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51. The Geopolitics of Food Security: Barriers to the Sustainable Development Goal of Zero Hunger

Author:
Jiayi Zhou, Lisa Marie Dellmuth, Kevin M. Adams, Tina-Simone Neset, and Nina von Uexkull
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Stockholm International Peace Research Institute
Abstract:
Assessing the prospects for Zero Hunger—Sustainable Development Goal 2—requires an understanding of food security that goes beyond developmental or humanitarian issues, to include linkages with geopolitics. Geopolitical challenges cut across areas such as natural resources, trade, armed conflict and climate change where unilateralism and zero-sum approaches to security directly hamper efforts to eradicate hunger and undermine the frameworks that govern those efforts. The report provides an overview of how geopolitics interacts with these areas. Competition for agricultural resources can be both a cause and a consequence of geopolitical rivalry. International trade, while essential for food security, also creates vulnerabilities through supply disruptions—sometimes politically motivated. Armed conflict is a driver of food insecurity, which can itself feed into social unrest and violence. Climate change interacts with all three phenomena, reshaping both the physical landscape and political calculus. These overlapping linkages require further integrated policy engagement and analysis.
Topic:
Climate Change, Development, International Trade and Finance, Governance, Food Security, Geopolitics, and Peace
Political Geography:
Global Focus

52. 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

53. COVID-19: Global Trade and Supply Chains after the Pandemic

Author:
David Ramirez
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
International Institute for Strategic Studies
Abstract:
The COVID-19 outbreak has shaken international trade and supply chains to their very foundations. This paper presents possible trade and supply scenarios, examining in particular the future of China’s pre-COVID-19 role as ‘the world’s factory’. Although disruptions such as the Japan earthquake and tsunami of 2011 and the recent trade war between the United States and China have strained global trade and supply chains in the past, particularly in Asia, COVID-19 has had historically devastating effects. While high levels of uncertainty currently make it hard to foresee exactly how global trade and supply chains will look in the post-COVID-19 era, it is inevitable that they will be reshaped.
Topic:
International Trade and Finance, Public Health, Pandemic, and COVID-19
Political Geography:
Global Focus

54. Globalization Isn’t in Decline: It’s Changing

Author:
Erik van der Marel
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Globalization isn’t in decline; it is simply changing. Although the COVID-19 crisis has seen a dramatic decline in goods trade, investments and the movement of people, a new type of globalization is emerging. This “new globalization” is based on digital services, research and development, data, ideas, and other intangibles. This development has been going on for a while and has evolved more rapidly after the previous global financial crisis (GFC) in 2008-9. For instance, the GFC caused digital services trade to significantly “de-link” from goods-related services trade. This pattern illustrates that the COVID-19 crisis will likely mark another break in trade patterns and that future growth in globalization will depend crucially on digital trade and cross-border exchange in intangibles.
Topic:
Globalization, International Political Economy, International Trade and Finance, Digital Economy, R&D, Data, and COVID-19
Political Geography:
Global Focus

55. Shifting into Digital Services: Does a Crisis Matter and for Who?

Author:
Erik van der Marel
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
How do trade patterns change after an external shock such as an economic crisis, and is this shift structural? This paper uses a Difference-in-Difference (DID) approach to investigate whether services trade became more digital after the Global Financial Crisis (GFC) in 2008. It finds that the GFC formed an independent break from the previous period that turned services trade to become more digital – although there are signs that this somewhat already happened before 2008. Software-intense services such as R&D services, information services, computer services and charges for Intellectual Property Rights (IPR) saw on average a 6 percent higher increase in global exports compared to other non-digital sectors post-2008. Countries with higher internet usage and with already comparative advantage in these sectors saw this higher increase in digital trade. More striking is that in particular upper-middle income countries and countries with high manufacturing activity saw the sharpest shift into digital services trade after the GFC. These significant outcomes forecast a direction into which patterns of services trade are likely to turn after the current economic crisis resulting from COVID-19.
Topic:
International Political Economy, International Trade and Finance, Digital Economy, Global Financial Crisis, Exports, and Digital Policy
Political Geography:
Global Focus

56. Learning to Love Trade Again

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

57. The Role of Trade Policy in Promoting Sustainable Agriculture

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

58. Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments

Author:
Vincent Vicard, Amélie Guillin, and Anne-Laure Delatte
Publication Date:
05-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are `abnormal' – unexplained – stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
Topic:
Economics, International Political Economy, International Trade and Finance, Finance, Borders, Investment, and Stock Markets
Political Geography:
Global Focus

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

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

60. The World Trade Organization: An Optimistic Pre-Mortem in Hopes of Resurrection

Author:
Dmitry Grozoubinski
Publication Date:
08-2020
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
In the midst of a pandemic and escalating global protectionism, the WTO's paralysed dispute settlement system, largely immobilised negotiations, and chronically underutilised monitoring and compliance function, are groaning under the weight of trade tensions, unilateralism, and neglect. Technical work in Geneva is part of the solution, but is insufficient on its own to resolve the Organization’s short- and long-term problems. Political leaders who still believe in the wisdom of predictable, rules-based trade must build coalitions to expand that structure, while forcing the difficult conversations about what a WTO acceptable to the major powers looks like, and investing in the painstaking rebuilding of business and civil society engagement with trade policy.
Topic:
International Trade and Finance, World Trade Organization, COVID-19, and Financial Stability
Political Geography:
Global Focus