nep-int New Economics Papers
on International Trade
Issue of 2015‒01‒26
forty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Canada-Korea Free Trade Agreement: What it Means for Canada By Dan Ciuriak
  2. Global production with export platforms By Tintelnot, Felix
  3. Food trade impacts of trade agreements in the developing world By Mujahid, Irfan
  4. The Role of E-governance on Agricultural Trade By BISWAS, TRINA; KENNEDY, P. LYNN
  5. Trade policy substitution: Theory and evidence from Specific Trade Concerns By Beverelli, Cosimo; Boffa, Mauro; Keck, Alexander
  6. Trade, import competition and productivity growth in the food industry By Olper, Alessandro; Pacca, Lucia; Curzi, Daniele
  7. Google matrix analysis of the multiproduct world trade network By Leonardo Ermann; Dima L. Shepelyansky
  8. Latin American Agriculture in a World of Trade Agreements By Josling, Tim; Paggi, Mechel; Wainio, John; Yamazaki, Fumiko
  9. Firm heterogeneity and costly trade: a new estimation strategy and policy experiments By Cherkashin, Ivan; Demidova, Svetlana; Kee, Hiau Looi; Krishna, Kala
  10. Potential Impact of TPP Trade Agreement on US Bilateral Agricultural Trade: Trade Creation or Trade Diversion? By Yeboah, Osei Agyeman; Shaik, Saleem; Agyekum, Afia Fosua
  11. TTIP: if free trade coming to the North Atlantic? By Dennis Novy
  12. Trade facilitation provisions in regional trade agreements traits and trends By Neufeld, Nora
  13. Servification of Manufacturing Firms Makes Divides in Trade Policy-Making Antiquated By Lodefalk, Magnus
  15. Trade Policy Uncertainty and the WTO By Valeria Groppo; Roberta Piermartini
  16. Conquering the EU market with new comprehensive trade agreements –simulating DCFTAs between the EU and neighbour countries By Rau, Marie-Luise
  17. Trade Deflection arising from U.S. Antidumping Duties on Imported Shrimp By Wang, Xiaojin; Reed, Michael
  18. The relationship between services trade and government procurement commitments: Insights from relevant WTO agreements and recent RTAs By Anderson, Robert D.; Locatelli, Claudia; Müller, Anna Caroline; Pelletier, Philippe
  19. China’s soybean import allocation analysis by country-of-origin By Zhu, Manhong; Seale, James L. Jr
  20. The global trade slowdown: cyclical or structural ? By Constantinescu, Cristina; Mattoo, Aaditya; Ruta, Michele
  21. Export policies and the general agreement on trade in services By Adlung, Rudolf
  22. Quality Upgrading, Competition and Trade Policy: Evidence from the Agri-Food Sector By Curzi, Daniele; Raimondi, Valentina; Olper, Alessandro
  24. Gains from Trade under Quality Uncertainty By Kunal Dasgupta; Jordi Mondria
  25. POTENTIAL TRADE IMPLICATIONS OF JOINING THE EURO ZONE FOR THE POLISH AGRO-FOOD SECTOR By Figiel, Szczepan; Hamulczuk, Mariusz; Klimkowski, Cezary; Kufel, Justyna
  26. Is there a trade-off between NTMs and Tariff protection in Mediterranean countries? By Marco, Lorena Tudela; Martinez-Gomez, Victor; Álvarez-Coque, José María García
  27. On Estimation of Gravity Equation: A Cluster Analysis By Bozena Bobkova
  28. On the existence and characterization of unequal exchange in the free trade equilibrium By Naoki Yoshihara; Soh Kaneko
  29. The determinants of quality specialization By Dingel, Jonathan I.
  30. “Food Processing Firms, Input Quality Upgrading and Trade” By Tseng, Eric; Sheldon, Ian
  32. The Environment, Trade Openness, and Domestic and Foreign Investments By Elmarzougui, Eskandar; Larue, Bruno; Tamini, Lota, D.
  33. Capacities and Absorptive Barriers for International R&D Spillovers through Intermediate Inputs By Neil Foster-McGregor; Johannes Pöschl; Robert Stehrer
  34. Price Damping and Price Insulating Effects of Wheat Export Restrictions in Kazakhstan, Russia, and Ukraine By Götz, Linde; Djuric, Ivan
  35. Thoughts on how trade, and WTO rules, can contribute to the post-2015 development agenda By Roberts, Michael
  36. Effects of Imports on Shrimp Prices in the Gulf & South Atlantic By Soley, Graham; Hu, Wuyang
  37. Triggering Factors for US Import Refusals By Nguyen, Ly; Robert, Nelson; Norbert, Wilson
  38. Export Performance and Survival in Russia: Why some Regions grow fast and others don't By Sergey Kadochnikov; Anna Fedyunina
  39. Intellectual property provisions in regional trade agreements: Revision and update By Valdés, Raymundo; McCann, Maegan
  40. Import Dependency of Food Production By Knuuttila, Marja; Vatanen, Eero; Niemi, Jyrki; Jansik, Csaba
  41. India’s grain security policy in the era of high food prices: a computable general equilibrium analysis By Yu, Wusheng; Bandara, Jayatilleke S.
  42. TTIP und ihre Auswirkungen auf Österreich By Fritz Breuss

  1. By: Dan Ciuriak
    Keywords: International and Trade Policy
    JEL: F14 F15 F17
    Date: 2015–01
  2. By: Tintelnot, Felix
    Abstract: Most international commerce is carried out by multinational firms, which use their foreign affiliates for the majority of their foreign sales. In this paper, I examine the determinants of multinational firms' location and production decisions and the welfare implications of multinational production. The few existing quantitative general equilibrium models that incorporate multinational firms achieve tractability by assuming away export platforms - i.e. they do not allow foreign affiliates of multinationals to export - or by ignoring fixed costs associated with foreign investment. I develop a quantifiable multi-country general equilibrium model, which tractably handles multinational firms that engage in export platform sales and that face fixed costs of foreign investment. I first estimate the model using German firm-level data to uncover the size and nature of costs of multinational enterprise and show that fixed costs of foreign investment are large. Second, I calibrate the model to data on trade and multinational production for twelve European and North American countries. Counterfactual results reveal that multinationals play an important role in transmitting technological improvements to foreign countries as they can jump the barriers to international trade; I find that a twenty percent increase in the productivity of US firms leads to welfare gains in foreign countries an order of magnitude larger than in a world in which multinational production is disallowed. I demonstrate the usefulness of the model for current policy analysis by studying the pending Canada-EU trade and investment agreement; I find that a twenty percent drop in the barriers to foreign production between the signatories would divert about seven percent of the production of EU multinationals from the US to Canada.
    Keywords: multinational enterprise,production location decisions,export platform,constrained maximum likelihood estimation
    JEL: F12 F23 L23
    Date: 2014
  3. By: Mujahid, Irfan
    Abstract: This study investigates food trade impacts of the enormous numbers of trade agreements in the world with special focus on developing countries. The Gravity model is used for the empirical analysis and developed in a large panel data setting. The results suggest that both multilateral and regional trade institutions have delivered significant positive impacts of food trade among developing countries. Although the WTO is found to have negative implications on food trade in general, it has increased food trade among developing countries. RTAs are found to have increased food trade among developed countries as well as the developing countries.
    Keywords: WTO, regional trade agreement, food trade, food security, International Relations/Trade,
    Date: 2014–08
    Abstract: Using an augmented gravity model this paper examines how different aspects of trade facilitations affect the export performance of the nations. The main objective of this paper is to evaluate the effect of one of the main pillars of trade facilitations namely e-governance on international trade. The augmented gravity model is estimated using pooled and cross-sectional, OLS and Instrumental Variable regression. The paper studies the impact of e-governance on agricultural exports for the years 2003 – 2005. The results suggest that better e-governance positively affects the volume of agricultural exports when controlled for endogeneity.
    Keywords: trade facilitation, gravity model, e-governance, bilateral agricultural trade, Institutional and Behavioral Economics, International Development, International Relations/Trade, Public Economics,
    Date: 2015–01–15
  5. By: Beverelli, Cosimo; Boffa, Mauro; Keck, Alexander
    Abstract: We investigate to what extent the probability that a Specific Trade Concern (STC) is raised in the WTO against a Member in a given sector is affected by past reductions in applied tariffs. Employing an identification strategy based on 'new measures', we find evidence of a substitution of non-tariff measures for tariffs both in the sample of TBT and in the sample of SPS concerns. While in the SPS sample this result holds both among developed and developing economies, in the TBT sample such 'trade policy substitution' only occurs when the country maintaining the measure at issue is economically developed. These results are consistent with our theoretical model, which predicts policy substitution between tariffs and standards in economies where meeting such standards is relatively less costly and in sectors where meeting such standards is relatively more important from the perspective of producers.
    Keywords: Import,International Trade Agreements,Non Tariff,Tariff,WTO
    JEL: F13 F14 F15
    Date: 2014
  6. By: Olper, Alessandro; Pacca, Lucia; Curzi, Daniele
    Abstract: Melitz and Ottaviano’s (2008) firm-heterogeneity model predicts that trade liberalization induces a selection process from low to high productivity firms, which translates to an industry productivity growth. A similar firms’ selection effect is induced by market size. In this paper, these predictions are tested across 25 European countries and 9 food industries, over the 1995–2008 period. Using different dynamic panel estimators we find strong support for the model predictions, namely that an increase in import penetration is systematically positively related to productivity growth. The results are robust to measurement issues in productivity, controlling for market size, country and sector heterogeneities, and for the endogeneity of import competition. Interestingly, this positive relationship is almost exclusively driven by competition in final products coming from developed (especially EU-15) countries, suggesting that EU food imports are closer substitutes for domestic production than non-EU imports. These results have some potentially interesting policy implications.
    Keywords: Import competition, Productivity growth, Food Industry, European Countries, Dynamic panel model, International Relations/Trade,
    Date: 2014–08
  7. By: Leonardo Ermann; Dima L. Shepelyansky
    Abstract: Using the United Nations COMTRADE database \cite{comtrade} we construct the Google matrix $G$ of multiproduct world trade between the UN countries and analyze the properties of trade flows on this network for years 1962 - 2010. This construction, based on Markov chains, treats all countries on equal democratic grounds independently of their richness and at the same time it considers the contributions of trade products proportionally to their trade volume. We consider the trade with 61 products for up to 227 countries. The obtained results show that the trade contribution of products is asymmetric: some of them are export oriented while others are import oriented even if the ranking by their trade volume is symmetric in respect to export and import after averaging over all world countries. The construction of the Google matrix allows to investigate the sensitivity of trade balance in respect to price variations of products, e.g. petroleum and gas, taking into account the world connectivity of trade links. The trade balance based on PageRank and CheiRank probabilities highlights the leading role of China and other BRICS countries in the world trade in recent years. We also show that the eigenstates of $G$ with large eigenvalues select specific trade communities.
    Date: 2015–01
  8. By: Josling, Tim; Paggi, Mechel; Wainio, John; Yamazaki, Fumiko
    Keywords: Latin American and Caribbean (LAC) countries have been among the most active participants in the negotiation of regional and bilateral FTAs. The countries of the region are members of 73 of the 259 FTAs notified to the WTO as currently in force, with 29 of these agreements containing tariff concessions made to one or more Latin American partners: the remaining 44 are between an LAC member country and a third country. Among LAC countries already linked by an FTA, a large percentage of agricultural tariffs are already duty free. But the progress in this direction seems to have stalled, with continued tensions in MERCOSUR and political difficulties in the Andean Community. Negotiation of the proposed Free Trade Areas of the Americas (FTAA) has been shelved, and the MERCOSUR-EU negotiations are moving at an imperceptible speed. Meanwhile other countries are moving ahead rapidly by negotiating ambitious mega-agreements, particularly the Trans Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (T-TIP). The only LAC countries actively involved in the TPP talks are Mexico, Chile, and Peru. If either or both of these mega-agreements are concluded the impacts on the region could be significant. These impacts include trade diversion and preference erosion in major import markets, as competitors improve their market access. They could also involve the de facto acceptance of regulatory decisions made by the mega-agreement partners. The Latin American strategies toward these potentially significant agreements and the impacts of the TPP and T-TIP on Latin American agriculture have so far gone largely unstudied. Several possible avenues exist for Latin American countries to counter the impact of a TPP and TTIP on agricultural exports. One possible avenue would be to strengthen existing bilateral trade agreements within the region and to rely on multilateral trade negotiations to improve market access in other regions. Another possible strategy would be to link existing multi-country agreements, such as MERCOSUR and the Pacific Alliance, to NAFTA, in effect reviving the idea for a Free Trade Area of the Americas (FTAA) under a different structure. Another possibility would be to complete and expand the scope of the MERCOSUR-EU FTA talks, to include other LAC countries. A fourth possible action would be for those countries that are not yet part of the negotiations to “sign on” to the TPP in so far as it is an “open access” agreement., Agribusiness, International Development, International Relations/Trade,
    Date: 2015
  9. By: Cherkashin, Ivan; Demidova, Svetlana; Kee, Hiau Looi; Krishna, Kala
    Abstract: This paper builds a tractable partial equilibrium model to help explain the role of trade preferences given to developing countries, as well as the efficacy of various subsidy policies. The model allows for firm level heterogeneity in demand and productivity and lets the mass of firms that enter be endogenous. Trade preferences given by one country have positive spillovers on exports to others in this model. Preferences given by the European Union to Bangladesh in an industry raise profits, resulting in entry, and some of these firms also export to the United States. The parameters of the model are estimated using cross sectional customs data on Bangladeshi exports of apparel to the United States and European Union. Counterfactual experiments regarding the effects of reducing costs, both fixed and marginal, or of trade preferences offered by an importing country are performed. The counterfactuals show that reducing fixed costs at various levels has very different effects and suggest that such reductions are more effective in promoting exports when applied at later stages when firms are more committed to production. A subsidy of 1.5 million dollars to industry entry costs raises exports by only 0.4 dollars for every dollar spent, but when applied to fixed costs of production, it raises exports by $25 per dollar spent.
    Keywords: Markets and Market Access,Economic Theory&Research,Access to Markets,Environmental Economics&Policies,Currencies and Exchange Rates
    Date: 2015–01–01
  10. By: Yeboah, Osei Agyeman; Shaik, Saleem; Agyekum, Afia Fosua
    Abstract: Trans-Pacific Partnership (TPP) trade agreement is a trade agreement U.S is negotiating with 11 other countries in the Asia-Pacific region (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) to reduce or eliminate tariffs on U.S. products exported to the TPP countries. With TPP, U.S expects to expand its trade with members of the partnership; resulting in GDP growth. However, there exist large concerns about the potential negative impact TPP will have on U.S. agricultural trade. Therefore, this paper examines the potential effect of TPP agreement on U.S agricultural trade using panel VAR and IRF models. A system of three VAR equations is developed for the three endogenous variables agricultural trade, real exchange rate, and the price ratio of imports to exports. In addition, the future pattern of trade is determined using the IRF curves. The lagged coefficients of agricultural trade volumes were significant in all three models implying current trade patterns are influenced by past volumes of trade. Also, the lagged price ratios have negative effect on current agricultural trade volumes as expected. Overall, the study found that a unit shock in price ratios as a result of the TPP agreement leads to a trade creation for U.S in the short run but in the long run, leads to more trade diversion than trade creation.
    Keywords: Trans-Pacific Partnership Agreement, Vector Autocorrelation, Impulse Response Function, International Relations/Trade,
    Date: 2015
  11. By: Dennis Novy
    Abstract: If successfully concluded, the Transatlantic Trade and Investment Partnership (TTIP) would be the most ambitious free trade agreement in history. Dennis Novy explains that while the potential benefits from liberalised transatlantic trade are large, getting there will be an arduous process and many difficulties will have to be overcome.
    Keywords: Transatlantic trade, globalisation, free trade, Europe, USA
    Date: 2015–01
  12. By: Neufeld, Nora
    Abstract: The paper first surveys the Trade Facilitation landscape at the regional level and analyses the main forces shaping it. It identifies key factors driving regional Facilitation approaches, examining their priorities, features and underlying philosophies. The study also highlights significant trends in regional Trade Facilitation provisions and analyses their implications. The paper then compares regional and multilateral initiatives, looking at areas of convergence and divergence, and highlighting where potential gaps exist. It analyses negotiating positions in the respective frameworks and discusses both the benefits and limitations of the resulting Trade Facilitation provisions. Examining the impact of the recently concluded WTO Agreement, the study highlights its potential value added.
    Keywords: regional trade agreements,trade facilitation,WTO Agreement on Trade Facilitation
    JEL: F13 F15 F53
    Date: 2014
  13. By: Lodefalk, Magnus (Örebro University School of Business)
    Abstract: The decline of manufacturing in OECD countries and job implications has been a long-time concern. Recently, policy-makers have set out for reindustrialisation. A trend related to these concerns and aspirations is the servicification of manufacturing – the increase in use, produce and sales of services. However, servicification of firms and its role for foreign trade and policy have only received limited attention. This paper reviews microlevel evidence and discusses trade policy implications. Servicification is found in several countries, including China, and there are indications that imported, domestic and exported services are key for the competitiveness of today’s manufacturing firms and their participation in international value chains. Therefore, the historic divides in trade-policy-making between trade in manufactures and services, between offensive and defensive interests, and between modes of supply are largely antiquated. Potential trade policy implications also include to: reform how governments consult business for trade negotiations; facilitate cross-border movement of persons; and cut tariffs on services embodied and embedded in manufactures and their sales.
    Keywords: Servicification; services; manufacturing; deindustrialization; offshoring; onshoring; trade; trade policy; GATT; WTO; Mode 4
    JEL: F13 F15 L16 L24 L60 O14
    Date: 2015–01–12
    Abstract: This paper analyzes the effect of firm size, capital intensity, profitability and agribusiness sector classification on a firm’s probability and intensity (i.e. the ratio of export sales to total sales) of exporting with a Tobit model. Our results show that Firm Size, Capital Intensity and Profitability have quite small negative effects on the export probability and intensity of U.S. agribusiness firms. In contrast, to which agribusiness sector a firm belongs show strong and robust impact on its export behavior. The agribusiness sectors we identified imply the comparative advantages of U.S. agriculture.
    Keywords: Agribusiness, Export, Profitability, Self-selection, Agribusiness, International Relations/Trade,
    Date: 2015
  15. By: Valeria Groppo; Roberta Piermartini
    Abstract: Do WTO commitments reduce the risk of trade policy reversals? To address this question, we rely on the theoretical model of varying cooperative tariffs by Bagwell and Staiger (1990) to specify our empirical model for the probability of a tariff increase. We then study how WTO tariff commitments affect this probability. We estimate our model using a database of WTO bound tariffs that we built for all WTO Members from 1996 to 2011 at the HS 6-digit level of disaggregation. Our results show that WTO commitments significantly reduce the probability of a tariff increase, even when the bound tariff is above the MFN applied rate. In addition, the WTO reduces trade policy uncertainty through its monitoring function. These results are robust to including political economy explanations of tariff changes and to addressing endogeneity concerns.
    Keywords: Gains from trade agreements, commitments, tariffs formation, binding overhang
    JEL: F1 F5
    Date: 2014
  16. By: Rau, Marie-Luise
    Abstract: The EU has undertaken considerable efforts of establishing Deep and Comprehensive Trade Agreements (DCFTAs). The EU DCFTAs go beyond tariff liberalisation, specifically targeting “behind the border” measures, commonly referred to non-tariff measures (NTMs). While offering benefits, the contents and implementation of the DCFTAs has been controversially discussed, and this paper investigates whether DCFTAs will actually help partner countries to sell their products on the EU market. For the analysis, the general equilibrium model MAGNET (Modular Applied General Equilibrium Tool) is applied in a recursive dynamic general equilibrium framework. In the simulation, DCFTAs are depicted in terms of a tariff liberalisation and the elimination of NTMs between the EU and DCFTA partners. The latter represents the regulatory orientation towards the EU, whereby the standard “ice-berg costs” approach is implemented in the simulation. The simulation results show that the DCFTA partner countries will not equally benefit from increased trade with the EU. In particular small DCFTA partners do not seem to be able to tap into the potential of the improved trading relations without the DCFTA. Other DCFTA partners however will be able to considerably increase their export to the EU, and in this sense they will conquer the EU market.
    Keywords: International trade, regional trade agreements, trade liberalisation, tariff liberalisation, non-tariff measures, DCFTAs, EU, CGE, International Relations/Trade,
    Date: 2014–08
  17. By: Wang, Xiaojin; Reed, Michael
    Abstract: We empirically test whether the investigation and impositions of U.S. antidumping duties in 2004 on imported shrimp distorts a named country's exports to third markets. We constructs a panel of bilateral, disaggregated product-level data for annual trade flows of subjected shrimp between the six named countries (Brazil, China, Ecuador, India, Thailand, and Vietnam) and four major importers (EU, Indonesia, Japan, and Malaysia) between 1999 and 2010. Our results show that named countries’ trade flows were reoriented to other destination markets when U.S. anti-dumping duties were levied against their shrimp products.
    Keywords: Agricultural and Food Policy, International Relations/Trade,
    Date: 2015
  18. By: Anderson, Robert D.; Locatelli, Claudia; Müller, Anna Caroline; Pelletier, Philippe
    Abstract: To date, government procurement has been effectively carved out of the main multilateral rules of the WTO system. This paper examines the systemic and other ramifications of this exclusion, from both an economic and a legal point of view. In addition to relevant elements of the WTO Agreements, particularly the Agreement on Government Procurement (GPA) and the General Agreement on Trade in Services (GATS), it derives insights from a large number of Regional Trade Agreements (RTAs) that embody substantive provisions on both government procurement and services trade. An important finding is that, from an economic perspective, general market access commitments with respect to services trade and commitments regarding government procurement of services are complementary and mutually reinforcing. In contrast, from a legal point of view and at the multilateral level, disciplines in the two areas have been "divided up" into two Agreements with different (but complementary) spheres of application: the key provisions regarding the scope of application of the GATS and the GPA make clear that each serves purposes that the other does not. Analysis of corresponding provisions of RTAs broadly supports and extends this finding. In light of the foregoing, a question arises as to possible ways of deepening disciplines in this area. Part 5 sets out, for reflection, several related options: (i) the built-in mandate in the GATS for negotiations on services procurement (Article XIII:2); (ii) "multilateralization" of the GPA; (iii) the reactivation of work in the (currently inactive) WTO Working Group on Transparency in Government Procurement; and (iv) the taking up of relevant issues in the context of bilateral or regional negotiations. Overall, we find that each of these possibilities has potential merits, though none is without related challenges.
    Keywords: Agreement,Budget,Commercial Policy,Corruption,Developing Countries,Developing Country,Development,Economic Integration,Expenditure,GATT WTO,General Agreement on Tariffs and Trade,Government,Government Expenditures,International Trade Agreements,International Trade Organizations,Liberalisation,Liberalization,MFN,Multilateralism,Openness,Optimal Trade Policy,Policy,Policy Making,Protection,Protectionism,Protectionist,Public Economics,Public Expenditure,Public Finance,Public Works,State Finance,Trade,Trade Agreements,Trade Liberalization,WTO
    JEL: F13 F15 F5 F53 F59 H5 H57 H7 H72 K2 K29 O1 O24 O29
    Date: 2014
  19. By: Zhu, Manhong; Seale, James L. Jr
    Abstract: The purpose of this paper is to estimate China’s soybeans import allocation by country-of-origin using the input allocation model for the multiproduct firm under input-output seperability. From the results, we find there is a competition between the U.S. and South America (Brazil and Argentina). Therefore, for U.S. policymakers, it might be necessary to provide certain export price support when facing strong international soybean exporting competitions
    Keywords: China soybean imports, joint production, multiproduct firm, differential approach, Agricultural and Food Policy, Demand and Price Analysis, International Relations/Trade, Research Methods/ Statistical Methods,
    Date: 2015
  20. By: Constantinescu, Cristina; Mattoo, Aaditya; Ruta, Michele
    Abstract: This paper focuses on the sluggish growth of world trade relative to income growth in recent years. The analysis uses an empirical strategy based on an error correction model to assess whether the global trade slowdown is structural or cyclical. An estimate of the relationship between trade and income in the past four decades reveals that the long-term trade elasticity rose sharply in the 1990s, but declined significantly in the 2000s even before the global financial crisis. These results suggest that trade is growing slowly not only because of slow growth of gross domestic product, but also because of a structural change in the trade-gross domestic product relationship in recent years. The available evidence suggests that the explanation may lie in the slowing pace of international vertical specialization rather than increasing protection or the changing composition of trade and gross domestic product.
    Keywords: Economic Theory&Research,Emerging Markets,Trade Policy,Free Trade,Trade Law
    Date: 2015–01–01
  21. By: Adlung, Rudolf
    Abstract: In addition to cross-border supply, the Agreement covers three additional types of transactions, i.e. the supply of services via consumer movements abroad as well as the presence of foreign firms and foreign service professionals in the respective markets. At the same time, the GATS accommodates a range of measures, including the use of quantitative restrictions and discriminatory taxes or subsidies, which are clearly constrained under the GATT. Most notably in the current context, the Agreement offers particularly broad scope for various types of export-related interventions, regardless of ensuing market distortions. The social and economic relevance of such measures, not only in sectors such as education or health, but also in producer-oriented services, including transport, telecommunications or finance, is immediately evident. This paper seeks to provide an overview and assessment in the light of relevant GATS provisions and WTO dispute rulings.
    Keywords: GATS,trade in services,export policies
    JEL: F13 F53
    Date: 2014
  22. By: Curzi, Daniele; Raimondi, Valentina; Olper, Alessandro
    Abstract: This paper analyzes the extent to which the reduction of import tariffs ‒ as a measure of import competition ‒ affects the quality upgrading of the food products exported to the EU. This relationship is studied within a ‘distance to the frontier’ model (Aghion et al., 2005) who predicts a non-monotonic relation between competition and innovation. Quality is inferred from trade data using the Khandelwal (2010) method. The results show strong support for the existence of an non-monotonic relationship between competition and quality upgrading, with varieties close to the world frontier more likely to upgrade quality in response to an increase in import competition.
    Keywords: Quality Upgrading, Trade policy, Competition, Distance to the frontier, Food Industry, International Relations/Trade,
    Date: 2014–08
  23. By: Toma, Luiza; Revoredo-Giha, Cesar; Thomson, Steven
    Abstract: To protect Malawian dairy farmers against cheap imports of milk powder, tariffs on dairy imports were increased in 2010. The purpose of this work is to analyse the effects of this policy measure on the dairy trade between Malawi and the European Union (EU). The results show that the increase in tariffs and fluctuations in the international dairy price have not had a significant impact on imports from partners outside trade agreements (e.g., EU) and imports of dairy products, and especially milk powder, are still strong. Since the increase in imports was from products with high value added, these were not destined to increase the availability of affordable products for the vast poor population and to reinforce food security.
    Keywords: Malawian dairy trade, European Union, constant market shares analysis, International Relations/Trade,
    Date: 2014–08
  24. By: Kunal Dasgupta; Jordi Mondria
    Abstract: We add quality uncertainty to a two-country trade model with CES preference and monopolistic competition. There are two kinds of firms - low quality and high quality. Quality is perfectly observable in the domestic market but not in the foreign market. Exporters use price to signal their quality. It is now well established that in such a model with full information, the welfare gains from trade (GFT) can be captured by a sufficient statistic that depends on domestic trade share and the elasticity of substitution. In contrast, in a model with asymmetric information, we show that within the class of separating equilibria, the sufficient statistic always under-estimates GFT, while within the class of pooling equilibria, the sufficient statistic could over-estimate GFT. Nevertheless, GFT are always positive. For an equilibrium refinement, we analyze the determinants of GFT. We show that the actual GFT under asymmetric information could be almost 2.5 times higher than that measured using the sufficient statistic approach.
    Keywords: Quality uncertainty, asymmetric information, signalling, gains from trade
    JEL: D83 F10 F19 L15
    Date: 2015–01–05
  25. By: Figiel, Szczepan; Hamulczuk, Mariusz; Klimkowski, Cezary; Kufel, Justyna
    Abstract: In the period of 1995-2013 the Polish agro-food export exhibited a very dynamic growth. It has happened under free-floating exchange rate system, which is believed to help stimulate exports when the Polish currency depreciates. Using some econometric procedures we have found that the exchange rate fluctuations played very little role in shaping the Polish agro-food trade. A comparison of relative prices of selected agricultural and food products in Poland and in the EU suggests that adoption of euro at a conversion rate close to the recent market levels should not have a significant impact on the Polish agro-food export.
    Keywords: Euro adoption, agro-food trade, Poland, International Relations/Trade,
    Date: 2014–08
  26. By: Marco, Lorena Tudela; Martinez-Gomez, Victor; Álvarez-Coque, José María García
    Abstract: Resulting from the reduction of tariffs, the significance of and the interest in the impact of Non-Tariff Measures on agricultural trade has increased. The aim of this paper is to analyze the relationship between NTMs and tariffs in Mediterranean (MED) countries. A product-by-product taxonomy combining the two measures was created, and later a statistical analysis between them was applied. We identified an overall relatively low level of protection. Our findings indicate that there are dynamic substitution statistical relationships between NTM and tariffs, although with big variations across goods and countries, which gives room to ongoing efforts of harmonization in the area of agricultural trade.
    Keywords: Non Tariff Measures, Mediterranean Countries, agri-food trade, International Relations/Trade,
    Date: 2014–08
  27. By: Bozena Bobkova (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)
    Abstract: This article questions the slope homogeneity in a gravity equation and proposes a partially heterogeneous framework for its estimation using panel data. We suggest to employ K-mean clustering to group countries according to the gravity equation variables. Further, the gravity model is estimated on these created homogeneous groups. We apply this procedure on analysis of German trade data and confirm the slope heterogeneity in the model. When we estimate the model on each cluster separately, the estimated coefficients and their standard errors vary sufficiently. Moreover, we show that the pooled estimation technique severely under- or overestimate the effect of given variables.
    Keywords: gravity model, K-mean clustering, Germany, slope heterogeneity
    JEL: C23 C45 F10 F14
    Date: 2014–12
  28. By: Naoki Yoshihara (Hitotsubashi University); Soh Kaneko (Keio University)
    Abstract: As in Roemer (1982, chapter 1), this paper considers a Marxian Heckscher-Ohlin model of subsistence international economies with a simple Leontief production technique and examines the existence and characterization of free trade equilibria involving the unequal exchange of labor (UEL). The paper provides an almost complete characterization of the domain of economies in which free trade equilibria with incomplete specialization exist. Moreover, the necessary and sufficient condition for a free trade equilibrium to involve UEL is identified.
    Keywords: Unequal exchange of labor, Marxian Heckscher-Ohlin international economies, international division of labor
    JEL: D63 D51
  29. By: Dingel, Jonathan I.
    Abstract: A growing literature suggests that high-income countries export high-quality goods. Two hypotheses may explain such specialization, with different implications for welfare, inequality, and trade policy. Fajgelbaum, Grossman, and Helpman (JPE 2011) formalize the Linder (1961) conjecture that home demand determines the pattern of specialization and therefore predict that high-income locations export high-quality products. The factor-proportions model also predicts that skill-abundant, high-income locations export skill-intensive, high-quality products (Schott, QJE 2004). Prior empirical evidence does not separate these explanations. I develop a model that nests both hypotheses and employ microdata on US manufacturing plants' shipments and factor inputs to quantify the two mechanisms' roles in quality specialization across US cities. Home-market demand explains at least as much of the relationship between income and quality as differences in factor usage.
    Date: 2014
  30. By: Tseng, Eric; Sheldon, Ian
    Abstract: In this paper the heterogeneous firms and trade literature is extended by integrating quality of inputs and outputs in a food and agricultural setting. Recently, Sexton (2013) has suggested that intermediate agricultural input quality is critical in food processing firms’ output quality and pricing decisions. The results presented in this paper indicate that intermediate agricultural input quality, when combined with the quality of other food processing inputs, is important in analyzing the production decision-making of firms. Extending the model of Kugler and Verhoogen (2012), the quality of food processing inputs is integrated into the analysis in two ways: first, it affects the production of the final good, in that higher quality food processing inputs lower the marginal cost of producing the final good; and, second, food processing input quality is complementary to intermediate input quality in determining quality of the final good. By choosing these elements, firms become differentiated on a vertical (quality) level not only because of their capability draw and intermediate input quality choice, but also because of their choice of food processing inputs. Three key results are developed in the paper: first, larger firms, measured by revenue, charge a higher price for their final good, pay a higher price for their inputs, and produce a higher quality final good. Second, firms that produce for export destinations with a higher preference for quality, choose higher-quality inputs. Third, if preference for quality increases in export-destinations new firms enter the export market, while less capable firms are forced to exit.
    Keywords: heterogeneous firms, input quality, food processing, Food Consumption/Nutrition/Food Safety, Production Economics, Research and Development/Tech Change/Emerging Technologies, F12, F61, L66,
    Date: 2015
  31. By: Pol Antra; Teresa C. Fort; Felix Tintlenot
    Abstract: This paper studies the extensive and intensive margins of firms' global sourcing decisions. We develop a quantifiable multi-country sourcing model in which heterogeneous firms self-select into importing based on their productivity and country-specific variables. The model delivers a simple closed-form solution for firm profits as a function of the countries from which a firm imports, as well as those countries' characteristics. In contrast to canonical models of exporting in which firm profits are additively separable across exporting markets, we show that global sourcing decisions naturally interact through the firm's cost function. In particular, the marginal change in profits from adding a country to the firm's set of potential sourcing locations depends on the number and characteristics of other countries in the set. Still, under plausible parametric restrictions, selection into importing features complementarity across markets and firms' sourcing strategies follow a hierarchical structure analogous to the one predicted by exporting models. Our quantitative analysis exploits these complementarities to distinguish between a country's potential as a marginal cost-reducing source of inputs and the fixed cost associated with sourcing from this country. Counterfactual exercises suggest that a shock to the potential benefits of sourcing from a country leads to significant and heterogeneous changes in sourcing across both countries and firms.
    Date: 2014–12
  32. By: Elmarzougui, Eskandar; Larue, Bruno; Tamini, Lota, D.
    Abstract: This paper aims to study the impact of growth and trade openness on the environment at the regional level. We find support for the environmental Kuznet Curve hypothesis for CO2 emissions in Africa, Asia and OECD countries. We find that the pollution haven hypothesis is supported for CO2 in Africa, the Middle East and North Africa, the former United Socialist Soviet Republic and Eastern Europe, and South America, but not for Asia, for which the pollution halo hypothesis could not be rejected. The pollution haven hypothesis is also supported for SO2 emissions in South America while the pollution halo holds for SO2 emissions in Africa. We show that local investment is contributing significantly to both CO2 and SO2 emission increases in most regions while trade openness matters only in OECD and South America.
    Keywords: CO2 and SO2 emissions, domestic investment, foreign direct investment, trade openness, ARDL
    JEL: C3 F18 F21 Q5
    Date: 2013–10
  33. By: Neil Foster-McGregor (The Vienna Institute for International Economic Studies, wiiw); Johannes Pöschl (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract Trade in goods and services is likely to be an important channel for international knowledge diffusion. This paper considers the extent of R&D spillovers through intermediate inputs for a sample of up to 40 developed and developing countries. Results suggest that such spillovers are present and are economically important. We find that countries and industries initially further behind the technological frontier enjoy stronger foreign R&D spillovers. Furthermore, foreign R&D spillovers are stronger in countries with greater absorptive capacity as measured by average years of secondary schooling and R&D spending. In terms of absorption barriers, the results are mixed With the exception of regulations on temporary workers we find that stronger labour market regulation and greater union density is associated with lower foreign R&D spillovers. The evidence for other absorption barriers related to product market, financial and investment regulation provide however no evidence of low regulation encouraging foreign R&D spillovers, with - in some cases - the reverse being found to hold true. Finally, we find that stronger levels of IPR protection can limit the extent of foreign R&D spillovers, possibly by limiting the ability to copy and borrow technology from abroad.
    Keywords: R&D spillovers, intermediates trade, productivity
    JEL: F15 O14 O19
    Date: 2014–10
  34. By: Götz, Linde; Djuric, Ivan
    Abstract: This study analyzes the domestic price effects of export controls for all 3 KRU countries during the global commodity price peaks. We develop two indicators to measure the strength of the export controls’ price damping and price insulating effect within a non-linear long-run price transmission model. Our analysis comprises 11 cases of export controls. Our results indicate heterogeneity in the damping and insulating effects of the export controls among the KRU where only two cases recorded the strongest effects: export ban in Russia (2010) and export tax system in Ukraine (2011).We argue that the effectiveness of export controls in the KRU is generally rather limited.
    Keywords: export controls, market integration, price transmission, crisis policy, Russia, Demand and Price Analysis, International Relations/Trade,
    Date: 2014–08
  35. By: Roberts, Michael
    Abstract: In September 2015, Heads of State and Government will gather in New York to agree the post-2015 development agenda. The role that trade will play in this agenda is neither clear, nor agreed. Yet an open, non-discriminatory, rules-based multilateral trading system underpins sustainable development - a concept that lies at the core of much of the post-2015 debate to date. Indeed, sustainable development is recognized as an objective in the Marrakesh Agreement Establishing the World Trade Organization (WTO). With the aim of stimulating discussion, this paper asks the question of how trade, and WTO rules, can contribute to the post-2015 development agenda? In reply, the author offers some thoughts on 10 contributions that trade, and WTO rules, can make to the post 2015 development agenda. The list is indicative, not exhaustive. The 10 contributions highlight the complex way in which trade and trade policy interact with the evolving debate on the post-2015 development agenda - a debate which encompasses issues ranging from poverty eradication, inclusive growth, climate change mitigation, decent work, food security, access to health services and sustainable development financing, to name but a few of the topics under consideration. The paper organizes the 10 indicative contributions around three headings: trade rules as part of the enabling environment for the achievement of the post-2015 development agenda; the role that trade, and trade policy, can play in meeting specific goals (including possible Sustainable Development Goals); and the contribution that Aid for Trade can make.
    Keywords: WTO,Millennium Development Goals,Sustainable Development Goals,Accession,Inclusive Growth,Food Security,Environment,Intellectual Property,Services,Financing for Development,Aid for Trade,Trade in Value Added,Trade Statistics
    JEL: F1 F13 O19
    Date: 2014
  36. By: Soley, Graham; Hu, Wuyang
    Abstract: Seafood remains a heavily imported product of the U.S., with shrimp being the first in terms of value and volume. When considering the importance of the fishery industry to the South Atlantic and Gulf Coast area economies, shrimping remains a vital enterprise for coastal residents in the United States. Many argue that decreases in the number of registered shrimp vessels could be the result of many factors, one of the strongest influences being foreign competition. With little previous research, this presentations attempts to analyze if empirical evidence exists to claim that increased volumes and values of imported shrimp products have any significant impacts on prices of domestic landings. Data derived from NOAA’S NMFS website are utilized for the following states: Alabama, Texas, Mississippi, Florida, South Carolina, North Carolina, and Georgia. We computed the weighted average price per pound for domestic landings and import shrimp products from 1990 to 2012 by month. A series of panel model specifications reveal that although the quantity of imported products did not appear to have significant impact on domestic prices, the unit price of imported products moved positively with domestic products.
    Keywords: Seafood Trade/Marketing, Price Analysis, Demand and Price Analysis, International Relations/Trade,
    Date: 2015
  37. By: Nguyen, Ly; Robert, Nelson; Norbert, Wilson
    Abstract: Antifreeze in toothpaste and melamine-tainted infant formula have raised concerns about the quality and safety of imports into the US to unprecedented levels. However, the Food and Drug Administration (FDA) cannot inspect all imports, so their inspections are path-dependent (Baylis et al., 2009) and targeted based on risk (Elder, 2013). This research investigates potential factors triggering FDA's import refusals within the three categories of food, drugs, and cosmetics during the period from 2002 to 2014. Triggering factors are differentiated by: 1) FDA's human resource and financial capacity; 2) product-specific characteristics; 3) economic and political pressures in the US and exporting countries; and 4) spillover effects among exporting countries. Number of refusals and ratio of refusals to import value are used as the dependent variable in a dynamic panel data model and in Negative Binominal model, respectively. The dummy variables for 20 countries classified into three regions (Asia, EU, and the Americas) are not statistically significant. Factors related to FDA's human resource and financial capacity, including FDA budget allocation, FDA foreign offices, the Food Safety Modernization Act of 2010 and historical compliance all have a significant influence on refusals. Determination of spillover effects indicates that lagged refusals and food scandal from China caused significant influence on rejections not only from the neighbor countries but also the EU members and American countries.
    Keywords: Import refusals, triggering factor, food, drug, cosmetics., International Relations/Trade, F5,
    Date: 2015
  38. By: Sergey Kadochnikov; Anna Fedyunina
    Abstract: In this paper, we investigate the relationship between export performance and economic growth in Russian regions. We propose a methodology for decomposition of export growth into intensive and extensive margins and distinguish between product- and geographic extensive components within extensive margin. An empirical analysis suggests that higher growth rates in Russian regions are associated with higher intensive margin. We reveal significant differences in export survival of differentiated and homogeneous flows and find evidence of strong effects of distance and institutions on export survival. We argue that Russian regions would experience higher economic growth if they were able to improve their export performance at the intensive margin by providing lower transport costs to the business and by enhancing higher quality of institutions.
    Keywords: export performance, economic growth, intensive margin, extensive margin, export survival, Russian regions
    JEL: F14 R1
    Date: 2015–01
  39. By: Valdés, Raymundo; McCann, Maegan
    Abstract: This is a revision and update of "Intellectual Property Provisions in Regional Trade Agreements" by Valdés and Runyowa (2012). This paper adjusts the methodology applied to assess the intellectual property (IP) provisions contained in regional trade agreements (RTAs) and the aggregation of such provisions into groups; it also updates the RTAs surveyed, from 194 in November 2010 to 245 in February 2014. New information contained in this revision relates to three IP-related investment and non-violation provisions in RTAs. The methodological revisions and new information result in changes to the assessment of the IP content of certain RTAs while the update reveals a growing and increasingly complex network of RTAs with IP content. This revision also provides new insights into possible improvements to the methodological toolkit for analysing IP in RTAs. The paper assembles detailed information about the IP provisions contained in active RTAs notified to the WTO. The goal was to expand beyond the more commonly studied RTAs, to review the full array of agreements notified to the WTO and thus to enable consideration of the implications of this diverse range of norm-setting activity for the multilateral system. Mapping of the IP content in RTAs involving parties from all regions and levels of development is necessary to better understand cross-cutting trends in RTAs, and how all the parts of the international IP framework influence each other. [...]
    Keywords: Regional Trade Agreements,Intellectual Property Rights,WTO,TRIPS
    JEL: F13 F15 F53 O34
    Date: 2014
  40. By: Knuuttila, Marja; Vatanen, Eero; Niemi, Jyrki; Jansik, Csaba
    Abstract: Self-sufficiency figures based on the relationship between domestic production and consumption fail to take into account the fact that domestic production itself is dependent on imported resources. In this paper, an indicator for measuring the import content of food production industries is introduced. With the aid of Eurostat input–output tables, the total dependency on imports, comprising both direct as well as indirect imports of raw materials and intermediates, is calculated for Finland, Germany and Denmark. The results of agricultural and food manufacturing production are presented, indicating a growing trend in import dependency, including energy, chemicals, feed protein and services.
    Keywords: agriculture, food industry, imports, inputs, input-output model, Industrial Organization,
    Date: 2014–08
  41. By: Yu, Wusheng; Bandara, Jayatilleke S.
    Abstract: There has been a great deal of recent interest in India’s food security, as evidenced by intensive discussions on India’s National Food Security Act (NFSA) and proposed changes to its food subsidy programs. The NFSA is both ambitious and full of potential problems, as it aims at guaranteeing the provision of subsidized food grains for around 70 percent of its vast population and is built upon India’s existing food security policy, which has caused enormous fiscal burden, particularly during the recent world food price crisis. This study uses a computable general equilibrium model to evaluate the fiscal and welfare costs of the market stabilization and insulating food policy of India during the 2007-08 global food crisis. We demonstrate that domestic food grain price stabilization through simultaneously subsidizing consumers and producers and restricting exports entailed huge fiscal costs and equally large welfare costs to India, an outcome that is almost always the worst as compared to the alternative policy mixes examined in this study. While the most market-oriented domestic and trade policy alternatives that would generate better welfare effects and the least fiscal costs may not be feasible due to political economy considerations, we argue that there exist some “middle-ground” policy mixes featuring partial relaxations of domestic subsidizations on either food grains or fertilizers and/or less restrictive border policies. These policy mixes are superior in terms of their welfare effects and fiscal costs and might also be politically possible.
    Keywords: India, food security policy, trade policy, agriculture subsidy, computable general equilibrium, Agricultural and Food Policy, Food Security and Poverty,
    Date: 2014–08
  42. By: Fritz Breuss
    Abstract: Mit einem umfassenden und in der Öffentlichkeit höchst umstrittenen Handels- und Investitionsabkommen (TTIP) wollen die EU und die USA die größte Freihandelszone der Welt errichten und damit Wachstum und Beschäftigung stimulieren. Zwar prognostizieren alle bisherigen TTIP-Studien positive Handels-, Wohlfahrts- und Beschäftigungseffekte für beide Vertragsparteien (allerdings in ungleichem Ausmaß), doch treten diese nicht sofort ein, sondern erst sehr langfristig. Die TTIP ist daher zur Überwindung der gegenwärtigen Krise nicht geeignet. Die geschätzten Liberalisierungseffekte divergieren erheblich je nach Methode: Während allgemeine Gleichgewichtsmodelle (CGE-Modelle) sehr geringe Wohlfahrtseffekte ermitteln (½% bis 1% des BIP), versprechen Schätzungen mit Gravitationsmodellen außerordentlich hohe Gewinne (Steigerung der Realeinkommen in der EU um 5% und in den USA um 13,4%). Allerdings dürfte es zu starken (und politisch brisanten) Verlusten an Handel und Wohlfahrt in Drittstaaten (Handelsumlenkungen) kommen. Für Österreich wird eine langfristig realisierbare BIP-bzw. Wohlfahrtszunahme um 1,7% (CGE-Modell) bis 2,7% bzw. 2.9% (Gravitationsmodell) geschätzt. Das Inkrafttreten eines TTIP-Abkommens dürfte sich wegen vieler parlamentarischer Hürden (es handelt sich um ein gemischtes Abkommen) verzögern.
    Date: 2014–11

This nep-int issue is ©2015 by Luca Salvatici. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.