|
on International Trade |
| By: | Osnago, Alberto; Piermartini, Roberta; Rocha, Nadia |
| Abstract: | This paper studies the effects of trade policy uncertainty on the extensive and the intensive margins of trade for a sample of 149 exporters at the HS6 digit level. We measure trade policy uncertainty as the gap between binding tariff commitments under trade agreements (multilateral and regional agreements) and applied tariffs- what is also known as tariffs' water. Our results show that trade policy uncertainty is an important barrier to export. On average the elimination of water increases the probability of exporting by 12 percent. A one percent decrease of water also increases export volumes by one percent. We also find that the negative impact of trade policy uncertainty is higher for countries with low quality of institutions and in the presence of global value chains. Finally, our findings show that on average trade policy uncertainty is equivalent to a level of tariffs between 1.7 and 8.7 percentage points. |
| Keywords: | binding overhang,tariffs,policy space,non-tariff barriers,World Trade Organization |
| JEL: | F10 F13 F14 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201505&r=int |
| By: | Daqing Yao; John Whalley |
| Abstract: | In this paper we assess the effects of the MFA/ATC using both world trade and US data after its removal. Previous literature assesses its effects while in operation. The trade data we analyze are consistent with theoretical predictions of more trade volumes, lower product prices, smaller effect of RTA on trade, less transshipment and quota hopping investment, and higher country concentration of exporters. We also find the effects of the MFA on clothing trade were more significant than for textiles trade. The benefits from freer trade in textiles and clothing shed light on other sectors that are still under trade protection. |
| JEL: | F13 F14 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21299&r=int |
| By: | Leonardo Baccini; Andreas Dür |
| Abstract: | The proliferation of bilateral and regional trade agreements has arguably been the main change to the international trading system since the end of the Uruguay Round in the mid-1990s. We argue that investment discrimination plays a major role in this development. Preferential trade agreements can lead to investment discrimination because of tariff differentials on intermediary products and as a result of provisions that relax investment rules for the parties to the agreement. Excluded countries are sensitive to the costs that this investment discrimination imposes on domestic firms and react by signing a trade agreement that aims at leveling the playing field. We test our argument using a spatial econometric model and a newly compiled data set that includes 166 countries and covers a period of eighteen years (1990–2007). Our findings strongly support the argument that investment discrimination is a major driver of the proliferation of trade agreements. |
| Keywords: | preferential trade agreement; foreign direct investment; diffusion; discrimination |
| JEL: | L81 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62305&r=int |
| By: | Bagwell, Kyle; Bown, Chad P.; Staiger, Robert |
| Abstract: | The WTO has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements (PTAs). Should economists see this as an efficient institutional hand-off, where the WTO has carried trade liberalization as far as it can manage, and is now passing the baton to PTAs to finish the job? We survey a growing economics literature on international trade agreements and argue on this basis that the WTO is not passé. Rather, and subject to some caveats, our survey of research to date suggests that the WTO warrants strong support while a more cautious view of PTAs seems appropriate. |
| Keywords: | dispute settlement; preferential trade agreements; terms of trade; trade agreements; WTO |
| JEL: | F13 F14 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10672&r=int |
| By: | Lawrence Edwards and Asha Sundaram |
| Abstract: | Employing a difference-in-difference estimation technique on firm-level data on Indian exporters, we show that the removal of US textile and apparel quotas was associated with a relative increase in sales of products where India was previously quota-restricted, but a relative decrease in sales of products where China was previously quota-restricted. We hence highlight the importance of accounting for falling trade barriers for rival exporters in analyzing trade liberalization effects. Additionally, we find that previously more productive firms see a greater increase in sales, suggesting potential gains from reallocation in an environment where quota rights were not allocated efficiently. |
| Keywords: | Import Quotas, Firm behavior, India, Chinese competition |
| JEL: | F10 F13 L11 O14 O24 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:526&r=int |
| By: | Caroline Freund (Peterson Institute for International Economics); Sarah Oliver (Peterson Institute for International Economics) |
| Abstract: | Regulatory standards protect consumers from defective products, but they impede trade when they differ across countries. The Transatlantic Trade and Investment Partnership (TTIP) seeks to reduce distortions in the automobile and other industries. Freund and Oliver evaluate the equivalence of automobile regulations in the United States and the European Union in terms of catastrophe avoidance and estimate the trade gains from harmonization. The UN 1958 Agreement on automobiles, which harmonizes regulations among signatories, is used to quantify the trade effect of regulatory convergence. The removal of regulatory differences in autos is estimated to increase trade by 20 percent or more. The effect on trade from harmonizing standards is only slightly smaller than the effect of EU accession on auto trade. The large economic gains from regulatory harmonization imply that TTIP has the potential to improve productivity while lowering prices and enhancing variety for consumers. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb15-10&r=int |
| By: | M. Bas; T. Mayer; M. Thoenig |
| Abstract: | Models of heterogeneous firms with selection into export market participation generically exhibit aggregate trade elasticities that vary across country-pairs. Only when heterogeneity is assumed Pareto-distributed do all elasticities collapse into a unique elasticity, estimable with a gravity equation. This paper provides a theory-based method for quantifying country-pair specific elasticities when moving away from Pareto, i.e. when gravity does not hold. Combining two firm-level customs datasets for which we observe French and Chinese individual sales on the same destination market over the 2000-2006 period, we are able to estimate all the components of the dyadic elasticity: i) the demand-side parameter that governs the intensive margin and ii) the supply side parameters that drive the extensive margin. These components are then assembled under theoretical guidance to calculate bilateral aggregate elasticities over the whole set of destinations, and their decomposition into different margins. Our predictions fit well with econometric estimates, supporting our view that micro-data is a key element in the quantification of non-constant macro trade elasticities. |
| Keywords: | trade elasticity, firm-level data, heterogeneity, gravity, Pareto, log-normal |
| JEL: | F1 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:560&r=int |
| By: | Tan, Yong; An, Liwei; Hu, Cui |
| Abstract: | In this paper, we extend the model of Melitz (2003) to separate the direct and indirect impact of an export tax rebate on the intensive margin of firm-level export sales at the sub-national level. The direct impact of the rebate is associated with a reduction of an exporting firm’s variable costs, while the indirect impact manifests itself through higher regional wages as a result of increased demand for local labor. First, the empirical results imply that a 1% rise in the export tax rebate rate increases the export sales among continuing exporters by 0.4% through the direct channel. Second, the same rebate increase reduces export sales among continuing exporters by 0.02% through indirect channel. Both effects are statistically significant, and are consistent with the model's predictions. |
| Keywords: | Export Tax Rebate, Regional Labor Market, Direct Impact, Indirect Impact |
| JEL: | D22 F10 F14 L10 |
| Date: | 2015–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65188&r=int |
| By: | Andreas Dür; Leonardo Baccini; Manfred Elsig |
| Abstract: | Preferential trade agreements (PTAs) have been proliferating for the last twenty years. A large literature has studied various aspects of this phenomenon. Until recently, however, many large-N studies have paid only scant attention to variation across PTAs in terms of content and design. Our contribution to this literature is a new dataset on the design of trade agreements that is the most comprehensive in terms of both variables coded and agreements covered. We illustrate the dataset's usefulness in re-visiting the questions if and to what extent PTAs impact trade flows. The analysis shows that on average PTAs increase trade flows, but that this effect is largely driven by deep agreements. In addition, we provide evidence that provisions that tackle behind-the-border regulation matter for trade flows. The dataset's contribution is not limited to the PTA literature, however. Broader debates on topics such as institutional design and the legalization of international relations will also benefit from the novel data. |
| Keywords: | preferential trade agreement; new regionalism; institutional design; dataset; trade flows; gravity model |
| JEL: | L81 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:59179&r=int |
| By: | Ron Alquist (Kings Peak Asset Management); Rahul Mukherjee (Graduate Institute of International and Development Studies); Linda L. Tesar (University of Michigan and NBER) |
| Abstract: | We develop a model of foreign direct investment (FDI) in which financially liquid foreign firms acquire liquidity-constrained target firms. Using a large dataset of emerging-market acquisitions, we find evidence supporting three central predictions of the model: (i) firms in external finance dependent and intangible sectors are more likely to be targets of foreign acquisitions; (ii) these targets have ownership structures with larger foreign stakes; (iii) these effects are most prominent in countries with low levels of financial development. The regression evidence indicates that liquidity is at least as economically important as technology- or trade-related motives for FDI in emerging-market economies. |
| Keywords: | Foreign direct investment; cross-border mergers and acquisitions; nancial development; external nance dependence; asset tangibility; emerging markets. |
| JEL: | F21 F23 G34 L24 L60 |
| URL: | http://d.repec.org/n?u=RePEc:mie:wpaper:646&r=int |
| By: | Leonardo Baccini |
| Abstract: | While there is evidence that politics matter for international cooperation, the impact on economic integration of the quality of institutions has been given short shrift in the previous literature. I argue that the quality of institutions raises the quantity and the quality of information available to potential member states during the bargaining phase of a trade agreement. In turn, this inflow of information reduces the negotiation period of an agreement and, in doing so, dampens the transaction costs associated with it. As a result, countries with good institutions are more likely to form trade agreements. Using original data on both the formation of trade agreements and the duration of negotiations, I quantitatively test this argument. The results strongly support the claim that the quality of institutions is a crucial driver in explaining the recent wave of regionalism. |
| Keywords: | corruption; international cooperation; the rule of law; trade agreement; transaction costs |
| JEL: | F4 |
| Date: | 2014–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:44923&r=int |
| By: | Hamilton, Daniel; Blockmans, Steven |
| Abstract: | The strategic considerations that define the perceived need for transatlantic renewal are the focus of this CEPS Special Report, in which the authors examine the geo-economic impact of the Transatlantic Trade and Investment Partnership (TTIP) on both emerging powers and poorer countries. Daniel Hamilton and Steven Blockmans argue that TTIP has the potential to be a catalyst for trade liberalisation at the global level, but only if the US and the EU are proactive about making the ‘open architecture’ of TTIP a reality. |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:10476&r=int |
| By: | Fernandes,Ana Margarida; Ferro,Esteban; Wilson,John Martin |
| Abstract: | The paper estimates the effect of product standards on firms? export decisions using two novel datasets. The first covers all exporting firms in 42 developing countries. The second covers pesticide standards for 243 agricultural and food products in 63 importing countries over 2006?12. The analysis shows that product standards significantly affect foreign market access. More restrictive standards in the importing country, relative to the exporting country, lower firms? probability of exporting as well as their export values and quantities. The relative restrictiveness of standards also deters exporting firms from entering new markets and leads to higher exit rates from those markets. Moreover, firm characteristics mediate the effect of product standards on firms? export decisions. Smaller exporters are more negatively affected in their market entry and exit decisions by the relative stringency of standards than larger exporters. Positive network effects of exporters from the same country may help reduce the burden of importing countries? standards on firms? decisions to enter new markets. |
| Keywords: | Science Education,Microfinance,Labor Policies,Markets and Market Access,Information and Communication Technologies |
| Date: | 2015–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7315&r=int |
| By: | Richard Fabling; Lynda Sanderson (The Treasury) |
| Abstract: | This paper examines the relationship between exchange rate fluctuations and New Zealand export performance. To isolate the impact of the exchange rate, as opposed to contemporaneous (and related) fluctuations in New Zealand’s economic performance or overseas market characteristics, we focus on bilateral export relationships at the firm level and control for both time-invariant country characteristics and changes in aggregate economic conditions. We examine two key margins of export adjustment – the probability of exporting (the extensive margin) and the average value of exports per firm (the intensive margin) – and distinguish between impacts on market incumbents and new or potential entrants. Finally, we specifically take account of the potential for interaction between the level and volatility of the exchange rate to affect exporting, as implied by theories of exchange rate hysteresis. |
| JEL: | D22 F14 F31 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:nzt:nztwps:15/08&r=int |
| By: | C. Jude; G. Levieuge |
| Abstract: | This paper investigates the effect of FDI on economic growth conditional on the institutional quality of host countries. We first develop several theoretical arguments to show that institutional heterogeneity may be an explanation for the mixed results of previous empirical studies. Second, using a Panel Smooth Regression model on a large sample of developing countries, we show that FDI has a positive effect on growth only beyond a certain threshold of institutional quality. In order to benefit from FDI-led growth, institutional reforms should thus precede FDI attraction policies. Additionally, some reforms seem to promote faster marginal effects of FDI, while institutional complementarities may lead to an incremental effect on growth. |
| Keywords: | FDI, growth, heterogeneity, institutional quality, PSTR, Developing economies |
| JEL: | F21 C34 F43 O16 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:559&r=int |
| By: | Lederman,Daniel; Pienknagura,Samuel Jaime; Rojas,Diego |
| Abstract: | Traditional measures of trade diversification only take into account contemporaneous export baskets. These measures fail to capture a country?s ability to respond to shocks by allocating factors of production into activities for which it has already paid the fixed costs associated with exporting. This paper corrects for the shortcoming of traditional measures of diversification by introducing a novel measure of trade diversification?latent diversification?and proposes a proxy to measure latent diversification, which is calculated by taking into account the entire history of a country?s exports. The paper shows that the observed gaps between traditional measures of diversification and the proposed proxy of latent diversification are sizeable; countries hold latent export baskets that are, on average, three times as large as their average contemporaneous export basket, and these gaps are largest for poor and small countries. Moreover, latent diversification is an important determinant of volatility?more diversified latent export baskets are associated with lower terms of trade volatility and, subsequently, lower GDP per capita volatility, even after controlling for the degree of contemporaneous export diversification and other trade and country characteristics. The latter result, together with the disproportionately large latent baskets relative to contemporaneous baskets observed in poor and small countries, suggests that latent diversification is an important vehicle toward stability in countries that face barriers in building diversified contemporaneous export baskets. |
| Keywords: | Pro-Poor Growth,Economic Theory&Research,Trade Policy,Emerging Markets,Economic Conditions and Volatility |
| Date: | 2015–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7332&r=int |
| By: | Baldwin, John R.; Yan, Beiling |
| Abstract: | Canada?s aggregate productivity performance has closely tracked changes in Canada?s trading environment. To gain a better understanding of the link, the Economic Analysis Division of Statistics Canada has conducted a set of studies that investigate whether and how changes in the trading environment, brought about by trade liberalization policies and exchange-rate movements, contributed to productivity growth. The firm-level analysis provides insights into the productivity dynamics that arise from within-industry growth and restructuring as resources are shifted from declining to growing industries. The paper provides an overview of the key Canadian empirical findings over the last two decades. |
| Keywords: | Business performance and ownership, Economic accounts, International trade, Manufacturing |
| Date: | 2015–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:stc:stcp5e:2015097e&r=int |
| By: | Trevor Tombe; Xiaodong Zhu |
| Abstract: | We study how misallocation due to goods- and labour-market frictions affect aggregate productivity in China. Combining unique data with a general equilibrium model of internal and international trade, and migration across regions and sectors, we quantify the magnitude and consequences of trade and migration costs. The costs were high in 2000, but declined afterward. The decline accounts for roughly two-fifths of aggregate labour productivity growth in China between 2000 and 2005. Reductions in internal rather than international costs are particularly important. Despite the decline, migration costs are still high and potential gains from further reform are large. |
| Keywords: | migration, internal trade, spatial misallocation, gains from trade, aggregate productivity, China |
| JEL: | F1 F4 R1 O4 |
| Date: | 2015–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-542&r=int |
| By: | Martin,William J.; Pham,Cong S. |
| Abstract: | This paper evaluates the performance of alternative estimators of the gravity equation when zero trade flows result from economically-based data-generating processes with heteroscedastic residuals and potentially-omitted variables. In a standard Monte Carlo analysis, the paper finds that this combination can create seriously biased estimates in gravity models with frequencies of zero frequently observed in real-world data, and that Poisson Pseudo-Maximum-Likelihood models can be important in solving this problem. Standard threshold?Tobit estimators perform well in a Tobit-based data-generating process only if the analysis deals with the heteroscedasticity problem. When the data are generated by a Heckman sample selection model, the Zero-Inflated Poisson model appears to have the lowest bias. When the data are generated by a Helpman, Melitz, and Rubinstein-type model with heterogeneous firms, a Zero-Inflated Poisson estimator including firm numbers appears to provide the best results. Testing on real-world data for total trade throws up additional puzzles with truncated Poisson Pseudo-Maximum-Likelihood and Poisson Pseudo-Maximum-Likelihood estimators being very similar, and Zero-Inflated Poisson and truncated Poisson Pseudo-Maximum-Likelihood identical. Repeating the Monte Carlo analysis taking into account the high frequency of very small predicted trade flows in real-world data reconciles these findings and leads to specific recommendations for estimators. |
| Keywords: | Free Trade,Economic Theory&Research,Statistical&Mathematical Sciences,Information and Communication Technologies,Econometrics |
| Date: | 2015–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7308&r=int |
| By: | Auboin, Marc |
| Abstract: | While conditions in trade finance markets returned to normality in the main routes of trade, the structural difficulties of poor countries in accessing trade finance have not disappeared - and might have been worsened during and after the global financial crisis. In fact, there is a consistent flow of information indicating that trade finance markets have remained characterized by a greater selectivity in risk-taking and flight to "quality" customers. In that environment, the lower end of the market has been struggling to obtain affordable finance, with the smaller companies in the smaller, poorer countries most affected. In an area where statistics are difficult to find, this paper looks at recent available information and provides background on the persistent and significant market gaps for trade finance in developing countries, notably in Africa and developing Asia. It discusses various initiatives in which the WTO and partner institutions are involved to alleviate in part this situation. |
| Keywords: | trade financing,cooperation with international financial institutions,coherence,G-20,developing countries |
| JEL: | F13 F34 F36 O19 G21 G32 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201506&r=int |
| By: | Antonescu, Daniela |
| Abstract: | Foreign Direct Investment (FDI) plays an important role in the development of national and regional economies and it has been considered a force for European Union integration, especially for developing regions. More, the FDI represent a key-tool for sustain development and economic growth at regional/local level. Foreign firms bring new technologies, knowledge and management skills, and local firms can learn from this. Therefore, the presence of foreign firms can improve region’s competitiveness, but fears can also be raised that foreign competitors crowd out local firms, and a net positive effect on the regional economy cannot be taken for granted. The understanding FDI determinants for development regions represent a field of interest both policy makers and investors because they are a particularly driven to market globalization. This study provides an empirical analysis of FDI at regional level (NUTS 2 regions) in European Union and Romania. |
| Keywords: | regional development, foreign direct investments, economic disparities |
| JEL: | F1 F15 R0 R3 |
| Date: | 2015–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65140&r=int |
| By: | Cali,Massimiliano; Hollweg,Claire Honore; Ruppert Bulmer,Elizabeth N. |
| Abstract: | Increasing the trade integration of developing countries can make a vital contribution to boosting shared prosperity, but it also exposes producers and consumers to exogenous shocks that alter relative prices, sometimes positively and sometimes negatively. This paper discusses the short-run effects of trade-related shocks on households to capture the potential welfare impact on the poor. The discussion explores the channels through which trade shocks are transmitted to households in the bottom of the income distribution, namely through consumption, household production, and market-based labor activities. The degree to which price shocks are passed through from borders to point of sale is a key determinant of the gains from trade and the ultimate welfare impact. Trade changes in agriculture directly affect households through their consumption basket. Lower agricultural prices reduce the cost of consumables, but these welfare gains may be offset by lower earnings for households that produce these same goods. Poorer households tend to be net consumers of agricultural products, suggesting a net welfare gain, but agricultural wage workers could suffer from wage cuts. Because poorer households tend to consume relatively fewer nonagricultural products, that is nonessentials, any trade-related shocks to prices of nonagricultural product are likely to be transmitted via labor channels. Despite significant evidence that nonagricultural trade reform ultimately leads to job creation and enhanced productivity, the short-run effects can be mixed. The costs incurred by workers to transition to new jobs slow the adjustment of the economy to a new steady state. Labor mobility costs, which tend to be higher in developing countries and for unskilled workers, reduce the potential gains to trade by diverting labor market adjustment from its most efficient path. |
| Keywords: | Free Trade,Economic Theory&Research,Emerging Markets,Labor Policies,Markets and Market Access |
| Date: | 2015–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7314&r=int |
| By: | Messerlin, Patrick |
| Abstract: | This CEPS Special Report examines the main facets of the debate about TTIP and services. First, it looks at the political and economic context and the various alternatives in terms of political support, stressing that only a partnership that ensures substantial economic gains will attract the support of the top policy-makers. Second, the paper makes the point that large economic gains in services require deep discussions on regulatory issues, and third, such discussions cannot rely on the negotiating techniques normally used for goods. There is thus a need to adopt a new approach, based on the mutual recognition and equivalence of regulations enforced in the services concerned, preceded by a mutual evaluation to grant such equivalence – all measures to be carried out by the regulatory bodies concerned, not by trade negotiators. This new game is a complex one but it has huge side benefits: it induces each TTIP partner to review the quality of their own regulations; it is at ease with the notion of a ‘living’ (evolving) agreement; and it can easily be open to third countries. All these benefits should reassure a general public that is fearful of a hastily baked deal. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:10550&r=int |
| By: | Bertocchi, Graziella (University of Modena and Reggio Emilia) |
| Abstract: | The slave trades out of Africa represent one of the most significant forced migration experiences in history. In this paper I illustrate their long-term consequences. I first consider the influence of the slave trade on the "sending" countries in Africa, with attention to their economic, institutional, demographic, and social implications. Next I evaluate the consequences of the slave trade on the "receiving" countries in the Americas. Here I distinguish between the case of Latin America and that of the United States. For the latter, I further discuss the subsequent migration experiences of the Second Middle Passage, when African slaves were transported, again forcibly, from the coastal regions to the inland, and of the Great Migration, when as free people they chose to leave the deep South for the Northern cities. |
| Keywords: | slavery, Africa, Americas |
| JEL: | F22 J15 O15 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9105&r=int |
| By: | Mendoza Alcantara,Alejandra; Fernandes,Ana Margarida; Hillberry,Russell Henry |
| Abstract: | Freight forwarders play a key role in moving goods across international borders. They arrange transport, oversee customs clearance on behalf of their clients, and more generally troubleshoot issues that arise while goods are in transit. This paper reports the results from a survey of 153 freight forwarding firms in Serbia. Respondents report on firm characteristics, operational choices, and conditions at the border posts and terminals where imported goods are cleared for release. One key purpose of the study is to investigate operational trade-offs between time and cost that arise when import shipments are in transit. In three of four hypotheticals, respondents suggest that money savings dominate time savings. Responses regarding real operational decisions such as route choices reinforce this finding. Respondents also reported penalty rates for late delivery of import shipments as well as the value of a typical import shipment. From these responses, it is estimated that the contracted value of one additional (unexpected) day of delivery time in Serbia appears to be approximately 1 percent of the value of the underlying shipment. |
| Keywords: | Transport Economics Policy&Planning,Transport Security,Transport and Trade Logistics,Trade Law,Common Carriers Industry |
| Date: | 2015–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7311&r=int |
| By: | Chase, Peter; Pelkmans, Jacques |
| Abstract: | Regulatory cooperation is both one of the most ambitious and contentious parts of the EU-US Transatlantic Trade and Investment Partnership (TTIP) negotiations. In this paper, having identified the many levels of international regulatory cooperation, we show that TTIP regulatory cooperation will be significant, but not ambitious, while political and legal limits on cooperation in both the EU and the US minimise the concerns. For transatlantic regulatory cooperation to work, it must accept these political and legal constraints, build trust and confidence among counterpart regulators so they see that their transatlantic partner can help them do their work better, and provide tools to help regulators on both sides make informed decisions while retaining their regulatory autonomy and accountability to their politicians and citizens. A TTIP that provides these tools – and some more detailed instruments to that effect – will be more ambitious than previous trade agreements, and should, over the longer term, provide both the economic and regulatory benefits that the two sides envisage. The paper incorporates comparisons with the relevant chapters of recent FTAs the US and the EU have concluded, so as to clarify the approaches and degrees of ambition in this area. This comparison suggests that the TTIP regulatory cooperation will probably be more ambitious in terms of commitments and have a wider scope than any of these FTAs. This paper is the seventh in a series produced in the context of the “TTIP in the Balance” project, jointly organised by CEPS and the Center for Transatlantic Relations (CTR) in Washington, D.C. It is published simultaneously on the CEPS (www.ceps.eu) and CTR websites (http://transatlantic.sais-jhu.edu). |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:10659&r=int |
| By: | Hombert, Johan; Matray, Adrien |
| Abstract: | We study whether R&D-intensive firms are more resilient to trade shocks. We correct for the endogeneity of R&D using tax-induced changes to the cost of R&D. On average across US manufacturing firms, rising imports from China lead to slower sales growth and lower profitability. These effects are, however, significantly smaller for firms with a larger stock of R&D -- by about half when moving from the 25th percentile to the 75th percentile of the R&D stock distribution. As a result, while the average firm in import-competing industries cuts capital expenditures and employment, R&D-intensive firms downsize considerably less. |
| Keywords: | China; import competition; innovation; R&D tax credit |
| JEL: | F14 L25 L60 O33 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10666&r=int |
| By: | KUNIMATSU Maki |
| Abstract: | Because of emerging China UnionPay (CUP) in the global credit card market and its competition with the Visa card, the first World Trade Organization (WTO) case in the financial services sector received attention from the media and commentators. The United States argued that measures by China to establish CUP as the sole supplier of electronic payment services for all domestic transactions in domestic currency, and broad prohibitions on the use of non CUP cards for cross-region or inter-bank transactions are inconsistent with the WTO agreement. However, the Panel did not conclude that the evidence submitted by the United States failed to establish inconsistency. Only marginal measures, such as requirements of a CUP logo and automated teller machine/point-of-sale (ATM/POS) acceptability of CUP cards were found to be WTO inconsistent.Discussion by the Panel revealed vulnerability in the normative structure of the General Agreement on Trade in Services (GATS), including duplication and intransparency of Articles 16 and 17, difficulty in translating "likeness," and uncertainness of scope of specific commitments. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rpdpjp:15009&r=int |
| By: | Ron Alquist (Kings Peak Asset Management); Rahul Mukherjee (Graduate Institute of International and Development Studies); Linda L. Tesar (University of Michigan and NBER) |
| Abstract: | Motivated by a set of stylized facts, we develop a model of cross-border mergers and acquisitions (M&As) to study foreign direct investment (FDI) in emerging markets. We compare acquisitions undertaken during financial crises Ð so called fire-sale FDI Ð with acquisitions made during non-crisis periods to examine whether the outcomes differ in the ways predicted by the model. Foreign acquisitions are driven by two sources of value creation. First, acquisitions by a foreign firm relax the target's credit constraint (i.e., a liquidity motive). Second, acquisitions exploit operational synergies between the target and the acquirer (i.e., a synergistic motive). During crises credit conditions tighten in the target economy and the liquidity motive dominates. The model predicts that during crisis relative to non-crisis periods, (1) the likelihood of foreign acquisitions is higher; (2) the proportion of foreign acquisitions in the same industry is lower; (3) the average size of ownership stakes is lower; and (4) the duration of acquisitions is lower (i.e., acquisition stakes are more likely to be flipped). We find support for (1) but not for the other three predictions. The results thus suggest that foreign acquisitions in emerging markets do not differ in these important ways between crisis and normal periods. |
| Keywords: | Fire sales; foreign direct investment; cross-border mergers and acquisitions; nancial crises; flipping |
| JEL: | F21 G01 G34 |
| URL: | http://d.repec.org/n?u=RePEc:mie:wpaper:645&r=int |
| By: | de Bromhead, Alan |
| Abstract: | This paper examines the lessons of the interwar period to place current concerns regarding a return to protectionism in historical context, highlighting the unique and one-time changes in voting rights that took place during the period and their relationship with trade policy. A particularly novel finding is the impact of women voters on the politics of protectionism. Public opinion survey evidence from the interwar years indicates that women were more likely to hold protectionist attitudes than men, while panel data analysis of average tariff rates during the interwar period shows that when women were entitled to vote tariffs were, on average, higher. This result is supported by an instrumental variables approach using Protestantism as an instrument for female voting rights. |
| Keywords: | political economy,suffrage,international trade,gender differences |
| JEL: | N40 N70 F50 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:qucehw:1503&r=int |
| By: | Flavio L. Carneiro |
| Abstract: | A fragmentação da produção – dispersão das variadas etapas envolvidas na produção de determinado bem em diferentes países, a cargo de diversas empresas – vem fazendo com que a fabricação de diversos bens seja realizada em cadeias globais de valor (CGVs), com diferentes padrões de estruturação geográfica e governança, que têm em comum o fato de que insumos, partes, peças e serviços – ou seja, cada etapa ou tarefa envolvida na produção de um bem final – serão realizados onde quer que estejam disponíveis os materiais e as habilidades necessários para sua realização, a preço e qualidade competitivos. Este fenômeno já começa a refletir-se em diversas agendas de pesquisa e vem alterando a maneira como as estatísticas de comércio exterior são compiladas e utilizadas, com iniciativas no sentido de produzir dados de comércio por valor agregado (VA), uma vez que a utilização de dados brutos de exportações e importações superestima o valor total do comércio e as exportações dos países produtores de bens finais. Por sua vez, este processo tem alterado de maneira radical o equilíbrio da economia política da política comercial nos países que deste participam, ao tornar as políticas comerciais de cada país cada vez mais interdependentes, reduzindo o incentivo à adoção de políticas protecionistas e ampliando a demanda por aprofundamento da integração comercial. A fragmentação internacional da produção tem se revelado ainda oportunidade de desenvolvimento, embora existam riscos envolvidos, o que ressalta a importância das políticas públicas para que estratégia de associação às CGVs se traduza em reais benefícios para um país. Production fragmentation – dispersion of the individual steps involved in the production of a particular good across different countries and several companies – means that the fabrication of an increasingly large number of goods is taking place in global value chains, with different patterns of geographic structure and governance, which have in common the fact that inputs, parts, services – that is, each step or task involved in the production of a final good – will take place wherever the materials and skills necessary for their completion are available, at competitive prices and quality. This phenomenon is opening new research agendas, and is changing the way the foreign trade statistics are compiled and used, with initiatives to produce trade data in value-added terms, since the use of gross trade data overestimates both the value of global trade and the exports from countries that produce final goods. On the other hand, this process has changed radically the political economy equilibrium of trade policy in the countries that participate in it, making trade policies of individual countries increasingly interdependent, reducing the incentive to adopt protectionist policies, and increasing the demand for a deepening of trade integration. International production fragmentation has also shown to be an opportunity for development, although there are risks involved, which highlight the importance of public policies in order to assure that a strategy which involves joining global value chains will translate into real benefits for a country. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipe:ipetds:2097&r=int |
| By: | Leonardo Baccini; Johannes Urpelainen |
| Abstract: | When do international treaties cause domestic policy adjustments? While previous research emphasizes the consequences of treaty ratification, we argue that the need to secure entry into force can induce states to change their policies already before ratification. If a state expects benefits from a treaty, it can increase the probability of foreign ratification by implementing policies that benefit pivotal domestic players within its partner country. Accordingly, studies that focus on policy change after ratification underestimate the importance of treaties and partly misconstrue the causal connection between treaties and policies. We test the theory against data on the relationship between North-South preferential trading agreements (PTAs) and automobile emission standards, finding that developing countries adopt automobile emission standards between the signature and ratification of North-South PTAs. |
| JEL: | L91 L96 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:50278&r=int |
| By: | Campos, Nauro F (Brunel University); Coricelli, Fabrizio (Paris School of Economics); Moretti, Luigi (University of Padova) |
| Abstract: | This paper investigates whether joint economic and political integration leads to larger economic benefits than just economic integration. The identification strategy rests on the fact that Norway, at the time of the 1995 Enlargement of the European Union (EU), had successfully completed negotiations and fulfilled all accession requirements, taken membership in the European Economic Area (with full access to the Single Market), but decided in a referendum to reject full-fledged EU membership. Using the differences-in-differences and synthetic control methods with regional data, we find substantial politically driven economic benefits from EU membership: if Norway had joined the EU in 1995, productivity levels between 1995 and 2001 would have been 6% higher on average. |
| Keywords: | political economy benefits, European Union, labor productivity, synthetic counterfactual method, regional data |
| JEL: | C33 F15 F43 O52 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9098&r=int |
| By: | Pelkmans, Jacques; Correia de Brito, Anabe |
| Abstract: | It is striking that there is little or no mention in the TTIP debate so far of the US-EU Mutual Recognition Agreement (MRA) concluded in 1998. At the time, expectations of the gains from the MRA were high. One should expect the MRA to be instructive for TTIP and entail some lessons to be learned for today’s attempt to lower technical barriers to trade (TBTs) across the North Atlantic. We offer an analysis of the 1998 MRA, the difficulties in the prior negotiations and those during the implementation phase, the subsequent and present status of sectoral approaches. The MRA experience revealed clearly how difficult it is to accomplish the acceptance of all relevant aspects of conformity assessment of the trading partner for the mere purpose of testing and certifying export goods on the requirements of the importing economy. The MRA has succeeded only in a few sectors. However, the ambition in TTIP with respect to TBTs is said to go so much further. It is therefore important for all those involved or interested in TTIP to learn the lessons of this early exercise in lowering TBT costs. This paper reaches two main conclusions: i) the US-EU MRA was only partially successful and only for some one-fifth of the export flows at the time: a disappointing outcome and a far cry from the expectations of business and political leaders; and ii) the EU’s attempt to ‘balance’ the negotiations in 1995 by bringing in three relatively competitive sectors did not work out – it was precisely there that problems accumulated. It is critical that domestic regulators must be satisfied during and after the negotiations that their pursuit of health, safety, environment and consumer protection objectives will not be watered down in any way. Lessons drawn include, among others: MRAs are not about regulatory change (by definition), but if initial regulatory cleavages between trading partners are too wide, conditions become so restrictive that parties may regard them as a denial of the very purpose of the MRA. There are incentives to opt for alternatives in the market for the formalised designation of conformity assessment bodies in the MRA and these are often cheaper and faster, while equally qualified. Even in heavily regulated sectors such as medicines and medical devices, the narrow MRA has been superseded by near-global forms of effective cost-reducing cooperative (i.e. not treaty-based) regulatory alignment, a confirmation of the OECD approach that governments should think in terms of an entire spectrum of forms of regulatory cooperation. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:10298&r=int |
| By: | Poulsen, Lauge; Bonnitcha, Jonathan; Yackee, Jason |
| Abstract: | This paper presents an informal cost-benefit analysis of the inclusion of investment protection provisions, including investor-state arbitration, in an investment chapter in TTIP. The analysis is conducted from the perspective of the EU and its member states. It argues that there is little evidence to suggest that investor-state arbitration will provide the EU with meaningful benefits, such as increased foreign investment from the US. In contrast, investor-state arbitration may impose non-trivial costs, in the form of litigation expenses and reduced policy space. This is due to the huge volume of US investment that would be covered by the investment chapter, as well as the fact that an investment chapter would almost certainly give foreign investors greater rights than they currently enjoy under EU and member state law. We conclude that, from the perspective of the EU, the case for including investor-state arbitration in TTIP is weak. Although we do not conduct a cost-benefit analysis from the perspective of the US, such an analysis would likely raise similar issues. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:10295&r=int |
| By: | Baetens, Freya |
| Abstract: | An investment chapter in TTIP offers an unprecedented opportunity to reform and improve the system of investment law. If the EU and the US seize this opportunity, it would set an important precedent in treaty-drafting, allowing for the incorporation of public policy objectives, thereby protecting states’ right to regulate. Ultimately, this type of concerted strategy is likely to be far stronger than the individual country strategy necessitated by the present system of over 3,000 bilateral treaties. The most important conclusion that should emerge from current discussions is that that there is a need for correct, timely and complete information for law- and policy-makers as well as the broader public, in relation to international investment law and procedures for investor-state dispute settlement (ISDS). |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:10297&r=int |