nep-int New Economics Papers
on International Trade
Issue of 2016‒06‒25
29 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. TTIP and Agricultural Trade: The Case of Tariff Elimination and Pesticide Policy Cooperation By Bo Xiong; John C. Beghin
  2. Foreign Direct Investments and trade in agriculture: an incomplete contracts approach By Margherita Scoppola
  3. Making (small) firms happy: The heterogeneous effect of trade facilitation measures By Fontagné, Lionel; Orefice, Gianluca; Piermartini, Roberta
  4. Cities Export Specialization By Jorge Díaz-Lanchas; Carlos Llano; Asier Minondo; Francisco Requena
  5. The absence of currency-related trade policies in the World Trade Organization (WTO) and its future inclusion By Kartika, Dwintha Maya
  6. The transmission of socially responsible behaviour through international trade By Carol Newman; John Rand; Finn Tarp; Neda Trifkovic
  7. Trade, firm selection, and innovation: the competition channel By Giammario Impullitti; Omar Licandro
  8. Offshoring, employment and wages By Bramucci, Alessandro
  9. Trade Finance Affects Trade Dynamics By Marta Arespa; Diego Gruber
  10. Small, young, and exporters: New evidence on the determinants of firm growth By M. Grazzi; D. Moschella
  11. A Model of Occupational Choice, Offshoring and Immigration By Bulent Unel
  12. The Impact of Mega-Ships By OECD
  13. Modelling the potential impacts of economic reform in a partnership between Australia and China By Paul Gretton
  14. Modelling the potential impacts of economic reform in a partnership between Australia and China By Paul Gretton
  15. International Trade and Job Polarization: Evidence at the Worker-Level By Keller, Wolfgang; Utar, Hale
  16. International Competition Intensified - Job Satisfaction Sacrificed By Dluhosch, Barbara; Horgos, Daniel
  17. Peru as a regional hub for trade facilitation and logistics services: Strategic considerations By Daniel Rais
  18. Regional Agricultural and Trade Policies: Indian Perspective By Chand, Ramesh
  19. A comparative study of the role of imports and exports on service sector productivity in Ghana By Effah Nyamekye, Gabriel
  20. Environmental Standards and International Trade: Latin American Stakeholders and the EU Environmental Footprint By Daniel Rais
  21. Exports and Labor Skills: The Role of Training By Blyde, Juan
  22. Winners and losers: Another look at the potential impacts of a Doha Round agreement on agriculture By Vanzetti, David
  23. Air Service Agreement Liberalisation and Airline Alliances By OECD
  24. What Happened to World Trade? By Otaviano Canuto
  25. Chinese Outward Foreign Direct Investment: Is ASEAN A New Destination? By Daniel Rais
  26. The Law of Regional and Multilateral Agreements: How does Andean Community law relate to WTO rules? By Daniel Rais
  27. Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs By Jaime DE MELO; Laurent WAGNER
  28. Opportunities for U.S. Beef Exports By Bacus, Kent
  29. Sugar in Mexico: Implications from the Antidumping and Countervailing Duties Suspension Agreements By Behar, Salvador

  1. By: Bo Xiong; John C. Beghin (Center for Agricultural and Rural Development (CARD))
    Abstract: A possible Trans-Atlantic Trade and Investment Partnership (TTIP) agreement will further integrate agricultural markets between the United States and the European Union. The elimination of tariffs and cooperation on sanitary and phytosanitary measures will promote cross-Atlantic trade. We empirically estimate the impacts of tariffs and Maximum Residue Limits (MRLs) on trade in plant products between the two partners. Furthermore, we simulate trade expansions under plausible negotiation outcomes. We find that a TTIP agreement promotes cross-Atlantic trade in plant products, in both directions, by over 60% if tariffs are removed and MRLs are mutually recognized or harmonized to Codex levels.
    Keywords: Trans-Atlantic Trade and Investment Partnership, TTIP, maximum residue limit, MRL, sanitary and phytosanitary measures, tariff, trade agreement, NTM JEL: Q17, F15
    Date: 2016–06
  2. By: Margherita Scoppola
    Abstract: Some firms invest abroad in land, while other firms procure raw materials from food or energy importing countries by means of an outsourcing arrangement with farmers in land-abundant countries. Few studies have investigated the pattern of recent Foreign Direct Investment (FDI) in agriculture and the ones that have are mostly focused on the locational drivers of FDI. This paper explores how the contractual features of transactions of agricultural products affect the "internalization" decision of firms, that is, the choice trade/FDI. The paper develops a partial equilibrium model incorporating incomplete contracts and asset specificity, which is used to address a number of questions: What is the impact of the quality of the institutions on the choice trade/FDI? How may the bargaining power of the downstream and upstream firms affect the outcome? How is the choice FDI/trade affected by the presence of a state-owned firm? The model provides some unconventional results, such as the finding that when the investor is private, better institutions may lead firms to choose outsourcing, while weak institutions may be a driver of FDI.
    JEL: Q15 F23 L23 Q17
    Date: 2016–05
  3. By: Fontagné, Lionel; Orefice, Gianluca; Piermartini, Roberta
    Abstract: This paper considers the asymmetric effect of Trade Facilitation Agreement (TFA) policies on heterogeneous exporters, based on matching a detailed panel of French firm exports to a new database of Trade Facilita- tion Indicators (TFIs) released recently by the Organisation for Economic Cooperation and Development (OECD). We analyze the effect of these TFIs on three trade-related outcomes: (i) exported value (firm intensive margin), (ii) number of products exported (product extensive margin) and (iii) average export value per product exported (product intensive margin). We find strong evidence of a heterogeneous effect of trade facilitation across firm size. While better information availability, advance ruling and appeal procedures mainly benefit small firms, the simplification of documents and automation tend to favor large firms' trade. This is coherent with the idea that while some elements of the TFA simply reduce the fixed cost of exporting (favoring small firms in particular), other chapters in the TFA reduce the scope for corruption at borders, making large firms less reluctant to serve corrupt countries.
    Keywords: Trade Facilitation,Heterogeneous Firms,Extensive Margin,Intensive Margin
    JEL: F13 F14
    Date: 2016
  4. By: Jorge Díaz-Lanchas (Department of Economic Analysis: Economic Theory. Universidad Autónoma de Madrid and Lawrence R. Klein Institute/CEPREDE. 28049 Cantoblanco. Madrid); Carlos Llano (Department of Economic Analysis: Economic Theory. Universidad Autónoma de Madrid and Lawrence R. Klein Institute/CEPREDE. 28049 Cantoblanco. Madrid); Asier Minondo (Corresponding author. Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastian (Spain). Research afiliate of Instituto Complutense de Estudios Internacionales.); Francisco Requena (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: Do large and small cities exhibit different patterns of export specialization? Using highly disaggregated product-level trade data for Brazilian cities in year 2013, we find that more populated urban areas export proportionately more complex and skill-intensive goods than less populated urban areas. We also show that Brazilian urban areas that have increased more in population have also augmented more than proportionately the exports of complex and skill-intensive goods. Our empirical findings support recent models which argue that large cities attract more skilled workers and exhibit a wide range of capabilities, providing them a comparative advantage in skill-intensive and complex goods.
    Keywords: urban areas, exports, complexity, skills, comparative advantage, Brazil
    JEL: F11 F14 R12
    Date: 2016–05
  5. By: Kartika, Dwintha Maya
    Abstract: It is unanimously agreed that currency policies of the countries, particularly their exchange-rate values, have a significant impact on trade as it alters exports and imports between one country and its trading partners. In spite of this, the rules of currency seem to be absent in World Trade Organization (WTO) framework. The main purpose of this paper is to analyse the reasoning why such important rules are missing out in the multilateral trade sphere. It is divided into few sections; the first one examines currency manipulation and the significance of it for international trade, the second one analyses the existence of institutional gap between WTO and International Monetary Fund (IMF) in addressing the problem of currency manipulation, the third explains the reinforcement of status quo at multilateral sphere based on neorealism framework, and the last one will provide some insight on the possibility of inclusion of currency chapter at free-trade agreement level.
    Keywords: WTO; IMF; International trade; Currency; TPP; free trade agreements; trade; currency manipulation; multilateralism; China;
    JEL: F1 F13 F15 F31 F33 F42 F5 F53 F55
    Date: 2015–04
  6. By: Carol Newman; John Rand; Finn Tarp; Neda Trifkovic
    Abstract: We investigate the relationship between the corporate social responsibility practices of local domestic firms and their engagement with foreign markets using four waves of panel data on a sample of more than 4,500 manufacturing firms from Viet Nam. We develop a measure of corporate social responsibility that combines compliance with labour standards, management commitment to corporate social responsibility, and community activities. We find a strong relationship between engagement in international markets and the corporate social responsibility activities of firms, with the exception of trade with China. Results suggest that firms in exportintensive sectors engage in more corporate social responsibility activities, while those in sectors with higher levels of imports engage in less. Length: 22 pages
    Keywords: corporate social responsibility, trade, spillovers, Viet Nam
    Date: 2016
  7. By: Giammario Impullitti; Omar Licandro
    Abstract: We study the welfare gains originating from pro-competitive effects of trade liberalization in an economy with heterogeneous firms, variable markups and endogenous growth. Variable markups arise from oligopoly trade in similar goods, and cost-reducing innovation is the engine of sustained productivity growth. Trade liberalization stiffens product market competition by reducing markups, generating tougher firm selection and increasing the aggregate productivity level. Market share reallocations triggered by selection increase firms’ incentives to innovate, thereby leading to a higher aggregate productivity growth rate. Endogenous productivity growth boosts the selection gains from trade, leading to substantial welfare improvements. A calibrated version of the model shows that growth doubles the gains from trade obtainable in models with static firm-level productivity.
    Keywords: Endogenous Growth, Heterogeneous Firms, Oligopoly, Variable Markups, Dynamic Gains from Trade.
    Date: 2016
  8. By: Bramucci, Alessandro
    Abstract: This paper reviews the debate on the economic effect of the international fragmentation of production, also known as "offshoring", and provides a preliminary investigation of the impact of intermediate imported inputs on employment and wages in five European countries (Germany, Spain, France, Italy, the United Kingdom). Data are obtained from the Sectoral Innovation Database (SID) of the University of Urbino, a large database that merges statistical material from various sources (LFS; CIS; WIOD). The first part of this work provides a review of the empirical literature that discusses the economic effects of offshoring on domestic labor demand and wages. The second section of the paper presents offshoring trends and discusses the results of the econometric analysis. Results suggest that offshoring has a general negative impact on employment and wages although more careful examination reveals that high-tech offshoring has a positive effect on wages of medium- and high-skilled workers.
    Keywords: Offshoring,Innovation,Employment,Wages
    JEL: F1 F2
    Date: 2016
  9. By: Marta Arespa (Universitat de Barcelona); Diego Gruber (Kernel Analytics)
    Abstract: Existent literature is by no means conclusive on the effects of trade finance on trade and the economy. We propose a suitable framework to explore the linkages between international trade and finance based on an international real business cycle model where firms require external finance to import and can be financially constrained. We find that credit shocks do affect the dynamic properties of the economy and they have the potential to cause significant deviations in trade and economic performance. The trade-to-GDP ratio falls following a negative credit shock, as the shock reduces the capability of firms to purchase foreign intermediate goods, thereby reducing efficiency and production. However, it forces a demand substitution towards domestic intermediate goods that limits GDP deterioration. We also find that financially developed countries trade more, are richer and more stable in terms of GDP and consumption, consistent with the empirical evidence. Finally, the model sheds light on persistent contradictions between theoretical business-cycle and their empirical counterparts, namely, the consumption/output anomaly and the volatility of consumption, imports and terms of trade relative to GDP.
    Keywords: Trade finance, credit constraint, great trade collapse, RBC
    JEL: E3 F1 F4 G1
    Date: 2016
  10. By: M. Grazzi; D. Moschella
    Abstract: This work investigates how the export status of the firm influences the patterns of growth at different age classes. We address this research question resorting to a novel set of data that links together the universe of Italian firms and detailed data on export transactions. We find that the positive relationship between export status and growth declines with firm age. Further, we also find that, even when accounting for the role of age, the negative size-growth relationship does not disappear, contrary to some recent evidence. These results, which are robust to a series of controls, suggest for a positive signaling role of the export status which is stronger for young exporters or born globals. Exploiting the product-country level dimension of the customs data we also provide, for the first time, evidence on differences in exchange rates pass through between young and experienced exporters. In particular, we find that early exporters appear to be well equipped to face exchange rates variations as their exports decrease less following a currency appreciation.
    JEL: D22 F14 L11 L21 L25
    Date: 2016–06
  11. By: Bulent Unel
    Abstract: This paper develops a North-South model of offshoring and immigration with occupational choice and endogenous firm productivity. Individuals in North choose to become entrepreneurs or workers, whereas those in South can only be employed as workers in either country. The model is used to investigate the impact of offshoring and immigration policies on occupational choice, task allocation, productivity, income inequality, and welfare. The model yields several interesting findings, but most notably it predicts that lowering offshoring costs generates job polarization, and pro-offshoring and pro-immigration policies may not be welfare improving in North.
  12. By: OECD
    Abstract: Larger container ships have generated cost savings for carriers, decreased maritime transport costs and as such facilitated global trade in the past. However, larger ships require adaptations of infrastructure, equipment and cause larger peaks in container traffic in ports, with wide-ranging impacts. This report assesses if the benefits of the current mega container ships still outweigh their costs to the whole transport chain.
    Date: 2015–05–01
  13. By: Paul Gretton (EABER)
    Abstract: Effective economic reform agendas provide a means for promoting national economic growth, raising living standards and adapting to changes in trading conditions, new technologies and ways of working. Taking as a focus the Australia-China economic relationship, the GTAP model of the global economy is used to project the implications for Australia and China of preferential, unilateral and broader approaches to trade liberalisation, a broad agenda for reform across the services sector and financial market reform. The simulations show that reform strategies based on non-discriminatory trade liberalization and broadly-based concerted domestic reforms are likely to deliver substantive economic benefits and contribute to growth. Agendas that are restrictive, either through preferential deals between trading partners or through a narrow sectoral focus domestically are likely to constrain gains below levels that would otherwise be attainable.
    JEL: F1 F3 F4 O4 O5
    Date: 2016–06
  14. By: Paul Gretton (EABER)
    Abstract: Effective economic reform agendas provide a means for promoting national economic growth, raising living standards and adapting to changes in trading conditions, new technologies and ways of working. Taking as a focus the Australia-China economic relationship, the GTAP model of the global economy is used to project the implications for Australia and China of preferential, unilateral and broader approaches to trade liberalisation, a broad agenda for reform across the services sector and financial market reform. The simulations show that reform strategies based on non-discriminatory trade liberalization and broadly-based concerted domestic reforms are likely to deliver substantive economic benefits and contribute to growth. Agendas that are restrictive, either through preferential deals between trading partners or through a narrow sectoral focus domestically are likely to constrain gains below levels that would otherwise be attainable.
    JEL: F1 F3 F4 O4 O5
    Date: 2016–06
  15. By: Keller, Wolfgang; Utar, Hale
    Abstract: This paper examines the role of international trade for job polarization, the phenomenon in which employment for high- and low-wage occupations increases but mid-wage occupations decline. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we use instrumental-variables techniques and a quasi-natural experiment to show that import competition is a major cause of job polarization. Import competition with China accounts for about 17% of the aggregate decline in mid-wage employment. Many mid-skill workers are pushed into low-wage service jobs while others move into high-wage jobs. The direction of movement, up or down, turns on the skill focus of workers' education. Workers with vocational training for a service occupation can avoid moving into low-wage service jobs, and among them workers with information-technology education are far more likely to move into high-wage jobs than other workers.
    Keywords: import competition; inequality; occupational change; vocational education
    JEL: F16 I24 J21
    Date: 2016–06
  16. By: Dluhosch, Barbara (Helmut Schmidt University, Hamburg); Horgos, Daniel (Helmut Schmidt University, Hamburg)
    Abstract: There has been an intense debate as to the effects of offshoring and global value chains on labor, with the debate centering around possible negative employment and income effects for the low(er) skilled in advanced economies. Although sociological and psychological research has shown that income falls far too short when it comes to subjective well-being (SWB), the globalization's impact on SWB has been surprisingly under-researched. This applies in particular to job satisfaction, including of those negatively affected by seeing their real income depressed. Against this backdrop, we develop a trade model that is capable of capturing job satisfaction in conjunction with the income and distributional effects of offshoring. Contrary to a great many beliefs, our theoretical considerations suggest that those remaining employed may be more satisfied with their jobs, even if suffering from increased competition and from more tasks being offshored. Running a cross-section logistic regression model that combines information on offshoring and job satisfaction, lends support to our theoretical explanations. Accordingly, job satisfaction is on average rated higher in countries with comparatively high offshoring activities. More disaggregated regressions get to the heart of the matter, which is a change in the characteristics of the remaining jobs. Our results stand up to extensive robustness checks with respect to different specifications, measures of globalization, and even when controlling for many of the usually suspected variables with reference to SWB.
    Keywords: Subjective Well-Being; Job Satisfaction; Offshoring; Global Value Chains
    JEL: F66 I31
    Date: 2016–06–20
  17. By: Daniel Rais
    Abstract: SECO Working Paper 8/2014
    Date: 2014–08–05
  18. By: Chand, Ramesh
    Keywords: Agricultural and Food Policy, International Relations/Trade,
    Date: 2016–02
  19. By: Effah Nyamekye, Gabriel
    Abstract: In this paper the author examine the effect of imports, and exports on service sector productivity of Ghana for the period 1970-2013, using annual time series data. The Augmented Dickey-Fuller test (ADF), and the KwiatKowski (KPSS) test were used for the assessment of the effect of external shock on imports, exports, and service sector productivity whereas the ordinary least square method (OLS) was used to examine the role of import, and export on service sector productivity. The results indicate that the effect of external shock to imports, exports, and service sector productivity are permanent and not temporary. There is negative significant effect of export and positive effect of import on service sector productivity in Ghana during the period of discussion. The results suggest that policy makers can rely on import to influence service sector productivity and not export. Future studies should examine the effect of import of goods and services on the service sector productivity to determine whether the current findings will be replicated since the current study used export and import volumes.
    Keywords: Export, Import, Service Sector Productivity
    JEL: F14 L25 L80
    Date: 2015–12–18
  20. By: Daniel Rais
    Abstract: SECO Working Paper 7/2015
    Date: 2015–12–02
  21. By: Blyde, Juan
    Abstract: An increasing number of analyses show that firms that are engaged in international trade have superior labor capabilities than their counterparts serving only the domestic market. One way to improve labor skills is by training current employees. There is, however, no empirical evidence showing how the exports of a firm respond to training programs. Using firm level data from Chile this study examines the impact of training employees on the firm’s export status. Based on a matching difference-in-differences estimator the results show that training employees can substantially increase the probability of becoming an exporter. Additional results provide details on how the effects differ by labor type, by the intensity of the labor training and whether there are cumulative effects over time. The analysis also sheds light on factors that complement training. All these issues are important to assess under what conditions labor training programs might work best with respect to trade outcomes
    Keywords: Exports, training, skills
    JEL: F10 F16 J24
    Date: 2016–06–06
  22. By: Vanzetti, David
    Keywords: Agricultural and Food Policy,
    Date: 2016–02
  23. By: OECD
    Abstract: This document explores the key elements of bilateral air service agreements (ASAs) and recent trends towards increasing liberalisation and examines linkages between ASAs and cross border airline alliance. It discusses issues related to antitrust reviews of proposed alliances and summarises and comments on the impacts of international airline alliances.
    Date: 2014–12–01
  24. By: Otaviano Canuto
    Abstract: 2015 was the worst year for world trade since the aftermath of the global financial crisis, with figures exhibiting a decline of almost 14% in dollar value terms. In fact, world trade volumes have lagged behind GDP growth since the 2000s, a trend accentuated since the onset of the global financial crisis, whereas global trade increases took place at a higher pace than world GDP prior to the new millennium. Although some transitional – and therefore potentially reversible – explaining factors may be pointed out, some structural trends have also been at play. Given that trade has been a key driver of global growth, income convergence, and poverty reduction, concerns have been raised over whether the current directions of world trade lead towards a lesser development-boosting potential.
    Date: 2016–06
  25. By: Daniel Rais
    Abstract: SECO Working Paper 6/2016
    Date: 2016–06–03
  26. By: Daniel Rais
    Abstract: SECO Working Paper 15/2014 by Yovana Reyes Tagle, PUCP
    Date: 2014–10–30
  27. By: Jaime DE MELO (Ferdi); Laurent WAGNER (Ferdi)
    Abstract: The Aid for Trade (AFT) initiative, launched in 2005 to help developing and especially the Least Developed (LDCs) countries integrate the rules of the World Trade System adopted in the Uruguay Round turned out to be more about mobilizing support for the stalled Doha Round negotiations. A decade later, a broadened AFT agenda has eluded effective evaluation. The recently concluded Trade Facilitation Agreement (TFA) provides an ideal opportunity to narrow the scope of AFT activities to heed the call for “managing for Development results” (MfDR). The paper reviews the evidence on trade costs distinguishing between Least Developed Countries (LDCs) and Landlocked LDCS (LLDCs). The paper also includes new estimates of time in transit for international parcel data that is measured relatively accurately. New estimates provide support for allocating a greater share of AFT funds towards LDCs and particularly towards LLDCs, both groups showing higher trade costs than comparators and less progress in reducing trade costs since 1995. On average, time in customs for imports and exports are also significantly higher for both groups than for their respective comparators. LDCs and LLDCs have systematically lower scores for the components in the new OECD Trade Facilitation Indicator (TFI). These new estimates suggest that a successful implementation of the TFA, defined as moving halfway towards the frontier value of the TFI for the respective country grouping could reduce trade costs for imports of LDCs by 2.5% and by 4.5% for LLDCs. Even though there is more to trade costs than customs management, monitoring implementation of the TFA would be part of the IPoA and a stepping stone towards the concrete trade performance targets that have lacked in AFT activities so far.
    Keywords: aid for trade
    Date: 2016–05
  28. By: Bacus, Kent
    Keywords: International Relations/Trade, Livestock Production/Industries,
    Date: 2016–02–25
  29. By: Behar, Salvador
    Keywords: Crop Production/Industries, Environmental Economics and Policy,
    Date: 2016–02

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