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Abstract by the authors: Addressing global carbon inequality constitutes an important task for both international negotiations on climate-change mitigation and the achievement of sustainable development goals. Soaring international trade might become a vigorous modifier for reducing global carbon inequality through production reallocation and economic boosts in different countries. However, this effect remains largely unexplored, not only because of little awareness of the windfall benefits from international trade but also because of debates on quantifying global carbon inequality from both production- and consumption-based perspectives. (…)
Abstract by the authors: Greater antitrust enforcement is argued to have positive correlations with the promotion of international trade. By 2019, the US, the EU and China, as global trade powers, have formed and strengthened bilateral antitrust cooperation to seek greater enforcement. However, the impact of such development on international trade has remained underexamined. The article argues that irrespective of their different legal forces, the US-EU, US-China and EU-China antitrust cooperation share convergences at the optimum and minimum levels. Based on the case study of the US, the EU and China’s regulations of the international Liquid Crystal Display (LCD) panel cartel, the article illustrates that as the effects doctrine continues to serve as the main normative value underpinning antitrust cooperation, matured competition regimes lack the incentive to share information with new regimes, competition regimes converge to apply comity restrictively and the consultation mechanism plays a limited role in holding the sides accountable under bilateral cooperation. Consequently, international antitrust remains fragmented, positing restraints to trade. The article calls for reconsideration of the effects doctrine as part of the transnational normative repertoire shaping bilateral antitrust cooperation and for devising policy tools to guarantee minimum information exchange among agencies.
Abstract by the authors: The growing importance of services trade in the global economy contrasts with the scarcity of timely data on this part of international trade. This paper develops models to nowcast aggregate services imports and exports, as measured by monthly services trade data, for the G7 countries. The methodology relies on machine‐learning techniques and dynamic factor models and combines traditional high‐frequency data with the use of Google Trends search data. The estimated services trade nowcasting models display a higher out‐of‐sample predictive power than a simple benchmark model. However, there does not seem to be one approach that outperforms other model specifications. Rather, a weighted average of the best models, combining machine‐learning with dynamic factor models, seems to be a promising avenue. The best models improve one step ahead predictive performance relative to a simple benchmark by 30%–35% on average across the G7 countries and across trade flows. Models capture approximately 67% of the fall in services exports following the COVID‐19 shock and 60% of the fall in imports on average across G7 economies.
Abstract: In recent decades a growing number of analytic political philosophers have started to pay attention to the ethics or morality of international economic integration. In this paper we offer an overview of the normative questions related to international trade. The paper has eight parts and focuses on these topics starting from a conceptual definition of trade: the legal, institutional and governance dimensions of international economic exchange and related ethical questions; the idea that trade has distributive effects within participating countries; the distinction between the ethics of production and consumption; two specific international markets, the market for natural resources and that for weapons.
Abstract by the authors: This study constructs a quantitative tool that can interpret the effects of trade protectionism on trading partners. Design/methodology/approach: Trade protectionist policies are a crucial phenomenon of international political economy. The existing literature has analyzed the consequences, causes, and effects of trade protectionist policies. A principal aspect of the present study is the diverse consequences of the operation of protectionism on trading partners. The central question is this: exactly in what way are the exports of trading partners influenced by a trade “war”? The methodology utilized is the composition of a Composite Index (CI). Findings: The analysis of this paper showed that the country's participation in international trade flows, economic and commercial strength and symmetrical or asymmetric interdependence with the countries involved on trade protectionism are the important aspects that determine the significance of the protectionist effects. Research limitations/implications: The composite index signifies the amount of the impact and not the kind. Actually, a state can have an unimportant influence on the trade protectionist policies of two of its trading partners, but this consequence could have an undesirable connotation. The reason is that the index does not examine the entire exports of a country, but the proportion of trade interconnections. Originality/value: The composite index is crucial for interpreting the effects of a phenomenon of global political economy.
Abstract by the authors: •The welfare effects of industrial and trade policy in open economies stem from the interplay between terms of trade and misallocation motives. •In a world characterized by sectoral economies of scale, trade policy alone cannot achieve a first-best outcome; industrial policy is also essential. •In this context, international cooperation is crucial to achieve a first-best outcome.•The paper represents an important step forward in the quantitative analysis of the welfare effects of trade and industrial policies, viewed through the lens of recent changes in the trade and industrial policies of the United States and China.
Abstract by the authors: The literatures on global commodity chains and global value chains rest on an unquestioned assumption: the continual expansion of globalization. The Trump Administration's trade wars challenged this foundational assumption and even today the new Biden regime also hints at the shift away from global supply chains. We find that the prior administration’s efforts caused continued disruption of long-established commodity chains in steel, aluminum, automobiles, and other manufactured products. Flows of raw materials, intermediate products and components, and finished goods now confront higher costs. Firms continue efforts to restructure commodity chains in ways that will require the disarticulation of some nodes and the creation of new nodes. We claim that these trade wars and breakdown of global commodity chains (GCCs) may in fact mark the start of the breakdown of the U.S.-led world order. This shift harkens the onset of a new era of economic and geopolitical conflict. A key question: has this disruption of old patterns and rise of new ones continued in the post-Trump era? Does the familiar pattern of globalization continue – or is competition, contestation and disarticulation leading to sectoral economic changes that drive larger patterns of economic ascent, dominance, and decline in the world economy?
Abstract by the authors: In recent years, the world’s largest economies and traders – the United States, China, and Japan – have chosen to use measures affecting international trade as a means to achieve political objectives in contravention of the rules of international economic law and the practices of international trade established over several decades. Since the end of World War II, the world economy and international trade have rapidly expanded and prospered by achieving a degree of separation between international trade and political struggles under the rule-based international trading system, the General Agreement on Tariffs and Trade and its successor, the World Trade Organization. Thus, the recent misuses of trade measures by the world’s largest traders are alarming, because they undermine the stability of the world trading system, which has been maintained for the past several decades. This article accounts politically-motivated trade measures (‘PTMs’) recently invoked by the United States, China, and Japan, assesses their incompatibilities with the rules of international economic law, and also examines the risks that these PTMs pose to the world trading system
Abstract by the authors:This study develops a dynamic stochastic general equilibrium model featuring the euro area, the United States and China. The countries in the model are linked through trade and international bond purchases. Having estimated the model, we study several scenarios of trade wars between the countries. Our findings suggest that no country benefits from imposing tariffs in the long run. Moreover, in terms of welfare, a country loses less if it does not impose retaliatory tariffs. The degree to which tariffs hurt a particular country depends on the strength of its import and export links, whereas a nontrivial interaction exists between tariffs and monetary policy. •We estimate a DSGE model with the euro area, the United States, and China.•We show that no country benefits from the tariffs in the long run.•The impact of tariffs depends on the strength of the trade links.•The welfare loss is smaller if a country does not retaliate tariffs.
Abstract by the authors: This article compares the EU and China’s approaches to negotiating free trade agreements (FTAs). We show how China’s approach is more gradualist with regards to coverage of issues, and argue that this gives China advantages, which it leverages in later deals. While there are important differences in the scope and approach of EU trade negotiations, we argue that the EU could gain similar advantages by incorporating more Chinese-style gradualism to how it negotiates FTAs. Paradoxically, we argue that mirroring Chinese strategy in this regard could be used by the EU to secure very different ends from China’s such as normative reforms in the areas of human rights, the rule of law, and democratic government. More gradualism would allow the EU to scale up trade cooperation and regulatory convergence in an incremental manner while autocratic partner countries make democratic reforms, and would also enlarge the scope of more coherent positive conditionality.
Abstract by the authors: In this paper, we explore the role of trade in the evolution of labor share in Latin American countries (LAC). We use trade agreements with large economies (US, EU, and China) to capture the effect of sharp changes in trade. During the last two decades, the countries that signed these trade agreements experienced a negative trend in labor share, while in the remaining countries there is an average increase in this share, generating a gap of 7 percentage points. We apply synthetic control methods, combined with regression analysis, to estimate the average causal impact of trade agreements on labor share. While effects are heterogeneous in our eight case studies, the average impact is negative between 2 to 4 percentage points of GDP four years after the entry into force of the trade agreements. This result is robust to the specification used and to the set of countries in the donor pool. We find that trade agreements with more labor-abundant counterparts affect labor share more, in line with traditional Heckscher–Ohlin forces. We also find that, after trade agreements, exports of manufactured goods and the share of industry to GDP increase on average, most notably in the case studies where negative effects on labor share are significant, a fact compatible with enhanced participation in Global Value Chains. Finally, a decomposition shows that all the reduction in labor share is explained by a negative impact on real wages.
Abstract by the authors: This article examines imports by Swedish firms and the utilization of the tariff preferences offered by the EU–South Korea Free Trade Agreement. To benefit from tariff preferences, the importer must make a formal request to use the preferences and also document the origin of the imported products (with a certificate of origin provided by the foreign exporter). This may be costly, and some importers choose to pay import tariffs even when tariff preferences are available. Hence, the preferences are not fully utilized. Using a detailed firm–transaction level data set on Swedish imports from South Korea, we analyse the determinants of preference utilization and how firms learn to use preferences. The results show that preference utilization is strongly correlated with potential duty savings, which depend on the preference margin and the size of the import transaction. From a learning perspective, we find that preference utilization is closely related to the number of import transactions undertaken by the firm, suggesting a learning-by-doing mechanism. The length of time the firm has been involved in importing activities plays a smaller role.
Abstract by the authors: This paper studies the impact of ‘border effects’ and the implementation of Free Trade Agreements (FTAs) on international trade in manufacturing goods. We take advantage of the time dimension in a panel setting to capture the rise of trade in final goods and intermediate inputs that are a distinguishing feature of Global Value Chains (GVCs). Our results suggest that reduced border effects account for the bulk of the increase in international manufacturing trade. The cost of a national border is estimated to have fallen by around 4.3% per year for trade in final goods and 2.8% for trade in intermediate inputs. Moreover, we show that it is important to control for different border effects for final goods and intermediate inputs when estimating the trade impact of FTAs in gravity equations. With this enhancement, our results suggest that FTAs increase trade in final goods by 52% after ten years, with no statistically significant difference for trade in intermediate inputs. We also find evidence that FTAs that more comprehensive FTAs like the European Union have a greater trade effect than the average FTA.
Abstract: Since 1999, the EU and the Mercosur countries have negotiated an Association Agreement (AA) which will include a trade pillar, the Free Trade Agreement (FTA). The latter aims at increasing the amount of goods crossing borders, including products associated with high greenhouse gas emissions or having adverse impacts on forests and other valuable ecosystems. This article assesses whether the adoption of the FTA would contravene the EU’s obligations under international law and EU primary law – with a focus on climate protection.
Abstract by the authors: This paper reviews the trade agreement landscape and argues that the conventional understanding of trade agreements as encapsulated in the WTO Agreements is now outdated. This misperception about trade agreements is not just an institutional insufficiency. Concentration on those agreements has led many practitioners and commentators to underestimate the variable texture of the global trade agreement fabric. But these shortcomings have not inhibited states from concluding innovative alternatives to regulate and manage the cross-border movement of goods and services. As this paper shows, trade-related agreements that do not fit the perceived traditional mold have proliferated. Given these advances, more policy and scholarly attention is required. Accordingly, this paper serves as a roadmap for the accommodation of trade agreements within the WTO and as an agenda for additional research
Abstract by the author: World Trade Organization (WTO) dispute settlements (hereafter abbreviated DS followed by a case number, 1 through 621) between January 1995 and September 2023 included dispute-issuing complainants (N = 616) and dispute-receiving respondents (N = 621) from 54 and 58 different countries, respectively. Current literature on dispute settlements mainly focuses on issues of compliance, transparency, and suggested reform (e.g., Jain, Journal of Asian Affairs, 2016; Schneider-Petsinger, Reforming the World Trade Organization, 2020), but lacks empirical research on whether geographic region is correlated with the likelihood that a country either brings forth or is presented with a dispute. The authors seek to address this gap in the literature.
Abstract by the author: The Marrakesh Agreement establishing the WTO recognized the need for positive steps to be taken to ensure that developing countries, and especially the least developed among them, secure a share in the growth of international trade that is commensurate with their economic development needs. This article discusses how the WTO helps to facilitate Africa’s integration into the WTO multilateral trading system. It is argued that while African countries are actively engaged in the work of the WTO and are pursuing their economic and policy interests, some key challenges remain. These include further diversifying their production, linking to global value chains (GVCs) and developing adequate infrastructure to facilitate digital trade so that it becomes a vehicle for economic growth. The WTO, working closely with partner institutions, supports Africa in its endeavours to tackle some of these challenges, offering a range of programmes that are geared towards trade capacity-building. It is argued that the work undertaken by WTO Chairs and academic institutions under the aegis of the WTO’s Chairs Programme (WCP) is of critical importance in providing the analytical underpinnings for the policy choices that will encourage fuller integration into the multilateral trading system. This programme was significantly expanded and deepened in 2021 with a view to strengthening its capacity to provide support to beneficiaries and especially least-developed countries (LDCs) (largely African countries) so that they can more fully embrace the multilateral trading system.
Abstract by the author: The commonplace narrative regarding China's participation in the WTO is that the original expectations have not been matched in subsequent experience. China has not behaved in accordance with the spirit (and sometimes the letter) of its commitments. Reactions by trading partners have been from critical to hostile, and some have even called for a WTO without China, ignoring the boost to international trade that China's accession has provoked. Yet, China's participation in the WTO cannot remain unaddressed. The US almost brought the WTO to its knees largely because of China, and the EU has enacted laws to counteract China's trade expansion. In this short paper, we argue that the solution to the China-issue passes through an addition and reinvigoration of the multilateral trade rules.
Abstract by the author: This article examines the Joint Statement Initiative on Electronic Commerce (E-Commerce JSI), which is being negotiated at the World Trade Organization (WTO) and aims to harmonize international digital trade rules. The E-Commerce JSI is a concrete opportunity for the WTO to demonstrate the ongoing value of its rule-making function at a time when it is under increasing pressure on a range of fronts. However, it also faces several challenges to its conclusion, including resolving differences on key rules (such as on data flows and localization), clarifying the development dimension of the rules being negotiated, and finding a path to include the ultimate agreement in the WTO architecture. This article examines the early successes and promises of the E-Commerce JSI, before assessing three key challenges it now faces. It concludes that the timely finalization of the E-Commerce JSI will be a major win for the WTO, both in terms of substantive rules and in highlighting the relevance of the multilateral institution to the modern development of international trade law. It explains the key obstacles to the conclusion of the negotiation likely rest on the interlinked issues of better communicating the JSI's development dimension, finding an acceptable compromise on the level of ambition for the rules, and integrating the JSI into the WTO architecture.
Abstract by the author: We use a new database of commitments made during the process of ratifying the Trade Facilitation Agreement (TFA) to study variation in countries’ commitment behaviour. The TFA is a novel World Trade Organization agreement because it allows developing countries to select commitments from a menu of best practices in trade facilitation, rather than to consent, or not, to a comprehensive package of negotiated commitments. The operation of this á la carte approach to concluding trade agreements is worthy of study in its own right, but the commitment data also offer a high‐level description of progress in an international effort to improve border management procedures around the globe. Our study uses data on TFA commitments to describe progress across subcomponents of the agreement. A regression model shows that the number of Type A trade facilitation commitments that a country made in the TFA ratification process depends on its level of development, population size, ability to control corruption and foreign aid received to support trade facilitation. We use multidimensional scaling techniques to study differences in the content of national commitment bundles. This approach demonstrates that variation in the content of countries’ commitments is closely tied to the number of commitments made.
Abstract by the authors: The article examines the dialogue between the Global Unions, the World Bank and the International Monetary Fund, which was formalized in 2002 and was originally initiated by the Global Unions. The dialogue takes place at three levels: headquarters, sector and country level. The Global Unions try to use the dialogue to persuade the international financial institutions to change their policies to promote and integrate a stronger social component within the system of global governance. The article focuses on the headquarters-level dialogue and examines some of the factors which promote and hinder the success of the dialogue from the perspective of the Global Unions.
Abstract by the authors: This article offers one of the first comprehensive analyses of China’s emerging practice in subsidizing the low carbon energy (LCE) transition by using the new energy vehicles (NEVs) industry as a case study. It puts forward a fresh framework for this analysis by dividing the NEV value chain into three segments: upstream, midstream, and downstream. Based on this framework, it expounds a strategic shift of China’s subsidization strategy across the NEV value chain, that is, from disproportionately subsidizing the midstream segment that produces NEVs and parts to increasingly subsidizing the upstream and downstream segments to promote research and development (R&D) and expansion of NEV infrastructure and consumption throughout the economy. It argues that this shift mainly comes out of the evolution of China’s industrial policies and economic priorities, which will continue to play a decisive role in the future restructuring and transformation of the NEVs sector. This shift may also reflect China’s intention to reduce potential trade conflicts and maximize WTO-compliance but only to the extent that doing so would not unduly constrain its capacity to pursue its economic goals and industrial policies. In addition, while the WTO rules and jurisprudence may accommodate some of these subsidies (e.g., NEV infrastructure subsidies), the relevant rules will need to be further developed to provide more policy space for other types of subsidies used worldwide (e.g., R&D subsidies). Until then, it remains debatable as to whether the WTO provides sufficient room for countries to facilitate a green recovery in the post-pandemic era.
Abstract by the authors: The extent to which official development assistance (ODA) conforms to internationally agreed goals and principles of aid effectiveness may be influenced by donors’ national interests. Disentangling the extent to which national ODA is motivated by development goals vs. commercial self-interest is difficult. European Union (EU) member states provide external aid through EU-level institutions and independently through national aid programs. Theory suggests pooled EU-level aid facilitates satisfying development effectiveness principles while bilateral ODA is more likely to reflect national interests. We investigate this hypothesis for a subset of ODA, aid for trade (AfT), provided by donors to recipient countries between 2002 and 2018. We find a strong, statistically significant positive relationship between AfT provided by EU donors and their exports to recipient countries. In contrast, AfT provided by EU institutions and non-European states enhances merchandise imports from recipient countries.
Abstract by the authors: At a time when policymakers of the European Union (EU) are pivoting towards a more assertive use of economic power in external relations, this article discusses the merits of situating the much-debated use of economic sanctions and other economic power-based instruments in the broader terminology of EU diplomatic capabilities. Pointing out a number of shortcomings in traditional literature on geoeconomics and economic statecraft, the article applies the concept of “geoeconomic diplomacy” to demonstrate how the EU’s geoeconomic success will heavily depend on the abilities of diplomats and civil servants from institutions and member states to engage in viable relationships with relevant public and private actors in the state-market realm. Based hereon, it identifies institutional and context-specific challenges that could affect the comprehensive realisation of recent EU policy reforms relevant to the geoeconomic agenda: (a) institutional measures to ensure a more robust enforcement of sanctions, (b) a new anti-coercion instrument to counter coercive trade practices by third countries, and (c) a more efficient, focused, and strategic utilisation of EU development funds for purposes of stability and peace. The article concludes by discussing the prospects for bringing such instruments closer together at the level of practical implementation through the establishment of stronger relationships between practitioners working across the EU’s various geoeconomic intervention areas.
Abstract by the authors: In the wake of unsettling conflicts and democratic backsliding, states and organisations increasingly respond with sanctions. The European Union (EU) is one of them: Brussels makes use of the entire toolbox in its foreign policy, and its sanctions appear in different forms—diplomatic measures, travel bans, financial bans, or various forms of economic restrictions. Yet, there is little debate between different strands in the literature on EU sanctions, in particular concerning measures under the Common Foreign and Security Policy and those pertaining to the development and trade policy fields. Our thematic issue addresses this research gap by assembling a collection of articles investigating the design, impact, and implementation of EU sanctions used in different realms of its external affairs. Expanding the definition of EU sanctions to measures produced under different guises in the development, trade, and foreign policy fields, the collection overcomes the compartmentalised approach characterising EU scholarship.
Abstract by the author: How is wealth distributed when the economy grows? I study this question in the context of African countries and ethnic groups. If wealth is distributed proportional to population, larger ethnic groups should benefit more when economic activity increases. Using nighttime light and individual level data to geographically locate wealth, I find the exact opposite: Smaller ethnic groups, particularly those in political power, benefit more from increased economic activity than larger ones. The results indicate that political elites in power redistribute wealth from larger ethnic groups. As a result, people’s satisfaction with democracy and trust in institutions reduces, casting a shadow on the implementation of trade liberalization policies in developing countries. Instrumental variables estimating exploiting exogenous variation in trading activity confirm initial results. •How is wealth distributed when the economy grows?•This Paper provides evidence that political elite capture the gains from trade.•Elite capture has negative consequences for individuals’ satisfaction with democracy and trust in institutions.•Results cast a shadow on trade policies’ impact on (democratic) development.
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