership responsibilities in the region, which aligns with the domestic economic and social reform agenda he launched upon coming to power following the death of his predecessor, Islam Karimov, in September The Strategic Implications of the Tashkent Conference 2016. The host’s speech was followed by opening statements from Afghanistan’s President Ashraf Ghani and Pakistan’s Prime Minister Imran Khan, whose delegations also exchanged informal views during the conference. Here a somewhat digressive remark is in order. When the conference was in its planning stage, the fall of the Ghani government in Afghanistan had not been anticipated. Still, one of the conference’s working group sessions was devoted to the devolving situation in Afghanistan. By that stage, the conference’s more astute participants were seeing the writing on the wall. Those who could not, of course, came to their senses less than a month later. Either way, the Taliban’s takeover of the country has put both Central and South Asia more firmly on the international geopolitical agenda— the recent events in Kazakhstan, which began as this issue of Baku Dialogues was being finalized, have also played a role in drawing attention back to the Silk Road region. But to come back to Mirziyoyev’s opening address. In the context of announcing a new, open foreign policy strategy for the country, Uzbekistan’s President made it clear that his country is centrally focused on strengthening regional connectivity. His announcement stressed that the focus would be on further deepening economic and cultural cooperation between Central Asia and South Asia—two regions that are linked historically as well as economically yet have not so far been able to transform this inherited potential towards proper policymaking in recent years. The Tashkent conference was advertised as being about enhancing regional interconnectivity, trade, and cooperation between Central Asia and South Asia—as well as presenting the host country’s new cross‑regional foreign policy strategy. But as Edward Lemon wrote in the Fall 2021 edition of Baku Dialogues, the conference also served to demonstrate that the emerging regionalism—a topic raised by the concerning countries themselves and not from outside—will be a leitmotif for future geostrategic developments in the Silk Road region.
Topic:
Diplomacy, International Trade and Finance, Infrastructure, Geopolitics, and Silk Road
Political Geography:
Global Focus

11. The Role of Storage in Commodity Markets: Indirect Inference Based on Grains Data

Author:
Christophe Gouel and Nicolas Legrand
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Understanding commodity prices dynamics is of crucial importance for assessing the persistence of cost-push costs or for countries dependent on commodity exports. Unfortunately, despite decades of research, the workhorse theoretical model in the field, the rational expectations storage model, is yet to be empirically validated. This paper provides the first full empirical test of the storage model. We first build a new storage model featuring a supply response, long-run demand and cost trends, and four structural shocks. We then develop a flexible empirical approach which relies on the indirect inference method and exploits the joint dynamics of prices and quantities unlike previous estimations which only use price information. The information contained in quantities is essential to relax restrictive identifying assumptions and empirically assess the overall consistency of the model's new features. Finally, we carry out a structural estimation on the aggregate index of the world most important staple food products: maize, rice, soybeans, and wheat. The results show that our extended storage model is consistent with most of the moments in the data, including the high price autocorrelation of which up to 42% can be explained by the transfer of inventories over time. They also show that, although for these commodities supply shocks are the main drivers of market dynamics, over the past 60 years all price spikes have been associated with large positive demand shocks.
Topic:
Agriculture, International Trade and Finance, Commodities, and Price
Political Geography:
Global Focus

12. The Culture-Promotion Effect of Multinationals on Trade: the IKEA case

Author:
Dylan Bourny, Daniel Mirza, and Jamel Saadaoui
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
In this paper, we investigate how some MNEs which spread their home culture over time and space to the rest of the world are affecting, in turn, trade flows from home. By selling products embodying cultural information related to their country of origin, those MNEs embrace the role of ambassadors of their home country. We argue that IKEA offers an ideal case to identify a multinational's culture-promotion effect on trade. We build a dataset on IKEA's presence in foreign markets between 1995 and 2015 and merge it with disaggregated product level trade between pairs of countries. We find solid evidence of an externality linked to IKEA: a setting of an IKEA new store in a destination increases trade flows by around 2% from Sweden for products that resemble to what the multinational offers (despite being completely unrelated to that multinational). This result is driven primarily by the products identified to encompass a high-cultural content. Other robustness checks and tests seem to be very much consistent with the hypothesis of IKEA promoting the Swedish culture to the world.
Topic:
Globalization, International Trade and Finance, Culture, and Multinational Corporations
Political Geography:
Global Focus

13. CONTAINMENT 2.0: SANCTIONS FOR THE LONG HAUL

Author:
David A. Lake
Publication Date:
03-2022
Content Type:
Commentary and Analysis
Institution:
Political Violence @ A Glance
Abstract:
The West is not imposing coercive sanctions on Russia to stop its current aggression. No one seriously expects that the sanctions will cause President Putin to withdraw from Ukraine. NATO made clear before the war that its members will not defend Ukraine with military force. The European members have also, as expected, carved out exceptions to the sanctions regime for oil and gas so as not to impose too much pain on their own economies. Putin anticipated the general scope of the sanctions likely to be imposed on Russia and decided it was worth invading Ukraine anyways. While he may have been surprised by the extent of the sanctions and unity of NATO so far, this is not enough to alter his calculus. Indeed, he is doubling down on the original plan. He also knows that he has other weapons and forms of coercion against the West up his sleeve. Rather, we are seeing the birth of a possible Containment 2.0, a forced decoupling of Russia from the Western international economy. This is a long-term, not a short-term, strategy. The point is to undermine the Russian economy, stifle its technological progress, deny Russians a standard of living comparable to that of the West, and break support for the regime over time. In doing so, the West undermines Russia’s ability to compete militarily, aiming to forestall further Ukraines, and weakens Putin’s hand at home and abroad.
Topic:
NATO, International Trade and Finance, Sanctions, Economy, and Containment
Political Geography:
Russia, Europe, Ukraine, Global Focus, and United States of America

14. Regulating the International Digital Economy, with Trade and Innovation in Mind

Author:
Douglas Lippoldt
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The international digital economy is growing rapidly, and the fragmented governance framework is struggling to keep pace. Global entities such as the World Trade Organization and regional trade agreements offer a patchwork approach to governance. This paper illustrates the importance of governance in relation to private-sector innovation and recommends next steps to enhance governance, close gaps and promote further innovation. Better definition and international alignment of the framework for governance of digital trade and data could lead to greater privacy, trust and security.
Topic:
International Cooperation, International Trade and Finance, Regulation, Digital Economy, and Innovation
Political Geography:
Global Focus

15. Have trade agreements been bad for America?

Author:
Alan Wm. Wolff, Robert Z. Lawrence, and Gary Clyde Hufbauer
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Many Americans are persuaded that trade agreements of the last 40 years have been a costly mistake. To be sure, open markets leave some people behind, and promises to help those hurt were broken. But on balance, expanding trade has greatly benefited the US economy, and policy approaches taken need to be built on rather than abandoned. Alan Wm. Wolff, Gary Clyde Hufbauer, and Robert Z. Lawrence say more must be done to help those harmed, but protectionism is not the solution. The international trading system needs more outspoken US support and leadership if it is to be maintained and improved.
Topic:
International Trade and Finance, Treaties and Agreements, Economy, and Trade
Political Geography:
Global Focus and United States of America

16. How to save the WTO with more flexible trading rules

Author:
Robert Z. Lawrence
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The clash between the Western and Chinese economic systems is threatening the world trading system, with countries increasingly using trade as a tool to coerce other countries. It is imperative to return to an inclusive, rules-based international trading order before the problems in trade spill over into the other geopolitical frictions that plague the world. This Policy Brief argues for a system that steers between two extremes that have emerged: “deep integration,” a single undertaking in which all members of the World Trade Organization (WTO) are expected to adhere to all rules regardless of their preferences and circumstances, and “decoupling,” in which groups of countries centered on the United States or China limit trade with each other. Instead, Lawrence says, the world trading system should have a “variable geometry” that allows open plurilateral agreements among self-selected members that desire deeper integration on particular issues while allowing members that prefer to implement distinctive domestic policies to remain outside some of these agreements and follow a set of more limited rules. The universal rules would permit diversity but still promote trade between all countries through measures such as safeguards that would deal mainly with the most harmful systemic frictions. If the multilateral system is not up to the task of creating such an approach, it is likely to lose its relevance as differentiated regional or topic groupings become increasingly dominant.
Topic:
Economics, International Trade and Finance, World Trade Organization, Reform, and Trade
Political Geography:
Global Focus

17. The IMF should enhance the role of SDRs to strengthen the international monetary system

Author:
Edwin M. Truman
Publication Date:
12-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The special drawing right (SDR), issued by the International Monetary Fund (IMF), has the potential to strengthen dramatically the international monetary system. Established in 1969 and allocated twice during its first decade, the SDR was in the institutional closet from 1980 until 2009, when $250 billion in SDRs was allocated to members of the IMF to help address the global financial crisis. In 2021 another $650 billion in SDRs was allocated to help address the coronavirus pandemic. The SDR has proved itself as a crisis instrument. This paper addresses critically the arguments against SDR allocations. It proposes regular annual SDR allocations, along with measures to make the SDR more attractive to critics and measures to build out the SDR system in support of the international monetary system. The paper includes an appendix on the history of the SDR. A second appendix analyzes SDR use following the 2009 and 2021 allocations and finds that contrary to the popular myth, many countries other than low-income members of the IMF benefited directly in multiple ways from those allocations.
Topic:
International Trade and Finance, Financial Crisis, Finance, and IMF
Political Geography:
Global Focus

18. The WTO and vaccine supply chain resilience during a pandemic

Author:
Chad P. Bown
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Cross-border supply chains and international trade enabled the manufacturing and delivery of billions of vaccine doses to inoculate the world against COVID-19. At the same time, the pandemic revealed how the World Trade Organization (WTO) must change to become more useful in the face of a public health emergency. This paper describes the market failures—especially on the supply side—justifying the domestic subsidies and contracting arrangements used to accelerate vaccine research and development and to increase the scale of vaccine production to save lives, livelihoods, and economic activity during a pandemic. It highlights tradeoffs associated with the US subsidies and the priority-rated contracts written through the Defense Production Act under Operation Warp Speed. This case study reveals a rich environment in which cross-border supply chains exacerbate input shortages in ways that constrain vaccine production, highlighting the need for the WTO to embrace new forms of international policy coordination for pandemic preparedness and response. As part of a pandemic treaty, the paper proposes a plurilateral agreement on vaccine supply chain resilience that would include novel and enforceable disciplines for export restrictions, provisions to trigger coordinated subsidies across countries to jointly scale up vaccine output- and input-production capacity, and market surveillance initiatives on supply chain transparency.
Topic:
International Trade and Finance, Vaccine, COVID-19, WTO, and Supply Chains
Political Geography:
Global Focus

19. The Black Hole of National Security: Striking the Right Balance for the National Security Exception in International Trade

Author:
James Bacchus
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Article XXI of the General Agreement on Tariffs and Trade (GATT) reserves for members of the World Trade Organization (WTO) the legal authority to restrict trade in goods to protect members’ “essential” security interests. Similar exceptions to WTO trade obligations exist in other WTO agreements. For more than seven decades, WTO members exercised self‐​restraint in invoking these exceptions, doing so only for narrow purposes and in truly exceptional circumstances to avoid pushing the boundaries of the law too far and thereby upending the delicate balance between members’ legitimate pursuit of their security interests and their obligations to reduce barriers to trade. Yet, trade restrictions justified on national security grounds have proliferated in recent years and are increasingly subject to litigation in WTO dispute settlement. As a result, the national security provisions contained within the WTO agreements, as well as fundamental questions about the nexus between trade and national security, are set to be tested and clarified by WTO jurists—a less than ideal outcome that could lead to the further undermining of WTO dispute settlement and the rules‐​based international trading system more broadly. This paper explains the origins of the national security exceptions in the GATT and the WTO agreements and the history of their invocation, summarizes recent litigation that has clarified these exceptions, discusses current developments and upcoming litigation that could prove pivotal to our understanding of the trade‐​security nexus and the future of the world trading system, and offers some concluding thoughts on the options available to WTO members for striking a balance between trade liberalization and the defense of national security.
Topic:
International Trade and Finance, National Security, World Trade Organization, and Tariffs
Political Geography:
Global Focus

20. Bilateral trade and conflict heterogeneity

Author:
Katrin Kamin
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Although the number of interstate disputes has fallen in the past 30 years, rising geopolitical competition is challenging the foundation of the absence of great power war. Additionally, the number of internal conflicts is surging. At the same time, globalisation has spun a net of global trade connections and has thus created dependencies, making everyone more vulnerable to the repercussions of conflict. In this context, this paper analyses the relationship between trade and conflict from a trade perspective: Using data from UCDP and COMTRADE this paper studies the effects of five different conflict types on international trade flows in the period 1992 - 2011, including interstate and internal conflicts as well as other types of violence.Applying the gravity equation of international trade and the ppml high-dimensional fixed effects estimator, this paper finds that the heterogeneity of conflict types and their distinct characteristics matter for the magnitude and direction of their influence on trade.
Topic:
Globalization, International Trade and Finance, Conflict, and Trade
Political Geography:
Global Focus

21. The impact of trade and trade policy on the environment and the climate: A review

Author:
Gabriel Felbermayr and Sonja Peterson
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
While international trade can offer gains from specialization and access to a wider range of products, it is also closely interlinked with global environmental problems, above all, anthropogenic climate change. This survey provides a structured overview of the economic literature on the interaction between environmental outcomes, trade, environmental policy and trade policy. In this endeavor, it covers approaches reaching from descriptive data analysis based on Input‐Output tables, over quantitative trade models and econometric studies to game‐theoretic analyses. Addressed issues are in particular the emission content of trade and emissions along value chains, the relocation of dirty firms and environmental impacts abroad, impacts of specific trade polices (such as trade agreements or tariffs) or environmental policy (such as Border Carbon Adjustment), transportation emissions, as well as the role of firms. Across the different topics covered, the paper also tries to identify avenues for future research, with a particular focus on extending quantitative trade and environment models.
Topic:
Climate Change, Environment, International Trade and Finance, Trade, and Carbon Emissions
Political Geography:
Global Focus

22. The Consequences of Unilateral Withdrawals from the Paris Agreement

Author:
Mario Larch and Joschka Wanner
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
International cooperation is at the core of multilateral climate policy. How is its effectiveness harmed by individual countries dropping out of the global mitigation effort? We develop a multisector structural trade model with emissions from production and a constant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we őnd that a US withdrawal would eliminate more than a third of the world emissions reduction (31.8% direct effect and 6.4% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 24.1% (11.9% direct effect and 12.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices.
Topic:
Climate Change, International Trade and Finance, Fossil Fuels, Carbon Emissions, and Paris Agreement
Political Geography:
Global Focus and United States of America

23. The Nature of Money and the Theory of International Trade: Thornton and Ricardo

Author:
Isabella Weber
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
A rich recent literature reinvestigates the nature of money, but little attention has been paid to the ramifications of the ways in which we theorize money for the theory of international trade. This paper examines the logical relationship between the neutrality of money and self-balancing trade based on Henry Thornton and David Ricardo as two foundational contributions to credit and commodity money theories respectively. I show that both authors theorize trade as self-balancing whenever money is conceptualized as neutral. I distinguish two notions of the neutrality of money: ex ante and ex post neutrality. In Thornton’s Paper Credit money is not neutral ex ante: there can be temporary trade imbalances. But in the long-run money is neutral ex post and international trade boils down to self-balancing barter. In Ricardo money is neutral both ex ante and ex post and international trade is always balanced unless central bank policy undermines monetary neutrality.
Topic:
International Trade and Finance, Economy, Money, and Trade
Political Geography:
Global Focus

24. Global Trade Today is Global Value Chains

Author:
David Henig
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
In the last 25 years global value chains have come to dominate global trade in a way surprisingly little discussed or understood. To meet the policy challenges of today and the future we need to understand the key characteristics of this new global trade and how they came about. The OECD estimate around 70% of total trade takes place in global value chains. Using their definition as where “the different stages of the production process are located across different countries”, and considering both goods and services inputs, this may be an understatement. The example most commonly used is the automotive sector, with 30,000 parts and associated services like satellite navigation going into one car. However there are many others. Modern primary commodity production is optimised by technology developed in other countries, diverse services and goods are frequently combined to create new product offerings, and most international business to consumer transactions are facilitated by leading global platforms. Positively this new globalization has provided consumers with an unprecedented choice of products at affordable prices. More challengingly it has seen governments struggle with the question of how they can best influence modern trade, amid signs of a backlash and simple demands for ‘more domestic manufacturing’. The popular global narrative that feeds such demands is one that has a traditional view of trade as a set of simple primary or manufactured goods transactions. Policymakers must move on from this narrative, making their choices, and explaining them clearly, on the basis of global value chains.
Topic:
International Political Economy, International Trade and Finance, Trade, and Global Value Chains
Political Geography:
Global Focus

25. Exploring ‘Non-Tariff Measures Black Box’: Whose Regulative NTMs on Which Products Improve the Imported Quality?

Author:
Mahdi Ghodsi
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Regulative non-tariff measures (NTMs), such as technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures, have frequently been imposed to regulate the quality of imported goods when the market fails to address some issues of concern regarding harmful products with low standards. The impact of NTMs on trade values and trade volumes has been extensively modelled and analysed in the literature, while their quality impact has usually been studied using the unit values of imports. In this paper a monopolistic competition framework is presented, in which firms choose both the quality and the price of their exports subject to the compliance costs of NTMs behind the border and a fixed cost of technological change. Using the solutions of this model including NTMs, the quality of products at the six-digit level of the harmonised system (HS) traded globally and bilaterally during the period 1996–2017 is estimated. Using these estimates, the impacts of TBTs and SPS measures on trade values, volume, unit value and quality are estimated. On average and across all global bilateral trade, TBTs restrict imports while improving quality significantly. SPS measures stimulate trade and improve the average imported quality. Then, by estimating the importer-specific impact of NTMs on traded value, quantity, unit value, quality, and quality-adjusted price for each product, the ‘NTM Black Box’ is opened and analysed. This provides evidence of whether the quality of traded goods to an importing country has been upgraded despite the trade restrictiveness of NTMs.
Topic:
Economics, International Political Economy, International Trade and Finance, and Non-Tariff Measures
Political Geography:
Global Focus

26. Assessing national laws for the implementation of CITES

Author:
Pascal Blickle, Angela Min Yi Hou, and Laura Störi
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
This TradeLab project analyses the domestic legislation of 14 developing countries in implementing the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The present memo summarises the main findings across the 14 Parties. This memo finds that most assessed Parties have implemented the CITES' core requirements, and recommendations provided in the resolutions of the Conference of the Parties (CoP). The project identifies a minority of three African countries for which the CITES Secretariat may wish to review their Category 1 status. These Parties fall short of all or several of the following elements: they failed to appropriately designate Management and Scientific Authorities by law, circumscribe the Authorities' tasks and responsibilities, or – by exclusively regulating native species – appear not to comprehensively cover species listed in the Convention's three Appendices.
Topic:
Environment, International Trade and Finance, Science and Technology, Trade, Ecology, and Biology
Political Geography:
Africa and Global Focus

27. Social clauses in trade agreements: implications and action points for the private sector in developing countries

Author:
Anna Liz Thomas, Jarrod Suda, and Gaia Grasselli
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
Since the 1990s, more free trade agreements have come to include social clauses, which make reference to domestic and international labour standards. As this international legal web continues to grow, so too will the questions and concerns from employers and businesses. This Tradelab report, for the International Organisation of Employers, provides practical guidance for those employers and businesses. It does so by taking the diverse array of actors, the tensions within, and the opportunities set forth by free trade agreements and elaborating upon them using three case studies.
Topic:
International Political Economy, International Trade and Finance, Treaties and Agreements, Labor Issues, Free Trade, Trade, International Business, and Labor Market
Political Geography:
Global Focus

28. How to rein in fossil fuel subsidies ? Towards a New WTO Regime

Author:
Simon Happersberger, Eleanor Mateo, and Selcukhan Ünekbas
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
Fossil fuel subsidies have negative consequences on the climate change, public budgets and and the transition to an environmentally friendly economy. Nevertheless, governments do not keep up with their commitments to phase out fossil fuel subsidies but misallocate again COVID-19 recovery funds in fossil fuel subsidies. This article provides an analysis of the current obstacles for phasing out fossil fuel subsidies and the potential of the WTO to advance a reform on fossil fuel subsidies. It argues that the WTO can contribute to a fossil fuel subsidies reform by its technical expertise in regulating subsidies, by its broad membership and by its institutional setting. Under the current framework of the ASCM, WTO member can use existing mechanisms, such as the TPRM, to increase transparency in the short term and facilitate discussions on the scope of subsidies while mitigating impacts on vulnerable groups or sectors. This would provide the ground for governments to work towards a new and ambitious agreement to stop producer fossil fuels subsidies and phase out consumer fossil fuels subsidies in the mid-to-long-term. However, the phase out of consumer subsidies needs to be carefully designed and embedded, to avoid unintended consequences on energy access and vulnerable households.
Topic:
Climate Change, Environment, International Trade and Finance, Natural Resources, Trade, Fossil Fuels, COVID-19, WTO, and Ecology
Political Geography:
Global Focus

29. 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

30. Oil Pipelines in the Silk Road Region Coordination and Collaboration Amidst Competition and Confrontation

Author:
Rodrigo Labardini
Publication Date:
04-2021
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
For centuries, numerous proj­ects have wanted to connect the Caspian Sea to its main markets in the East (China) and the West (Europe). All vie to link en­ergy sources (oil and gas) and goods (commodities and manufactured products) with consumers. Con­temporary pipelines and transport corridors are presented as cost‑effi­cient, faster, and profitable, and thus sound economical alternatives to traditional hauling via tankers. Reviewing the political map, con­tinental pathways between East and West must traverse two regional “choke‑points,” each with three alter­native routes. First, the “Eastern Gap” at the Caspian Sea: Russia, Iran, and the Caspian Sea. The Caspian Sea region also includes Azerbaijan, of course, since it is the only state (together with Russia and Iran) located on its western bank, with routing options via the Caucasus to reach the Black Sea and Anatolia on to Europe. Second, the “Western Gap” at the Black Sea: Russia (again), the Black Sea, and Anatolia. The South Caucasus’ unique geo­graphical location between East and West as well as between Russia and Iran place it at a strategic crossroads of key geopolitical interest. Furthermore, the Caucasus‑Caspian Sea‑Central Asia region (CCCA) today—this corre­sponds more or less to what the edi­tors of Baku Dialogues have called the “Silk Road region”—is merging ever closer with Eurasian and Middle East politics. The politicization of energy and transport—with pipeline poli­tics often dealing with opposing eco­nomic and partisan interests—as well as sanctions against Russia and Iran, also raises the importance of sanc­tions‑free routes. Compounding these issues is the fact that several countries in the region are landlocked, depen­dent on transit states, and vulnerable to the latter’s maneuvers.
Topic:
International Trade and Finance, Oil, Natural Resources, and Silk Road
Political Geography:
Global Focus

31. The Global Economic Impact of the COVID-19 Pandemic: The Second Wave and Policy Implications

Author:
Gyeong Lyeob Cho, Minsuk Kim, and Yun Kyung Kim
Publication Date:
09-2021
Content Type:
Research Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper examines the macroeconomic impact of the COVID-19 pandemic through the Computable General Equilibrium model. Due to a second wave and a subsequent delay in economic recovery, the pandemic could lead to a permanent shock in capital accumulation and productivity. This implies that the shock may not merely affect the short-term growth rate but also negatively impact the future economic growth path from its pre-pandemic trend. Through simulations, in the mild scenario, countries lose 0.10% to 0.31% of their future economic growth rates; in the severe scenario, they lose 0.21% to 0.69%.
Topic:
Economics, Globalization, International Trade and Finance, Public Health, Pandemic, and COVID-19
Political Geography:
Global Focus

32. Better Two Eyes than One: A Synthesis Classification of Exchange Rate Regimes

Author:
Cécile Couharde and Carl Grekou
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper proposes a new de facto classification of exchange rate regimes, the synthesis classification. The proposed framework has several advantages over existing de facto classifications. First, it offers a unified framework based on the most divergent classifications, the RR and LYS classifications, leading not only to a broader coverage but also to encompass a broad spectrum of exchange systems. Second, it fits better with the known history of exchange rate regimes developments in the post-Bretton Woods era. Among others, it brings an interesting nuance to the so-called hollowing-out hypothesis by showing that the evolution of de facto regimes —especially in emerging economies since the late 1990s— has essentially involved movement toward more tightly “managed” intermediate regimes and not a shift away from such regimes. As an illustration of the insightfulness of our classification, we empirically revisit the nexus between currency crises and exchange rate regimes. In addition to associate a higher probability of currency crisis to both intermediate and floating regimes, our classification, also displays better statistical performances than other classifications in predicting currency crises.
Topic:
Economics, International Cooperation, International Trade and Finance, Exchange Rate Policy, and Currency
Political Geography:
Global Focus

33. Love of Variety and Gains from Trade

Author:
Christophe Gouel and Sébastien Jean
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper shows how gains from trade are conditioned by love of variety, defined as the extent to which an additional product variety generates benefits in either final or intermediate consumption. We develop a multi-country, multisector gravity trade model where love of variety is parameterized separately from product substitutability using a generalized CES demand function, and show analytically how gains from trade depend on love of variety through different channels that we identify and interpret. In this context, except for very specific parameterizations, gains from trade differ between a heterogeneous- and a homogeneous-firm model. Counterfactual simulations based on a calibrated version of this model show that, all other things being equal, the assessed gains from trade commonly vary by a proportion of one to three depending on the value of the love-of-variety elasticity, in a way that differs significantly across countries. Trade war simulations also point to the strong sensitivity of the assessed impacts. We conclude that love of variety is a key determinant of the gains from trade, an aspect that has so far been overlooked for the sake of convenience in the modeling framework and due to lack of empirical estimates.
Topic:
International Cooperation, International Trade and Finance, Trade Wars, and Models
Political Geography:
Global Focus

34. Free Trade Agreements and the Movement of Business People

Author:
Thierry Mayer, Hillel Rapoport, and Camilo Umana Dajud
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Many of the measures to contain Covid-19 severely reduced business travel. Using provisions to ease the movement of business visitors in trade agreements, we show that removing barriers to the movement of business people promotes trade. To do this, we first document the increasing complexity of Free Trade Agreements. We then develop an algorithm that combines machine learning and text analysis techniques to examine the content of FTAs. We use the algorithm to determine which FTAs include provisions to facilitate the movement of business people and whether those provisions are included in dispute settlement mechanisms. Using these data and accounting for the overall depth of FTAs, we show that provisions facilitating business travel indeed facilitate business travel (but not permanent migration) and, eventually, increase bilateral trade flows.
Topic:
International Cooperation, International Trade and Finance, Migration, Business, Free Trade, Pandemic, and COVID-19
Political Geography:
Global Focus

35. Long-Term Macroeconomic Projections of the World Economy

Author:
Lionel Fontagné, Erica Perego, and Gianluca Santoni
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
What will the global economy look like in a generation? The answer depends on the multiple forces driving long-term growth (demography, education, diffusion of technical progress, energy costs, investment and saving behaviour, international capital mobility) and requires a comprehensive framework to conceptualise them. We re-estimate the three-factor (capital, energy, labour) MAcro-econometric model of the Global Economy (MaGE), initially developed by Fouré et al. (2013), with a database covering 170 countries using state-of-the-art methods. We thus establish the long-term structural relationships that drive the dynamics of the World economy. The model projections to 2050 illustrate the expected changes in the World economy and their driving forces. In light of the projected volume of energy consumption, making these projections compatible with climate imperatives calls for increased technology sharing at the international level in order to decouple economic growth from energy use.
Topic:
Economics, Energy Policy, International Trade and Finance, and Macroeconomics
Political Geography:
Global Focus

36. Ambivalence About International Trade in Open- and Closed-ended Survey Responses

Author:
Arturo Chang, Thomas Ferguson, Jacob Rothschild, and Benjamin I. Page
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Institute for New Economic Thinking (INET)
Abstract:
Spontaneous, open-ended survey responses can sometimes better reveal what is actually on people’s minds than small sets of forced-choice, closed questions. Our analysis of closed questions and trade-related open-ended responses to 2016 ANES “likes” and “dislikes” prompts indicate that Americans held considerably more complex, more ambivalent, and – in many cases – more negative views of international trade than has been apparent in studies that focus only on closed-ended responses. This paper suggests that contrast between open- and closed-question data may help explain why the effectiveness of Donald Trump’s appeals to trade resentments surprised many observers.
Topic:
International Trade and Finance, Public Opinion, Free Trade, Donald Trump, and Data
Political Geography:
Global Focus and United States of America

37. Economic impact of the global ferry industry

Author:
Oxford Economics
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
The global ferry industry comprises companies that own or operate vessels that transport passengers, goods and vehicles over short sea and inland routes. Ferries provide vital connections which enable all types of journey, whether that be local trips to work, study, visit others, or access amenities, or longer trips for business or tourism. Ferries also facilitate trade within and across national borders. Ferries therefore play a pivotal role as an economic and social enabler. As they do so, they sustain significant economic activity in their own right, both directly through the income and employment they support, and through wider supply chain and worker spending effects which benefit other parts of the economy. In this study, commissioned by Interferry, we assess the economic footprint of the global ferry industry. Our modelling suggests the global ferry industry could have supported $60 billion in GDP and 1.1 million jobs globally in 2019.
Topic:
International Trade and Finance, Maritime Commerce, Labor Issues, Maritime, and Travel
Political Geography:
Global Focus

38. Interactions Between Global Value Chains and Foreign Direct Investment: A Network Approach

Author:
Amat Adarov
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
The world economy is increasingly shaped by cross-border production and investment activity. The paper uses complex network analysis along with panel data econometric techniques to study the structure and interactions between the networks of global value chains (GVC) and foreign direct investment (FDI). The analysis reveals that both FDI and GVC networks have a distinct core-periphery structure dominated by a relatively small number of countries with the USA constituting the global hub interlinked with regional European and Asian clusters, which, in turn, are centered around regional hub countries like China and Germany. Simultaneous equation model regressions using three-stage least squares suggest that FDI centrality facilitates GVC centrality of countries. However, FDI centrality is driven to a large extent by the FDI statutory restrictions and tax offshore regulations, rather than GVC connectivity.
Topic:
International Trade and Finance, Foreign Direct Investment, Borders, Networks, Macroeconomics, and Global Value Chains
Political Geography:
Global Focus

39. Labour Taxes and International Trade: The Role of Domestic Labour Value Added

Author:
Amat Adarov, Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper revisits the relationship between labour taxation and international trade, focusing on the role of domestic labour value added. Using sectoral data from 41 EU and OECD economies over the period 2005-2014, we assess how labour taxes affect exports and imports and how domestic labour value added shapes this relationship. We find that higher labour taxes reduce exports but that the effect depends to a large extent on the share of domestic labour value added, which differs by industries, countries and time periods. Imports do not seem to be affected. This implies that changes in labour taxes will not affect all sectors and countries in the same way and that policy makers should be aware of this when deciding on labour taxes. We also calculate the contribution of labour tax changes to the export dynamics in the analysed period and sample of countries, finding that in general the contribution is small.
Topic:
International Trade and Finance, Labor Issues, Tax Systems, Exports, and Imports
Political Geography:
Global Focus

40. Impact of Technical Barriers to Trade on the Trade in Goods in the Information and Communications Technology Sector: Differentiating by Aim of the Regulatory Measure

Author:
Mahdi Ghodsi
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In this modern digital world, goods from the information and communications technology (ICT) sector are the engine of the global economy. While tariffs levied on ICT goods have been eliminated or significantly reduced since the conclusion in December 1996 of the Information Technology Agreement of the World Trade Organization (WTO), non-tariff measure (NTMs) have come to be used more frequently with regard to imports of these goods. Technical barriers to trade (TBTs), as the most important trade policy measure imposed on imports of ICT goods, form the focus of this study. This paper analyses how different types of TBTs imposed on imports of ICT goods globally affected the values and volumes of imported goods at the six-digit level of the Harmonised System (HS) during the period 1996-2018. Keywords cited in the TBTs notified to the WTO give an indication of the aims behind the imposition of TBTs. Therefore, this study digs deeper into the impact of 30 types of TBT, using the keywords cited. The methodology used in this paper controls for zero trade flows using the Pseudo Poisson Maximum Likelihood (PPML) technique; and it controls for endogeneity bias using the exogenous instrumental variable approach. Furthermore, the paper provides more detailed analysis of the impact of TBTs across five ICT product categories that are defined by the United Nations Conference on Trade and Development (UNCTAD). The results indicate that TBTs have a generally strong positive impact on the value of imports of ICT goods. While many keywords cited in TBTs notified to the WTO affect the values and volumes of imports in a positive way, certain other TBTs function as trade barriers that reduce their values and volumes.
Topic:
International Trade and Finance, Communications, World Trade Organization, Tariffs, and Information Technology
Political Geography:
Global Focus

41. Source – Assembly – Sink: Value Added Flows in the Global Economy

Author:
Robert Stehrer
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In this paper we provide a method to characterise global value chains and a related decomposition of bilateral gross exports by distinguishing three different stages of the value-added flows: (i) the source of value added, (ii) the final assembly stage of a product, and (iii) the final absorption (sink) of this product. Methodologically this is embedded in a simple framework using matrix algebra allowing for intuitive interpretations of the individual decomposition terms and results. The approach leads to a novel decomposition of bilateral gross export flows and related value-added trade indicators. It is shown how these correspond to existing measures using the property of inverse matrices. Specifically, the paper sheds light on the nature of the double-counting terms discussed in the literature. Finally, the approach outlined is extended by incorporating insights from the hypothetical extraction method. We argue that this is a complementary approach which however can be used to flexibly define the value chains of interest and characterise the respective flows that are considered part of this defined value chain, again carefully differentiating the source, assembly, and sink dimensions.
Topic:
International Trade and Finance, Economy, Exports, Global Value Chains, and Decomposition
Political Geography:
Global Focus

42. Heterogeneous Effects of Non-tariff Measures on Cross-border Investments: Bilateral Firm-level Analysis

Author:
Amat Adarov and Mahdi Ghodsi
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We analyse the heterogeneous effects of technical regulations and safety standards embodied in non-tariff measures on foreign direct investment using global firm-level panel data of bilateral cross-border ownership relationships over the period 2008-2018. To this end, we develop a novel measure of time-varying bilateral ad valorem equivalents of sectoral non-tariff measures, which reveals that technical barriers to trade (TBTs) played a much greater role as a trade-inhibiting factor in comparison with import tariffs and sanitary and phytosanitary (SPS) measures over the period 1996-2018, with their relative importance increasing in the post-Great Recession period. Estimations using the Poisson pseudo-maximum likelihood framework reveal the importance of non-tariff measures as a driver of foreign direct investment, with heterogeneous effects observed for the measures imposed by the host and the home country, as well as across sectors and types of non-tariff measures. Among other results, we find that an increase in the stringency of technical barriers to trade imposed by the host country is associated with higher investment in the foreign subsidiaries operating in this country, pointing to the regulatory barrier-jumping motive of foreign direct investment. The effect is much stronger for the multinational corporations operating in the information and communications technology sector.
Topic:
International Trade and Finance, Foreign Direct Investment, Economy, and Business
Political Geography:
Global Focus

43. How do Corporate Taxes affect International Trade?

Author:
Mario Holzner, Branimir Jovanovic, and Goran Vukšić
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
This paper investigates how corporate income taxes affect international trade, and identifies the underlying channel. Using data on 33 NACE sectors, for 34 EU and OECD economies, over the period 2005-2014, we find that corporate income taxes reduce exports and imports only when the stock of foreign direct investment (FDI) is high. The effect is present primarily in the service sector and in countries with low corporate taxes. We interpret these findings as evidence that multinational enterprises reduce their operations in countries that raise their corporate taxes. The effect has been found to be small on aggregate, implying that the expected increase in corporate taxes in the future, arising from the global minimum tax, is unlikely to hurt international trade.
Topic:
International Trade and Finance, Foreign Direct Investment, Tax Systems, Exports, Profit, Imports, and Corporations
Political Geography:
Global Focus

44. El comercio internacional de armamento y las ventajas comparativas

Author:
Victoria Alonso
Publication Date:
11-2021
Content Type:
Journal Article
Journal:
Journal on International Security Studies (RESI)
Institution:
International Security Studies Group (GESI) at the University of Granada
Abstract:
En este artículo se pretende explicar la adecuación de los modelos que explican el comercio internacional en términos generales al ámbito del comercio internacional de material de defensa. Estudiaremos la evolución de los modelos explicativos del comercio para ver en quémedida servirán o no para explicar el comercio en seguridad y defensa, particularmente en el modelo Heckscher-Ohlin. Con el objeto a entender el comercio de material de uso militar recurrimos a un análisis de la composición de la industria,estudiando casos de los principales exportadores e importadores, así como los motivos que llevan adar el salto de la mera producción de bienes al comercio internacional teniendo en cuenta las distintas maneras de exportar y las regulaciones a las que se puede enfrentar la industria cuando decide lanzarse al comercio internacional.
Topic:
Defense Policy, International Trade and Finance, Trade, and Industry
Political Geography:
Global Focus

45. The Carbon-Neutral LNG Market: Creating a Framework for Real Emissions Reductions

Author:
Erin Blanton and Samer Mosis
Publication Date:
07-2021
Content Type:
Commentary and Analysis
Institution:
Center on Global Energy Policy (CGEP), Columbia University
Abstract:
As governments and companies consider options to decarbonize their energy systems, addressing greenhouse gas emissions from natural gas and liquified natural gas (LNG) will inevitably become a greater concern. Natural gas is viewed by some as potentially providing a bridge in a broad energy transition from dependence on fossil fuels to lower-emission sources. Even with advancements in renewable energy, many forecasts show natural gas will remain core to meeting global energy demand for some time, including as a backup fuel source for renewables.[1] But as the emissions profile of the natural gas value chain has become clearer, estimates of its footprint have increased, raising questions about natural gas’s transitory function. While gas will continue to have a prominent role in the energy mix,[2] without action to better account for, reduce, and offset natural gas and LNG emissions, the breadth and length of its use will increasingly come into question—including by countries with growing energy demand who see diminishing incentive to favor natural gas over high-emitting but fiscally cheap fuel sources, such as coal. Amid these considerations, discussions of value chain carbon intensity and greenhouse gas (GHG) accounting are becoming an important component of LNG trade, giving rise to the concept of “carbon-neutral LNG.” In the trade of carbon-neutral LNG, GHG emissions from supply and/or consumption are accounted for and offset by procuring and retiring carbon credits generated through GHG abatement projects, such as afforestation, farm/soil management, and methane collection.[3] Currently, carbon-neutral LNG makes up a slim portion of global LNG trade, with just 14 cargoes traded transparently since the first was sold in 2019, compared to over 5,000 cargoes of LNG being delivered globally in 2020 alone.[4] By examining the efficacy of the market at this early stage, as this commentary does, areas for improvement in the carbon-neutral LNG trade are highlighted. Procurement of carbon credits does not negate the emissions from natural gas and LNG, and accordingly, adoption of offsets should be paired with a broader and deeper reduction in the emissions intensity of these fossil fuels to ensure they remain conducive to meeting growing energy demand without needlessly jeopardizing global, national, and corporate efforts to reduce emissions. When considering this alongside the important role LNG and natural gas are likely to continue to play in meeting energy demand in key parts of the world during the transition period, it becomes clear that efforts must be made to scale GHG emissions mitigation throughout the value chain, such as through leakage reduction and employment of less carbon-intensive liquefaction technology, as well as to offset remaining emissions through the procurement and retirement of high-quality carbon credits. Serious questions remain about scaling the carbon-neutral LNG trade, including which emissions are accounted for, what methodology is employed in the emissions measurement and verification, and how the emissions are priced—either through a carbon credit or a carbon tax. If these questions are sufficiently addressed, natural gas and LNG may align better with global policy direction and emissions requirements. That is to say, GHG verification and mitigation will be critical to the sustainability of LNG in the decarbonizing global energy stack in the coming decade, with knock-on impacts on long-term LNG contract structure, trade flows, and market pricing. While this commentary does not prescribe policy to meet carbon neutrality or Paris Agreement goals specifically, it does examine an existing and growing market trade behavior that has the potential to assist countries dependent on natural gas in meeting their climate targets during this transitory period for the global energy system. Section 1 outlines the current state of the carbon-neutral LNG trade, while section 2 suggests a structure for LNG GHG accounting based on existing accounting methodologies. Section 3 discusses the different forms through which emissions mitigation can be integrated into the LNG trade, including a discussion on the risks of greenwashing. Section 4 highlights the implications of the growing carbon-neutral LNG market and provides recommendations to market participants and policy makers.
Topic:
Energy Policy, International Trade and Finance, Natural Resources, Carbon Emissions, and Decarbonization
Political Geography:
Global Focus

46. TRIPS-Past to TRIPS-Plus: Upholding the Balance between Exclusivity and Access

Author:
James Bacchus
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
A deadly global pandemic and other unique circumstances have combined to present the World Trade Organization (WTO) with an opportunity to modernize its rules for the trade-related aspects of intellectual property (IP) rights. The best place to begin is with a full realization of the negotiated balance between exclusivity and access in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). There is the need to turn the “TRIPS-past” of WTO IP rules agreed in 1995 into the “TRIPS-plus” of improved rules more fit to purpose for the twenty-first century. New rules are needed to help spark new innovations of all kinds and the rapid spread of those innovations worldwide, including rules relating to intangible assets and especially to digital expressions of IP. Continuing questions over the extent to which the TRIPS Agreement protects the exclusivity of IP rights in COVID-19 vaccines underscore how much uncertainty remains about where the line of this balance is in this multilateral trade agreement, and also how much doubt still exists about whether that line is in the right place.
Topic:
International Cooperation, International Trade and Finance, Intellectual Property/Copyright, Multilateralism, Pandemic, COVID-19, and WTO
Political Geography:
Global Focus

47. Could Trade Agreements Help Address the Wicked Problem of Cross-Border Disinformation?

Author:
Susan Ariel Aaronson
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Whether produced domestically or internationally, disinformation is a “wicked” problem that has global impacts. Although trade agreements contain measures that address cross-border disinformation, domestically created disinformation remains out of their reach. This paper looks at how policy makers can use trade agreements to mitigate disinformation and spam while implementing financial and trade sanctions against entities and countries that engage in disseminating cross-border disinformation. Developed and developing countries will need to work together to solve this global problem.
Topic:
International Cooperation, International Trade and Finance, Borders, and Disinformation
Political Geography:
Global Focus

48. The Digital Decide: How to Agree on WTO Rules for Digital Trade

Author:
James Bacchus
Publication Date:
08-2021
Content Type:
Special Report
Institution:
Centre for International Governance Innovation
Abstract:
After more than 20 years of unsuccessful negotiations, WTO member countries may be able to agree on global digital trade rules if they look to the new Digital Economy Partnership Agreement (DEPA) among Chile, New Zealand and Singapore as a model. As the first “digital only” trade agreement, the DEPA offers a modular approach that allows members to pick and choose which modules work best for them today while enabling them to adopt more legal commitments on digital trade in the future. As cross-border trade becomes increasingly digital, especially during the COVID-19 pandemic, ensuring the free movement of goods and services is essential to the global economy.
Topic:
International Cooperation, International Trade and Finance, World Trade Organization, and Digital Economy
Political Geography:
Global Focus

49. 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

50. Global value chains and the removal of trade protection

Author:
Chad P. Bown, Aksel Erbahar, and Maurizio Zanardi
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper examines how trade protection is affected by changes in the value-added content of production arising through global value chains (GVCs). Exploiting a new set of World Trade Organization (WTO) rules adopted in 1995 that impose an exogenously timed requirement for countries to reevaluate their previously imposed trade protection, the authors adopt an instrumental variables strategy and identify the causal effect of GVC integration on the likelihood that a trade barrier is removed. Using a newly constructed dataset of protection removal decisions involving 10 countries, 41 trading partners, and 18 industries over 1995–2013, they find that bilateral industry-specific domestic value-added growth in foreign production significantly raises the probability of removing a duty. The results are not limited to imports from China but are only found for the protection decisions of high-income countries. Back-of-the-envelope calculations indicate that rapid GVC growth in the 2000s freed almost a third of the trade flows subject to the most common temporary restrictions (i.e., antidumping) applied by high-income countries in 2006.
Topic:
Economics, International Trade and Finance, Global Markets, Finance, and Trade
Political Geography:
Global Focus