https://pages.eiu.com/Feb18PublicPolicyAftershockAsiaMKT_Aftershocklandingpage.html
At the end of July, WTO launched the 2018 editions of its annual statistical publications: World Trade Statistical Review, Trade Profiles, and World Tariff Profiles.
World Trade Statistical Review 2018 “looks into the latest trends in global trade, with an in-depth analysis of what is being traded in goods and services and who the leading players are. It also looks at the performance of developing economies, the latest developments in regional trade agreements, trade in value-added terms and digital trade.”
Trade Profiles 2018 presents key indicators on merchandise trade and trade in commercial services for 197 economies.
Finally, World Tariff Profiles 2018, jointly produced with the ITC and UNCTAD, “provides comprehensive information on the tariffs and non-tariff measures imposed by over 170 countries and customs territories. Tariff data are presented in comparative tables and in one-page profiles for each economy. Statistics on non-tariff measures by country and by product group complement the data on tariffs.” This publication also includes a special analysis of how least-developed countries make use of preferential tariffs offered by trading partners.
Additional data is available through the WTO’s statistical webpage, WTO’s statistical database, and the International Trade and Market Access online data application.
The latest issue of Book News from WTO Publications, highlighting recently launched titles and products, is now available.
Featured in this instalment are four new titles:
To learn more about WTO Publications and availability of titles, visit the WTO Publications website or the WTO Bookshop website.
This paper examines differences in welfare implications between a free trade area (FTA) and a customs union (CU) for member countries differing in their market sizes. In a stylized three-country model of trade under oligopoly, we take into account the conditions that FTA members set external tariffs to induce their exporting firms to comply with Rules of Origin (ROO) within the trade bloc.
Full-text available in .pdf
Using a detailed data set at the tariff line level, we find an emulator effect of multilateralism on subsequent regional trade agreements (RTAs) involving the USA. We exploit the variation in the frequency with which the US grants immediate duty free access (IDA) to its RTA partners across tariff lines. A key finding is that the US grants IDA status especially on goods for which it has cut the multilateral most favored nation (MFN) tariff during the Uruguay Round the most. Our results suggest that the Uruguay Round multilateral “concessions” have elicited subsequent preferential trade liberalization.
Full-text available in .pdf
While most of RTA talks have incorporated rules on industrial tariff and non-tariff barriers, services, and trade remedies in the past, countries now seek to co-operate on other areas of policymaking, such as rules on investment. This article provides detailed analysis on the effects of trade and investment liberalization on Korea’s inward and outward foreign direct investment (FDI) by collecting all relevant information on substantive investment provisions contained in all Korea FTAs in force as May 2013 and constructing indices of the extensiveness of investment provisions.
Full-text available in .pdf
This paper explores the impact of input trade liberalization on imported input and exported product prices. Using Chinese transaction data for 2000–2006, we capture causal effects between exogenous input tariff reductions and within firm changes in HS6-traded product prices. For identification, we make use of a natural control group of firms that are exempted from paying tariffs. Both imported input and export prices rise. The effect on export prices is specific to firms sourcing inputs from developed economies and exporting output to high-income countries. Results are consistent with a scenario within which firms exploit the input tariff cuts to access high-quality inputs in order to quality-upgrade their exports.
Full-text available in .pdf
In response to the USA blocking Mexican trucks from traveling to the inland part of the USA, Mexico imposed tariffs on US fresh apple exports. This study analyzes the impacts of the Mexican tariff on USA, Mexican and world apple markets by using theoretical analysis and developing a spatial equilibrium trade model. The results show that this tariff increases apple prices in Mexico, to the benefit of Mexican producers but harming Mexican consumers. Even though Mexico collects revenues from its tariff, the overall welfare impact is negative because consumers’ loss outweighs producers’ gain and tariff revenues. Since the USA exports less to Mexico, its prices and production decline, but consumption increases. To mitigate the export market loss to Mexico, the USA redirects its exports to other importing countries, displacing other apple exporting countries’ trade with these importing countries.
Full-text available in .pdf
This paper analyzes economic rivalry between two firms using an international Cournot duopoly model, where a firm from a landlocked country (LC) and a firm from a coastal country (CC) compete in a third-country market. It is assumed that the landlocked country firm adopts a transport-cost reducing R&D subsidized by its government, while the CC government imposes a toll fee on the LC firm. The findings show since a change in the LC’s transport-cost reducing R&D subsidy has a positive effect on its export and a negative effect on the CC’s export, both measures have effective strategic export policies.
Full-text available in .pdf
China’s success in attracting high levels of foreign direct investment (FDI) has drawn a lot of attention from around the world, and so has the fast growth of Chinese regions that have enjoyed the lion’s share of the FDI inflow. The specific mechanisms through which FDI has benefited the country’s economic development, however, are less clear than the spectacular growth in both the capital flow and the economy.
Full-text available in .pdf
Abstract
In this paper, we examined back-and-forth international transactions through tariff reduction by estimating modified gravity equations for finished goods and intermediate goods separately. Our main findings are as follows. Exports of finished machinery products are negatively associated with not only the importer’s tariff rates on finished machinery products but also the exporter’s tariff rates on machinery parts. Similarly, exports of machinery parts are negatively associated with not only the importer’s tariff rates on machinery parts but also the exporter’s tariff rates on finished machinery products. These results imply that tariff reduction in only one production process in an industry has the potential to drastically change the magnitude of trade in the whole industry.
Full-text available in .pdf
Abstract:
Trade theory has no clear prediction on how import protection affects an importing sector’s relative size. In this paper, we estimate the impact of US trade protection on industrial production relative size based on a translog GDP functional system. Using an industrial panel data set and controlling for factor endowments and technology improvement, we find empirical evidence that trade protection does not help much increase a sector’s relative size. Such findings are also robust to both the inclusion of the role of political economy and the coverage of various non-tariff measures as proxies of industrial protection.
Full-text available in .pdf
Abstract:
There are two strands of approaches gauging bilateral trade barriers: the gravity models and the trade intensity index. This paper integrates these two approaches by developing a new trade intensity index. This so called “gravity model adjusted trade intensity” (GMATI) index can reflect the short run trade barriers while controlling for the long run ones under global trade context. Based on 182 countries’ export data during 1988–2005, we first estimate the expected bilateral trade level using a gravity model with comparative advantage effects. Then we apply the GMATI index for China. While the conventional trade intensity index shows that China trades less than its expected level, our GMATI index nevertheless suggests the opposite in most cases. It indicates that after considering the effect of country characteristics such as distance, economic size and comparative advantage, China’s world trade face less trade barriers than the world average level.
Full-text available in .pdf
This research adopts the heterogeneous-firm approach to analyze how technical barriers to trade (TBT) imposed by China affect its imports. The empirical analysis is based on a sample covering China’s import control measures (e.g. TBT, tariff, license and quota) of all harmonized system (HS) 4-digit products during the period 1998–2006. A modified two-stage gravity model is used to correct for Heckman selection bias and firm heterogeneity bias. This paper finds that, in general, TBT reduce China’s import probability with potential trade partners, but raise the import values with existing trade partners. Further evidence shows that the TBT effects on trade value remain quite stable. However, the TBT effects on trade probability vary a great deal across industries and countries in different time periods.
Full-text available in .pdf
Abstract:
We examine the linkages between import policy and export performance, extending classic macroeconomic trade effects to more recent concepts from the modern literature on gravity models. We also examine these effects empirically with a panel of global and bilateral trade spanning 15 years. Our emphasis on the role of import policy (i.e. tariffs) of exporters as an explanation of trade volumes contrasts with the recent emphasis on importer policy in the gravity literature. It also reinforces the growing body of evidence on the importance of economic environmental (policy and infrastructure) conditions in explaining relative export performance and is in line with the literature on global value chains.
Full-text available in .pdf
Taking global value chains (GVCs) into account has important implications for trade policy. When production is vertically fragmented and trade in intermediate inputs is prevalent, one has to look differently at a certain number of issues. Through case studies, this paper provides new evidence on the incidence on services of tariffs levied on goods (case study 1) and then discusses effective rates of protection in a world of GVCs and what the removal of tariffs on intermediate inputs implies, using the example of Canada (case study 2). To illustrate how trade agreements could be made more relevant for GVCs, the paper further looks at sectoral approaches in trade negotiations through the example of the Information Technology Agreement (case study 3) and finally compares the network of regional trade agreements in force with global production networks (case study 4).
Full-text available in .pdf
In this report, we examine and estimate the welfare impacts of trade liberalization and increased trade on consumers. Despite Korea’s continuous trade liberalization over the years, it is criticized that Korean consumers have rarely realized welfare enhancement due to tariff reduction or elimination. This report identifies factors affecting import prices other than tariffs such as exchange rates, marketing margins, distribution channels, and product variety. Policy implications are derived from the findings of the report; Fostering fair and competitive environments in the domestic market of the imported goods and concerted efforts by civil organizations and NGOs or consumer groups, such as frequent consumer price reviews on imported goods and relevant monitoring activities, should be encouraged for the benefits of consumers.
Full-text available in .pdf
We study trade policy in a two-sector Krugman (1980) trade model, allowing for wage, import and export subsidies/taxes. We study non-cooperative trade policies, first for each individual instrument and then for the situation where all instrumentscan be set simultaneously, and contrast those with the efficient allocation. We show that in this general context there are four motives for non-cooperative trade policies: the correction of monopolistic distortions; the terms-of-trade manipulation; the delocation motive for protection (home market effect); the fiscal-burden-shifting motive. The Nash equilibrium when all instruments are available is characterized by first-best-level wage subsidies, and inefficient import subsidies and export taxes, which aim at relocating firms to the other economy and improving terms of trade. Thus, the dominating incentives for non-cooperative trade policies are the fiscal-burden-shifting motives and terms-of-trade effects.
Full-text available on-line
ABSTRACT: There is little doubt among economists about the trade distortion effects of export taxes, like those of import duties. It is found in this paper that, under the multilateral trading system of the World Trade Organization (WTO), Members’ commitments to the elimination or limitation of the use of export taxes are highly imbalanced. While all original WTO Members except Australia and most Members by accession undertake no such commitment, the commitments of a number of other new Members are somehow substantial. The situation is even worse in the case of China, due to the mechanic interpretation approach recently adopted by the Panel and Appellate Body in China – Raw Materials. This paper examines this issue from both legislative and judicial perspectives, and makes recommendations to China for its future trade negotiations and dispute settlement.
Conventional wisdom holds that protectionism is counter-cyclic; tariffs, quotas and the like grow during recessions. While that may have been a valid description of the data before the First World War, it is now inaccurate. Since the Second World War, protectionism has not been counter-cyclic; tariffs and non-tariff barriers simply do not rise systematically during downturns. I document this new stylised fact with a panel of data covering over 180 countries and 40 years, using over a dozen measures of protectionism and six of business cycles. I test and reject a number of potential reasons why protectionism is no longer counter-cyclic. A ‘diagnosis of exclusion’ leads me to believe that modern economics may well be responsible for the decline in protectionism’s cyclic behaviour; economists are more united in their disdain for protectionism than virtually any other concept. This in turn leaves one optimistic that the level of protectionism will continue to decline along with its cyclicality.
New for you 