nep-int New Economics Papers
on International Trade
Issue of 2007‒01‒23
seven papers chosen by
Martin Berka
Massey University

  1. Outsourcing Tariff Evasion: A New Explanation for Entrepot Trade By Raymond Fisman; Peter Moustakerski; Shang-Jin Wei
  2. The Free Trade Agreement Morocco-EU: A simulation of the impact on bilateral flows By José Vicente Blanes Cristóbal; Juliette Milgram Baleix
  3. The Trade Effects of Preferential Arrangements: New Evidence from the Australia Productivity Commission By Dean A. DeRosa
  4. Trade in Business Services in General Equilibrium By James R. Markusen
  5. Turkish EU Membership: A Simulation Study on Economic Effects By Pekka Sulamaa; Mika Widgrén
  6. Dutch retail trade on the rise? By Harold Creusen; Björn Vroomen; Henry van der Wiel; Fred Kuypers
  7. Renewable Resources, Pollution and Trade in a Small Open Economy By Horatiu A. Rus

  1. By: Raymond Fisman; Peter Moustakerski; Shang-Jin Wei
    Abstract: Traditional explanations for indirect trade through an entrepot have focused on savings in transport costs and on the role of specialized agents in processing and distribution. We provide an alternative perspective based on the possibility that entrepots may facilitate tariff evasion. Using data on direct exports to mainland China and indirect exports via Hong Kong SAR, we find that the indirect export rate rises with the Chinese tariff rate, even though there is no legal tax advantage to sending goods via Hong Kong SAR. We undertake a number of extensions to rule out plausible alternative hypotheses based on existing explanations for entrepot trade.
    JEL: F1 O10 O17
    Date: 2007–01
  2. By: José Vicente Blanes Cristóbal (Universidad Pablo de Olavide); Juliette Milgram Baleix (Universidad de Granada)
    Abstract: We analyse the effect due of the next FTA between Morocco and the EU on bilateral Moroccan imports. As our main contribution to the existing literature, we include in our gravity equation tariff data at the industry level. This allows to better estimate trade determinants and also makes possible to perform simulations of the tariff dismantling taking into account its different path for each industry and year. A complete tariff dismantling will double the average yearly trade growth observed in the years just before the transition period to the FTA begun. The average effect follows the tariff reduction schedule being greater at the beginning and at the end of the transition period. The effect is positive for all EU Member States but exports growth to Morocco is greater for Portugal, Greece, Slovakia, Lithuania and Spain and lower for Germany, Denmark, Finland, France and Sweden. By industries, the faster growth are predicted for Leather and leather products, Wood and wood products, Textiles and textile products, Rubber and plastic products and Pulp, paper an paper products and publishing and printing. Finally, we also find a positive effect of Moroccan immigration in the EU on bilateral trade.
    Keywords: Liberalisation; EU; Morocco; Free Trade Area; Tariff; Immigration; gravity equation
    JEL: F10 F13 F14 F15 F17 F22
    Date: 2006
  3. By: Dean A. DeRosa (ADR International Ltd)
    Abstract: This paper critically examines “new” evidence from the gravity model that indicates the majority of preferential trading arrangements (PTAs) today are predominantly trade diverting. This new evidence on trade diversion was presented in a recent Australia Productivity Commission (APC) working paper. Although no major faults are found in the methodology of the APC study, the present analysis finds the opposite conclusion—that the majority of current PTAs are predominantly trade creating—when a variant of the gravity model formulated by Andrew Rose is applied to upto- date regression data using a variety of econometric methods, including the Tobit regression method employed by the APC study.
    Keywords: trade policy, preferential trading arrangements, free trade agreements, gravity models
    JEL: F13 F15 F17
    Date: 2007–01
  4. By: James R. Markusen
    Abstract: Trade in business services has been attracting attention from academic researchers, policy makers, and business journalists. While there are many anecdotes, there has been little in the way of formal theory applied to this issue. In this paper, we adapt a general model of fragmentation of production activities to try to capture the specific features of business services. Following a general discussion, we calibrate a numerical general-equilibrium simulation model to a situation in which both trade and foreign investment in services are initially banned or technically infeasible. We then compute three counter-factual scenarios: one in which trade but in investment in services is feasible or allowed, one in which investment but not trade is allowed, and one in which both trade and investment in services is allowed.
    JEL: F0 F2 F23
    Date: 2007–01
  5. By: Pekka Sulamaa; Mika Widgrén
    Abstract: This paper evaluates the economic effects of Turkish EU membership. The evaluation is based on the widely utilized computable general equilibrium called model GTAP (Global Trade Analysis Project). Imperfect competition is modelled by existence of scale economies on non agricultural sectors. The latest GTAP database version (base year 2001) is aggregated into seven regions: Turkey, Germany-Austria, North EU, South EU, Balkan countries, NAFTA, ASIA and Rest of World. We analyse economic effects of abolishing trade barriers between the EU25 and Turkey and applying common external tax on Turkey. Turkish EU membership is clearly beneficial for Turkey and it does not seem to have significant negative impact for the rest of the world. If we take scale economies into account the aggregate effects are larger than in perfect competition case.
    Keywords: Turkey, EU, CGE, international trade
    Date: 2007–01–12
  6. By: Harold Creusen; Björn Vroomen; Henry van der Wiel; Fred Kuypers
    Abstract: The Dutch retail trade demonstrated a relatively meagre performance in terms of productivity (growth) during the 1990s; especially seen from an international perspective. This study analyses the productivity performance of the Dutch retail trade in more detail; and focuses on competition and innovation as two main drivers of productivity growth. More precisely; it takes the mutual relationship between competition; innovation and productivity explicitly into account. Between 1993 and 2002 changes in competition varied substantially within the retail trade. However, on average competition slightly declined. Furthermore, only a few firms in the Dutch retail trade innovate. Regression analysis reveals that both competition and innovation enhance productivity growth directly. Further, fiercer competition induces more innovation, and consequently also raises productivity indirectly via innovation.
    Keywords: competition; innovation; productivity; measurement; productivity policy
    JEL: D24 L1 L5 L81 O31
    Date: 2006–12
  7. By: Horatiu A. Rus (University of British Columbia)
    Abstract: Industrial pollution can have damaging effects on resource-based productive sectors. International trade creates opportunities for overexploitation of the open-access renewable resources but also for separating the sectors spatially. The paper shows that, depending on the relative damage inflicted by the two industries on the environment, it is possible that the production externality will persist and that specialization in the dirty good may not be the obvious choice from a welfare perspective. Also, the resource exporter does not necessarily have to lose from trade even when specializing incompletely, due to the partially offsetting external effects.
    Keywords: Renewable Resources, Pollution, Production Externalities, Environment, International Trade
    JEL: Q27 Q22 Q53
    Date: 2006–11

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