nep-int New Economics Papers
on International Trade
Issue of 2019‒03‒18
fifty-one papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Preferential Trade Agreements and Multinational Production By Sébastien Miroudot; Davide Rigo
  2. Externalities and Agricultural Import Bans: Evaluating Regionalization Measures in Light of the Russia – Pigs Dispute By Emily Blanchard; Mark Wu
  3. Globalization and Protectionism: AMLO’s 2006 Presidential Run By Sebastian Bustos; Jose Ramon Morales Arilla
  4. The intensive margin in trade By Ana Margarida Fernandes; Peter J. Klenow; Sergii Meleshchuk; Martha Denisse Pierola; Andrés Rodríguez-Clare
  5. The Return to Protectionism By Pablo D. Fajgelbaum; Pinelopi K. Goldberg; Patrick J. Kennedy; Amit K. Khandelwal
  6. What gains and distributional implications result from trade liberalization? By Maria Bas; Caroline Paunov
  7. Innovation and the Patterns of Trade: A Firm-Level Analysis By Santacreu, Ana Maria; Varela, Liliana
  8. Labour market effects of currency appreciation: The case of Switzerland By Peter H. Egger; Johannes Schwarzer; Anirudh Shingal
  9. Learning about digital trade: Privacy and e-commerce in CETA and TPP By Robert Wolfe
  10. The Impact of the Mexican Drug War on Trade By Jose Ramon Morales Arilla
  11. Intra-firm and Arm's Length Trade during the Global Financial Crisis: Evidence from Korean Manufacturing Firms By Moon Jung Choi; Ji Hyun Eum
  12. Productivity, Market Penetration and Allocation of Sales By Zhe, Chen; Sun, Xiaonan
  13. The foreign direct investment-institution nexus in oil-abundant countries By Federico Carril-Caccia; Juliette Milgram Baleix; Jordi Paniagua
  14. Determinants of services trade agreement membership By Peter H. Egger; Anirudh Shingal
  15. Indonesia – Chicken: Tensions between international trade and domestic food policies? By Boris Rigod; Patricia Tovar
  17. COMESA-EAC-SADC trepertite free trade area: challenges and prospects By albagoury, samar; Anber, Mahmoud
  18. Activism and Trade By Pamina Koenig; Sandra Poncet
  19. Non-tariff Measure Estimations in Different Impact Assessments By Eddy Bekkers; Hugo Rojas-Romagosa
  20. Free Movement, Open Borders and the Global Gains from Labor Mobility By Christian Dustmann; Ian Preston
  21. Concentration in international markets: evidence from US Imports By Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
  22. Concentration in International Markets: Evidence from US Imports By Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
  23. Targeting FDI By Ferrett, Ben; Wooton, Ian
  24. The Impact of the 2018 Trade War on U.S. Prices and Welfare By Mary Amiti; Stephen J. Redding; David Weinstein
  25. Trade in Financial Services Regionalism: Derivatives Clearing and Settlement in Economic Integration Agreements By George A. Papaconstantinou
  26. Open Plurilateral Agreements, International Regulatory Cooperation and the WTO By Bernard Hoekman; Charles Sabel
  27. Greening the WTO. EGA, tariff concessions and policy likeness By Petros C. Mavroidis; Damien J. Neven
  28. How should the EU and other WTO members react to their WTO governance and WTO Appellate Body crises? By Ernst-Ulrich Petersmann
  29. Responses to Trade Opening: Evidence and Lessons from Asia By Mitra, Devashish
  30. Do Institutions Determine Economic Geography? Evidence from the Concentration of Foreign Suppliers By Fariha Kamal; Asha Sundaram
  31. China – Cellulose Pulp: China’s Quest to Satisfy WTO Panels and the Appellate Body By Kara Reynolds; Tatiana Yanguas
  32. Walls and Fences: A Journey Through History and Economics By Vernon, Victoria; Zimmermann, Klaus F.
  33. Is peak globalisation upon us? Globalisation is much more than trade in goods By Yeabsley, John; Nixon, Chris
  34. Taking stock By World Bank
  35. Intellectual Property Enforcement, Exports and Productivity: Evidence from China By Huiwen Lai; Keith E. Maskus; Lei Yang
  36. EU — Fatty Alcohols (Indonesia): Corporate Structure, Transfer Pricing, and Dumping By Shushanik Hakobyan; Joel P. Trachtman
  37. International Buyers' Sourcing and Suppliers' Markups in Bangladeshi Garments By Grossi, Julia Cajal; Macchiavello, Rocco; Noguera, Guillermo
  38. Market size, product differentiation and bidding for new varities By Jie Ma; Ian Wooton
  39. Critically important: The heterogeneous effect of politics on trade By Julian Hinz; Elsa Leromain
  40. Geography, Competition, and Optimal Multilateral Trade Policy By Antonella Nocco; Gianmarco I.P. Ottaviano; Matteo Salto
  41. Productivity and Trade Growth in Services: How Services Helped Power Factory Asia By Shepherd, Ben
  42. Trade and growth in the Iron Age By Jan David Bakker; Stephan Maurer; Jörn-Steffen Pischke; Ferdinand Rauch
  43. Exit and Foreign Ownership: Evidence from Export-Oriented Firms in Sri Lanka By Daniel Stock
  44. China's export registration in the automobile industry: Effects on manufacturer-intermediary match efficiency By Sun, Xiaonan
  45. United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China: Hitting Nails in the Coffin of Unfair Dumping Margin Calculation Methodologies By Thomas J. Prusa; Edwin A. Vermulst
  46. When innovation policy trumped protectionism: the Reagan years By Ufuk Akcigit; Sina T. Ates; Giammario Impullitti
  47. Trade Shocks and the Shifting Landscape of U.S. Manufacturing By Katherine Eriksson; Katheryn Russ; Jay C. Shambaugh; Minfei Xu
  48. The European Union’s response to the trade crisis By Uri Dadush; Guntram B. Wolff
  49. Immigrants’ Earnings Growth and Return Migration from the U.S.: Examining their Determinants using Linked Survey and Administrative Data By Randall Akee; Maggie R. Jones
  50. Immigrant Naturalisation, Employment and Occupational Status in Western Europe By Rezart Hoxhaj; Maarten Vink; Tijana Prokic-Breuer
  51. The Trade Policy of the United States under the Trump Administration By Craig VanGrasstek

  1. By: Sébastien Miroudot; Davide Rigo
    Abstract: This paper investigates the impact of deep integration in preferential trade agreements (PTAs) on multinational production (MP), i.e. the production carried out by firms outside of their country of origin. Using a structural gravity model, we find that tariff reductions have a positive impact on MP of goods. This effect is stronger for foreign affiliates trading intermediate inputs or serving the final demand. However, while deep provisions have no significant impact on foreign affiliates that produce goods, we find that deep integration provisions positively affects foreign affiliates operating in the service sector. These results suggest that the proliferation of PTAs with deep integration provisions has contributed to the growth of multinational production and facilitated the participation of foreign affiliates in global value chains.
    Keywords: preferential trade agreements, multinational production, deep integration, services, investment.
    JEL: F12 F14 F15 F23 L23
    Date: 2019–02
  2. By: Emily Blanchard; Mark Wu
    Abstract: Article 6 of the SPS Agreement presents a series of interlinked obligations for importing and exporting countries of diseased agricultural products. The Russia – Pigs dispute raises the question of when an importing country is justified in imposing a ban on products from exporting countries unaffected by the disease, on the basis of the fact that the country is part of the same customs union as another country inflicted with the disease. This Article contends that four distinct classes of cross-border and cross-product externalities ought to play in an important role when assessing this question in the future. It discusses the possible roles to be played by bilateral, sequential, pass-through, and supply chain externalities in propagating the transmission of agricultural disease across borders through trade.
    Keywords: Externalities, Dispute Settlement, SPS, African Swine Flu, Agricultural Disease
    Date: 2018–12
  3. By: Sebastian Bustos (Center for International Development at Harvard University); Jose Ramon Morales Arilla (Center for International Development at Harvard University)
    Abstract: We study the effects of local tariff drops for Mexican exports to the US on the local electoral perfor- mance of Andrés Manuel López Obrador (AMLO) in Mexico’s 2006 presidential election. In an effort to appeal to his rural base, AMLO proposed to unilaterally retain tariff exemptions on imported corn and beans, which were scheduled to drop under NAFTA by the end of 2008. This elevated protectionism in the public agenda during the campaign. We find that local economic gains due to export tariff drops under NAFTA between 1994 and 2001 led to a drop in AMLO’s local vote share gains in 2006. These effects are contingent to the 2006 election, as similar effects on local vote for the left are not found in previous or later elections. Results are robust to controls for local grain growing and Chinese competition. We predict that AMLO would have been elected in 2006 had protectionism not been a salient electoral issue. Our findings suggest export access gains due to globalization undermine local political preferences over national protectionist platforms.
    Keywords: NAFTA, AMLO, Globalization, Protectionism
    JEL: F13 F55 D72
    Date: 2019–03
  4. By: Ana Margarida Fernandes; Peter J. Klenow; Sergii Meleshchuk; Martha Denisse Pierola; Andrés Rodríguez-Clare
    Abstract: Is the variation in bilateral trade flows across countries primarily due to differences in the number of exporting firms (the extensive margin) or in the average size of an exporter (the intensive margin)? And how does this affect the estimation and quantitative implications of the Melitz (2003) trade model? The benchmark Melitz model with Pareto-distributed firm productivity and fixed costs of exporting, predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners should occur on the extensive margin. We subject this theoretical prediction to a reality check drawing upon the World Banks Exporter Dynamics Database (EDD) which has firm-level exports from 50 developing countries to all destinations. We find that around 50 percent of the variation in exports across trading partners is along the intensive margin, contradicting the benchmark Melitz-Pareto model. We find that moving from a Pareto to a lognormal distribution of firm productivity allows the Melitz model to successfully match the role of the intensive margin evident in the EDD. We then study the implications of our findings for quantitative trade theory. Using likelihood methods and the EDD, we estimate a generalized Melitz model with a joint lognormal distribution for firm productivity, fixed costs and demand shifters, and use exact hat algebra to quantify the counterfactual effects of a decline in trade costs on trade flows and welfare in the estimated model. Finally, we compare these effects to those that would be predicted by the Melitz-Pareto model, with the Pareto shape parameter chosen to match the average trade elasticity implied by our estimated Melitz-lognormal model. We find that the effects on welfare turn out to be quite close to those in the standard Melitz-Pareto model even though the effects on trade flows remain different.
    Keywords: intensive margin of trade, extensive margin of trade, productivity distribution, trade costs, welfare, Pareto
    JEL: F10 F12
    Date: 2019
  5. By: Pablo D. Fajgelbaum; Pinelopi K. Goldberg; Patrick J. Kennedy; Amit K. Khandelwal
    Abstract: We analyze the impacts of the 2018 trade war on the U.S. economy. We estimate import demand and export supply elasticities using changes in U.S. and retaliatory tariffs over time. Imports from targeted countries declined 31.5% within products, while targeted U.S. exports fell 11.0%. We find complete pass-through of U.S. tariffs to variety-level import prices. Using a general equilibrium framework that matches these elasticities, we compute the aggregate and regional impacts. Annual consumer and producer losses from higher costs of imports were $68.8 billion (0.37% of GDP). After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare loss was $7.8 billion (0.04% of GDP). U.S. tariffs favored sectors located in politically competitive counties, but retaliatory tariffs offset the benefits to these counties. We find that tradeable-sector workers in heavily Republican counties were the most negatively affected by the trade war.
    JEL: F1
    Date: 2019–03
  6. By: Maria Bas (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Caroline Paunov (OECD - Directorate for Science - Technology and Innovation)
    Abstract: This paper investigates the distributional impacts of trade liberalization across firms, consumers and workers. Using firm-product-level census data for Ecuador, we exploit exogenous tariff changes at entry to the World Trade Organization. We show that with input tariff cuts firms access higher quality and new input varieties. Consequently, firms increase their product scope and quality, while their production's skill-intensity increases and costs decrease. "Real" productivity (TFPG) increases only in the medium run, following adjustments to produce more and higher quality products. Positive immediate revenue productivity (TFPR) gains result because firms' markups increase. Consumers still gain as quality-adjusted prices decrease and varieties increase. Workers benefit differentially: skilled workers' wages rise compared to less skilled worker's wages. Input-tariff liberalization also has distributional impacts across firms. Only more productive firms with high markups increase product scope and quality and gain market shares. With output-trade liberalization the least productive firms decrease their product scope.
    Keywords: gains from trade,input and output tariff reductions,product scope,product quality,market share,quantity and revenue total factor productivity (TFPQ - TFPR),skill premium,markups,price,foreign inputs quality and variety,firm-product-level data,Ecuador
    Date: 2019–02
  7. By: Santacreu, Ana Maria (Federal Reserve Bank of St. Louis); Varela, Liliana (University of Warwick, CEPR and CAGE)
    Abstract: This paper studies the impact of increased import penetration on a country’s long-term patterns of trade. It shows that foreign competition induces firms to increase their R&D efforts in order to differentiate their products and escape competition. Quality improvements translate into increases in firms’ exports. This effect, however, is heterogeneous across sectors and is driven by sectors’ in which the country has a comparative advantage. On the aggregate, the impact of import competition on innovation and a country’s patterns of trade depends crucially on the distribution of sectoral comparative advantage. We provide evidence of this mechanism using firm-level data on trade and innovation for France and import competition driven by China’s WTO entry.
    Keywords: quality upgrading, import competition, patterns of trade, comparative advantage JEL Classification: F12, F14, O30, O41
    Date: 2019
  8. By: Peter H. Egger; Johannes Schwarzer; Anirudh Shingal
    Abstract: Recent work on labour market effects of globalization has generated both academic and populist interests. However, this work has focussed exclusively on the manufacturing sector. Moreover, general equilibrium effects of globalization have received little attention. This study contributes to filling both these gaps by examining the general equilibrium effects of external exposure on the labor market in Switzerland. We exploit exogenous exchange rate movements to identify trade-induced shocks across all sectors of the Swiss economy and transpose industry-level exposure to the municipal level, using detailed employment data on the entirety of Swiss firms. We find strong evidence for three channels of employment effects of currency appreciation - negative employment growth induced by increasing export uncompetitiveness and higher import competition, and positive employment growth induced by cheaper availability of foreign inputs. The combined average effect of the three channels on employment is found to be negative in our preferred results, with significant heterogeneity across municipalities.
    Keywords: international trade, labour market, exchange rates, global value chains
    JEL: F10 F14
    Date: 2018–06
  9. By: Robert Wolfe
    Abstract: It is a truth universally acknowledged that every ambitious 21st century trade agreement is in want of a chapter on electronic commerce. One of the most politically sensitive and technically challenging issues is personal privacy, including cross-border transfer of information by electronic means, use and location of computing facilities, and personal information protection. States are learning to solve the problem of state responsibility for something that does not respect their borders while still allowing 21st century commerce to develop. A comparison of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP) allows us to see the evolution of the issues thought necessary for an e-commerce chapter, since both include Canada, and to see the differing priorities of the U.S. and the EU, since they are each signatory to one of the agreements, but not of the other. I conclude by seeking generalizations about why we see a mix of aspirational and obligatory provisions in free trade agreements. I suggest that the reasons are that governments are learning how to work with each other in a new domain, and learning about the trade implications of these issues.
    Keywords: digital trade, electronic commerce, trade agreements
    Date: 2018–05
  10. By: Jose Ramon Morales Arilla (Center for International Development at Harvard University)
    Abstract: This paper studies the unintended economic consequences of increases in violence following the Mexican Drug War. We study the effects on exports in municipalities with different levels of exposure to violence after the policy. A focus on exports allows us to control for demand shocks by comparing exports of the same product to the same country of destination. Building on the close elections identification strategy proposed by Dell (2015), we show that municipalities that are exogenously exposed to the Drug War experience a 40% decrease in export growth on the in- tensive margin. Large exporters suffer larger effects, along with exports of more complex, capital intensive, and skill intensive products. Finally, using firm level data, we provide evidence consistent with violence increasing marginal exporting costs.
    Keywords: Exports, Violence, Mexico, Regression Discontinuity
    JEL: H56 D72 F16 N76
  11. By: Moon Jung Choi (Economic Research Institute, Bank of Korea); Ji Hyun Eum (Economic Research Institute, Bank of Korea)
    Abstract: In this paper, we investigate and compare the different patterns of intra-firm trade and arm's length trade during the global financial crisis. Intra-firm trade refers to the cross-border flow of goods between related parties, and arm¡¯s length trade refers to the cross-border flow of goods between unrelated parties. Using firm-level data from the Korean manufacturing sector from 2006 to 2009, we employ two approaches that complement each other, accounting decomposition and fixed effects regression analyses. Our accounting decomposition result reveals that aggregate-level intra-firm trade is more responsive to shocks during the global financial crisis compared to arm¡¯s length trade, particularly in durable goods industries. The decline in intra-firm trade during the crisis is largely driven by extensive margins while the changes in arm¡¯s length and total trade are largely driven by intensive margins. The fixed effects panel regression results show that firms¡¯ involvement in the global value chain is the most significant determinant for the decline in a firm¡¯s trade growth during the crisis, where the negative effect is stronger for arm¡¯s length trade than for intra-firm trade, and is more pronounced in durable goods industries than in non-durable goods industries.
    Keywords: Intra-firm trade, Arm¡¯s length trade, Global financial crisis, Firm-level data
    JEL: F14 F23 L22
    Date: 2019–03–07
  12. By: Zhe, Chen; Sun, Xiaonan
    Abstract: This paper investigates how firm productivity is associated with the sales allocation of Chinese exporters. We demonstrate that highly productive firms are less export oriented compared with less productive ones. This negative correlation between firm productivity and export intensity among exporters remains robust when we control firm ownership, factor intensity, and rule out impacts of processing trade. In order to rationalize our empirical findings, we extend the Arkolakis (2010) model to allow marketing cost elasticities to be heterogeneous across markets. A higher marketing cost elasticity domestically gives rise to a faster sales expansion in the home market as firm productivity grows. The fact that this negative correlation is more pronounced among firms who belong to advertising intensive industries supports the model predictions.Further evidence helps to rule out alternative explanations such as the effects of variable markup and product quality.
    Keywords: Productivity, Marketing Cost, Export Intensity, Market Competition, F14, F23
    Date: 2019–03
  13. By: Federico Carril-Caccia (Department of Economic Theory and History, University of Granada (Spain).); Juliette Milgram Baleix (Department of Economic Analysis and Political Economy, University of Seville (Spain).); Jordi Paniagua (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: The present work reassesses the link between natural resources, institutional quality and foreign direct investment (FDI). In particular, we focus on the impact of good governance and democracy on foreign direct investment in oil-abundant countries. To this end, we estimate the effect of host countries’ institutions on the extensive margin (number of bilateral greenfield investment projects), using a gravity equation for a dataset that covers 182 countries during 2003-2012. Our findings confirm that compliance to rule of law, lack of corruption, political stability and democracy could boost new FDI links through the extensive margin. Our results could not rule out the “oil curse”, meaning that oil producers attract fewer new greenfield projects than similar countries without oil. Unlike other studies, we show that the impact of institutions is not necessarily undermined by the presence of natural resources.
    Keywords: Democracy, FDI, gravity equation, institutions, oil
    JEL: C23 F21 F23 Q39
    Date: 2019–03
  14. By: Peter H. Egger; Anirudh Shingal
    Abstract: Since about a decade, we have seen a surge in interest as well as in the use of services preferentialism and unilateral services regulations. This paper provides an economic explanation of services regulation and services preferentialism, including their interaction. The paper derives hypotheses based on a numerical welfare analysis where tradable services are treated as a secondary (produced) input in the production of tradable goods. Apart from hypotheses on the emergence of services trade agreements (STAs), the paper derives ones on the stringency of unilateral services provisions - a general services trade restrictiveness. For instance, one of the hypotheses is that services trade restrictiveness is endogenous, and it is aligned with economic fundamentals. Another hypothesis suggests that countries are more likely to participate in STAs if the partners' general, unilateral services trade restrictiveness is more similar to theirs. These and other hypotheses are supported by data.
    Keywords: Services trade agreements, Services trade restrictiveness, Preferential trade liberalization, Services trade, Economic determinants of trade liberalization
    JEL: F10 F13 F15
    Date: 2018–06
  15. By: Boris Rigod; Patricia Tovar
    Abstract: This paper analyzes the dispute Indonesia – Measures concerning the importation of chicken meat and chicken products from a legal-economic perspective. We evaluate alternative explanations for the motive behind Indonesia´s import restrictions and conclude that they can be linked to protectionist political-economic motives and are most likely due to a self-sufficiency objective and the legal requirements attached to it. Economically, the import restrictions on chicken and other food products have led to substantial price volatility, and they impose costs on Indonesian consumers and small farmers who are net buyers of food, firms that import certain raw materials, as well as foreign exporters. Therefore, by making food more expensive and less accessible, they could reduce food security. We also argue that an additional issue with the goal of self-sufficiency in Indonesia is lack of comparative advantage in some food items, including chicken meat and chicken products. Legally, although the Panel highlighted that self-sufficiency is a legitimate policy objective that as such does not lead to a violation of WTO law, the Indonesia - Chicken case leads to the question of whether, in practice, it is feasible to implement a self-sufficiency target resorting only to WTO-compliant policies. Finally, we discuss potential alternative economic policies and examine whether Indonesia could have attained its food self-sufficiency objective in a WTO-consistent manner.
    Keywords: WTO, dispute settlement, self-sufficiency, food security, Indonesia
    Date: 2018–11
  16. By: Bruno Merlevede; Victoria Purice (-)
    Abstract: Supplying inputs to foreign affiliates is consistently found to be an important source of productivity gains for domestic firms. We analyse the impact of border regimes on the existence and size of cross-border indirect productivity effects, exploiting variation in the pace and extent of European integration of seven Central and Eastern European countries and their neighbours during the period 2000-2010. EU-membership is a necessary condition for positive cross-border indirect productivity effects through backward linkages. Schengen area participation further magnifies cross-border effects. Our results bear testimony to the successful EU integration of CEECs and warn about potential productivity costs to local firms should border restrictions be reinstated.
    Keywords: Banking; FDI, Productivity, Spillovers, Borders
    JEL: F2 D24
    Date: 2019–03
  17. By: albagoury, samar; Anber, Mahmoud
    Abstract: In Sharm ElShiekh, Egypt, 2015 the member states of three major African regional economic blocks: COMESA, SADC and EAC, agreed on establishing a common free trade area called COMESA-EAC-SADC TFTA. Establishing this FTA is considered as a major step towards Africa’s Continental trade integration which is one of the main objectives of Africa 2063 Agenda. This paper aims to identify the potential impacts of the integration among those three RECs on various aspects of economic growth including welfare, trade, price effects, and government’s revenues and to identify the main obstacles and challenges that may hinder achieving these potentials.
    Keywords: Tripartite Free Trade Area, TAFTA, COMESA, SADC, EAC,
    JEL: F10 F14 F15
    Date: 2018
  18. By: Pamina Koenig; Sandra Poncet
    Abstract: This paper studies the effect of activism on the imports of consumer products, by focusing on an event which generated massive consumer mobilization against neglecting firms, namely the collapse of the Rana Plaza building affecting the textile industry in Bangladesh. We hypothesize that this episode was a main shock in the perceived quality of clothing producers sourcing in Bangladesh. Using detailed import flows on textile goods from OECD countries, we analyze whether the imports of consumer products were affected by the disclosure of information, in countries differently exposed to the collapse. To proxy the amount of information received by individuals in different countries, we use the nationality of the firms involved in the Rana Plaza building: soon after the disaster, NGOs and the media insisted on the origin countries of the neglecting companies, publishing the list of misbehaving firms by nationality. We use a difference-in-difference approach to compare the imports from Bangladesh of countries having been differently associated in the news to the Rana Plaza collapse. Results show a post-disaster decrease in imports for countries whose firms were directly involved in the Rana Plaza building. The effect has to be interpreted relatively to the evolution of imports of similar countries, however not linked to the collapsed Rana Plaza knitting factories. While aggregate imports from Bangladesh continue to increase during the whole period (2010-2016), there is a marked disruption that affects countries whose brands were named and shamed by activists and the media after the disaster. No such differential pattern is observed for non-textile goods. Our results are robust to a variety of checks.
    Keywords: Activism;Multinational Firms;Trade;Imports;Clothing Industry
    JEL: F14 L67 L31
    Date: 2019–03
  19. By: Eddy Bekkers; Hugo Rojas-Romagosa
    Abstract: The reduction of non-tariff measures (NTMs) has become the key policy variable to evaluate modern and deep free trade agreements (FTAs), such as the Transatlantic Trade and Investment Partnership (TTIP). In this chapter we overview the two main approaches to estimating NTM reductions associated with the implementation of FTAs. We then detail how these reductions are estimated in different impact assessment studies of TTIP, we compare and analyse the main differences in these estimations and how they affect the overall economic impact of TTIP. We find that accounting for differences in the expected NTM reductions can explain a large share of the discrepancies regarding the overall potential economic effects between different impact assessments of TTIP.
    Keywords: Non-tariff measures, trade cost estimations, gravity models, CGE models, quantitative trade models, Transatlantic Trade and Investment Partnership
    Date: 2018–07
  20. By: Christian Dustmann (University College London, Department of Economics and CReAM); Ian Preston (Department of Economics, University College London and CReAM)
    Abstract: Straightforward economic arguments point to the potential for large global output gains from movement of labor from less to more productive locations. Yet the politics of receiving countries seems resistant, characterized rather by efforts to limit migration, or to stop it altogether. In this paper we examine the foundations of claims of large welfare gains through free mobility, studying implications of liberalizing migration for world welfare under a variety of models, paying attention not only to overall gains but also to how gains are distributed, and reviewing attempts to quantify the benefits. We conclude by asking how far considerations beyond economics motivate keenness to impose restrictions on migration.
    Date: 2019–03
  21. By: Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
    Abstract: We use transaction-level data to study changes in the concentration of US imports. Concentration has fallen in typical industry, while it is stable by industry and country of origin. The fall in concentration is driven by the extensive margin: the number of exporting firm has grown, and the number of exported products has fallen more for top firms. Instead, average revenue per product of top firms has increased. At the industry level, top firms are converging, but top firms within country are diverging. These facts suggest that intensified competition in international markets coexists with growing concentration among national producers.
    Keywords: Superstar firms, concentration, US imports, firm heterogeneity, international trade.
    JEL: E23 F12 F14 L11 R12
    Date: 2019–02
  22. By: Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
    Abstract: We use transaction-level data to study changes in the concentration of US imports. Concentration has fallen in typical industry, while it is stable by industry and country of origin. The fall in concentration is driven by the extensive margin: the number of exporting firm has grown, and the number of exported products has fallen more for top firms. Instead, average revenue per product of top firms has increased. At the industry level, top firms are converging, but top firms within country are diverging. These facts suggest that intensified competition in international markets coexists with growing concentration among national producers.
    Keywords: superstar firms, concentration, US imports, firm heterogeneity, international trade
    JEL: E23 F12 F14 L11 R12
    Date: 2019–03
  23. By: Ferrett, Ben; Wooton, Ian
    Abstract: We study the tax/subsidy competition between the governments of two countries to attract the FDI projects of two firms. We assume that governments lack the capacity to target every potential inward investor with a tailored fiscal offer. Consequently, each government is constrained to bid for a single firm. In this environment, we show that subsidy competition, where both governments bid for the same firm, arises only if there is uncertainty over which country offers the more profitable location for the firm's plant. Intuitively, such uncertainty leads to both governments believing that they might win the subsidy competition. In contrast, when the characteristics of the two countries are common knowledge, subsidy competition never arises in equilibrium, as the losing country would prefer to target the other firm. We also explore some of the welfare implications of governmental targeting constraints.
    Keywords: efficiency; Foreign direct investment; tax and subsidy competition
    JEL: F12 F23 H25 H73
    Date: 2019–03
  24. By: Mary Amiti; Stephen J. Redding; David Weinstein
    Abstract: This paper explores the impacts of the Trump administration's trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods. Overall, using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of 2018. We also see similar patterns for foreign countries who have retaliated against the U.S., which indicates that the trade war also reduced real income for other countries.
    Keywords: international trade, tariffs, trade war
    JEL: F13 F14
    Date: 2019–03
  25. By: George A. Papaconstantinou
    Abstract: Trade in financial services is integrated through Economic Integration Agreements (EIAs), in addition to the multilateral trading system developed under the WTO. Securities’ clearing and settlement services have nowadays become more important than ever. The latter have gained enormous strategic relevance due to the global regulatory shift towards tasking clearinghouses to mitigate the risks associated with trading of OTC derivatives. This study assesses the liberalization levels of the financial services in the plurilateral trading system. It aims to shed light on the underlying dynamics that could explain the rationale behind international trade treaties. Most importantly, this contribution assesses the relationship between regulation of international trade and regulation of financial market infrastructure in order to bring into the spotlight problematic features that underscore existing silos in WTO Members’ administrations.
    Keywords: Regional Vs Multilateral trade in financial services, Preferential trading system, EIAs, Clearing and Settlement, GATS, Regulation of financial market infrastructure, Clearing house
    JEL: K40 K33
    Date: 2018–12
  26. By: Bernard Hoekman; Charles Sabel
    Abstract: Sustained high growth in many developing countries (‘the rise of the rest’) combined with long-standing WTO working practices hampers the ability of the WTO to perform its routine functions and paralyzes efforts to adapt to new circumstances. Preferential trade agreements have taken up some of the slack in addressing differences in domestic regulation of product safety, environmental and social conditions, but are exclusionary and inefficient from a global perspective. In this paper, we argue that a new type of agreement based on open plurilateral cooperation offers better prospects for groups of countries to explore and develop their potential common interests on regulatory matters, while safeguarding core aspects of their national regulatory sovereignty and in-creasing the possibility of regenerating the WTO from within.
    Keywords: Regulation, international cooperation, trade, WTO, plurilateral agreements
    Date: 2019–02
  27. By: Petros C. Mavroidis; Damien J. Neven
    Abstract: This paper considers the APEC and EGA agreements which grant tariff concession through HS classifications beyond the six digit level ("ex outs") in favour of "green" goods and discuss how these initiatives fit into the WTO legal regime. Even if the practical significance of the APEC agreement should not be overestimated as it involves modest tariff concessions over a subset of goods which are not heavily traded, these agreements involve a paradigm shift to the extent that they use tariffs concessions negotiated on a plurilateral basis as a policy instrument to meet public policy concern, instead of making market access conditional on meeting national regulations. We find that there is a tension between the current definition of likeness for the enforcement of MFN provisions and the use of ex outs and a risk that improved market access for ex outs could be seen a de facto discrimination. One way out of this conundrum is to define likeness in terms of policy rationales.
    Keywords: WTO, APEC, EGA, Tariffs, Terms of Trade, ex outs
    JEL: K40
    Date: 2019–01
  28. By: Ernst-Ulrich Petersmann
    Abstract: Since 2017, the United States (US) and other World Trade Organization (WTO) members violate their legal duties and democratic mandates given by national parliaments to maintain the WTO Appellate Body (AB) as legally prescribed in Article 17 of the WTO Dispute Understanding (DSU), i.e. as being ‘composed of seven persons’, with vacancies being ‘filled as they arise’. This contribution argues that none of the reasons offered by the US for its blocking of the (re)appointment of AB candidates - on grounds unrelated to the personal qualifications of the candidates - can legally justify its disruptions of the WTO legal and dispute settlement system. Also the European Union (EU) has offered no convincing justification of its failure to protect ‘strict observance of international law’ in it external relations, as required by Article 3 of the Lisbon Treaty on European Union (TEU) and by Article IX:1 WTO Agreement (‘where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting’). The 2018 ‘Concept Paper’ prepared by the EU Commission on ‘WTO modernization’ indicates no strategy for the obvious problem that the EU objective of ‘preserving and deepening the rules-based multilateral system’, including ‘more effective and transparent dispute settlement including the Appellate Body’, is inconsistent with the US strategies underlying US blocking of the AB jurisdiction by preventing the appointment of AB judges, a strategy which was previously applied by the US for blocking third-party adjudication under Chapter 20 of the North American Free Trade Agreement (NAFTA). Trade diplomats have no democratic mandate for disrupting the AB jurisdiction by illegally reducing the number of AB members to one single judge by December 2019 and, thereby, undermining the WTO legal and dispute settlement system. EU trade diplomats must exercise leadership for using the existing legal powers and duties of the WTO Ministerial Conference and General Council under Article IX:1 WTO – if necessary, based on ‘a majority of the votes cast’ - to initiate and complete the WTO selection procedures for filling AB vacancies and protect the AB as legally defined in Article 17 DSU. Article IX.2 could be used for authoritative interpretations ‘taken by a three-fourths majority of the Members’ confirming the collective duties of WTO members to fill AB vacancies in case of illegal blocking of AB nominations. WTO law foresees similar majority decisions for the appointment of the WTO Director-General; such majority decisions are necessary for preventing illegal de facto amendments of the WTO legal system, and do not set a precedent for future WTO majority voting on discretionary, political issues, which most WTO diplomats reject as a ‘nuclear option’. As suggested by European ordo-liberalism, citizens and democratic institutions must hold trade politicians democratically and legally more accountable for complying with their legislative mandates to implement and modernize, but not to destroy WTO law and dispute settlement.
    Keywords: Appellate Body, competition rules, governance crisis, ordo-liberalism, WTO
    Date: 2018–12
  29. By: Mitra, Devashish (Asian Development Bank Institute)
    Abstract: In various Asian countries, international trade has raised productivity, lowered markups through import competition (while increasing them through cheaper inputs that can be imported), raised wages, expanded employment, and, above all, reduced poverty. This is in sharp contrast to the impact of trade in some of the Latin American countries, which suggests exercising caution in extrapolating results to Asian countries that have not yet been studied. There are also a few adverse consequences of trade that have already been found for Asia. Apart from raising inequality, trade can increase informality, especially in the presence of labor-market rigidities. Additionally, there are the adverse effects stemming from trade adjustment as a result of worker mobility costs. In this context, this study discusses various policies that researchers have recommended.
    Keywords: trade opening; worker mobility; trade adjustment; import competition
    JEL: F10 F13
    Date: 2019–01–11
  30. By: Fariha Kamal; Asha Sundaram
    Abstract: Do institutions shape the geographic concentration of industrial activity? We explore this question in an international trade setting by examining the relationship between country-level institutions and patterns of spatial concentration of global sourcing. A priori, weak institutions could be associated with either dispersed or concentrated sourcing. We exploit location and transaction data on imports by U.S. firms and adapt the Ellison and Glaeser (1997) index to construct a product-country-specific measure of supplier concentration for U.S. importers. Results show that U.S. importers source in a more spatially concentrated manner from countries with weaker contract enforcement. We find support for the idea that, where formal contract enforcement is weak, local supplier networks compensate by sharing information to facilitate matching and transactions.
    Keywords: buyer-seller match, global sourcing, contract enforcement, institutions, spillovers, trade
    JEL: F1 F14 R12
    Date: 2019–02
  31. By: Kara Reynolds; Tatiana Yanguas
    Abstract: In April 2017, a WTO panel ruled that China’s anti-dumping investigation into imports of dissolving cellulose pulp from Canada violated the WTO’s Anti-dumping Agreement. The panel found that China’s description of the parallel price trends of dumped imports and domestic products failed to explain their finding that the dumped imports caused the decline in domestic prices. The ruling perhaps should not have surprised anyone as the WTO had made similar findings in disputes involving two previous Chinese anti-dumping investigations. This paper explores to what degree “parallel price trends” can be used as a valid methodology to determine price depression, and whether it is the methodology itself that is problematic or China’s implementation of that methodology that has caused it to lose three disputes over the past five years.
    Keywords: Anti-dumping, WTO dispute, parallel price trend, and cellulose pulp
    Date: 2018–11
  32. By: Vernon, Victoria; Zimmermann, Klaus F.
    Abstract: Throughout history, border walls and fences have been built for defense, to claim land, to signal power, and to control migration. The costs of fortifications are large while the benefits are questionable. The recent trend of building walls and fences signals a paradox: In spite of the anti-immigration rhetoric of policymakers, there is little evidence that walls are effective in reducing terrorism, migration, and smuggling. Economic research suggests large benefits to open border policies in the face of increasing global migration pressures. Less restrictive migration policies should be accompanied by institutional changes aimed at increasing growth, improving security and reducing income inequality in poorer countries.
    Keywords: Walls,fences,defense,security,international migration,mobility
    JEL: F22 H56 J61 N4
    Date: 2019
  33. By: Yeabsley, John (New Zealand Institute of Economic Research); Nixon, Chris (New Zealand Institute of Economic Research)
    Abstract: We examine the phenomenon of globalisation as it affects New Zealand. We look at its impact on New Zealand and ask whether it is a force which has had its day (peak globalisation)or is it continuing to morph and evolve.
    Keywords: Trade; Gloablisation
    JEL: F00 F10 G15
    Date: 2017–10–11
  34. By: World Bank
    Keywords: International Economics and Trade - Export Competitiveness International Economics and Trade - Trade Facilitation Macroeconomics and Economic Growth - Economic Growth Macroeconomics and Economic Growth - Economic Policy, Institutions and Governance Macroeconomics and Economic Growth - Fiscal & Monetary Policy
    Date: 2018–06
  35. By: Huiwen Lai; Keith E. Maskus; Lei Yang
    Abstract: We study how provincial-level enforcement of intellectual property rights (IPRs) affects Chinese firms’ decisions regarding exit, export, and the channels through which to receive technology transfer. Our findings provide insights into how variations in IPRs enforcement alter productivity. Our model combines the standard theory of heterogeneous firms with the endogenous choices of those firms concerning how they absorb international technologies through imitation or licensing. We show that, in this setting, the exit and export cutoff productivities differ from those in the standard environment, leading to a different sorting mechanism. We also predict that stronger IPRs change the decisions firms make concerning their mode of technology transfer, further altering their productivity and export possibilities. Empirical tests based on a comprehensive dataset of Chinese firms from 2000 to 2006 support the model predictions.
    Keywords: Intellectual Property Enforcement, Exports, Firm Heterogeneity
    JEL: D23 F13 F14 O34
    Date: 2018–07
  36. By: Shushanik Hakobyan; Joel P. Trachtman
    Abstract: The EU—Fatty Alcohols decision of the Appellate Body addressed an important issue of the scope of permissible adjustments under Article 2.4 of the Agreement on Interpretation of Article VI of the GATT 1994, focusing on the “mark-up” paid by an Indonesian exporter to a related company as a difference affecting price comparability between the export price and the normal value. The Appellate Body confirmed that the primary focus of the investigating authority's assessment is on whether the relationship between related companies can be demonstrated to be a factor that impacts the prices of the relevant transactions. This case raises the question of whether a harmonized approach to transfer pricing across different regulatory areas would be useful to bring greater consistency of treatment and certainty to international transactions.
    Keywords: dumping, transfer pricing, dispute settlement, WTO, EU
    Date: 2018–12
  37. By: Grossi, Julia Cajal (Graduate Institute, Geneva); Macchiavello, Rocco (London School of Economics and CEPR); Noguera, Guillermo (Yale University and CAGE)
    Abstract: Large international buyers play a key role in global value chains. We exploit detailed transaction-level data on the usage of material inputs to study how Bangladeshi garment suppliers’ markups vary across international buyers. We find substantial dispersion in markups across export orders of a given seller for the same product. Buyer effects explain a significant share of this variation, while destination effects do not. Buyers adopting relational sourcing strategies pay higher markups than non-relational buyers. This pattern holds within seller-product-year combinations, is robust to controlling for the buyer’s size, traded volumes, and quality, and, together with larger volumes, implies higher profits for suppliers dealing with relational buyers.
    Keywords: Markups, Sourcing Strategies, Global Buyers, Buyer-Driven Value Chains JEL Classification: L11, L14, D23, F63
    Date: 2019
  38. By: Jie Ma (University of Business and Economics); Ian Wooton (Department of Economics, University of Strathclyde)
    Abstract: We analyse a firm's investment in a regional economy composed of two countries. The firm already manufactures a horizontally differentiated good in the region and we determine the firm's equilibrium location choice for the new good and the welfare consequences of fiscal competition between the two countries. We find that the firm's location decision is efficient. Fiscal competition does not affect the location of production but redistributes rents between the firm and the taxpayers of the host country. The implications of endogenous product differentiation and the new good being produced by a competing firm are also considered. As far as we know the tax competition literature has not previously addressed the issue of product differentiation.
    Keywords: FDI, import substitution, market size, MNEs, product differentiation
    JEL: F21 F23 L22
    Date: 2019–03
  39. By: Julian Hinz; Elsa Leromain
    Abstract: There is strong empirical evidence showing that political relations have an impact on aggregate bilateral trade flows. In this paper, we show that the impact is heterogeneous across products, depending on product characteristics. Specifically, imported products used as intermediate inputs intensively may be more sensitive to adverse shocks. This is particularly relevant in the current context of increased international input linkages. We sketch a simple theoretical framework and test the mechanism in reduced-form. We implement a difference-in-differences approach with monthly trade flows and a novel dataset of diplomatic incidents. We find that a negative shock to political relations leads to a general decrease in trade flows, and that the response is larger for products in markets with low price gaps to alternative sourcing partners and high direct and indirect imported input use.
    Keywords: Trade frictions, political relations, dependence, input sourcing
    JEL: F14 F15 F51 F52
    Date: 2018–12
  40. By: Antonella Nocco (Università del Salento); Gianmarco I.P. Ottaviano (Bocconi University); Matteo Salto (European Commission)
    Abstract: How should multilateral trade policy be designed in a world in which countries differ in terms of market access and technology, and firms with market power differ in terms of productivity? We answer this question in a model of monopolistic competition in which variable markups increasing in firm size are a key source of misallocation across firms and countries. We use 'disadvantaged' to refer to countries with smaller market size, worse state of technology (in terms of higher innovation and production costs), and worse geography (in terms of more remoteness from other countries). We show that, in a global welfare perspective, optimal multilateral trade policy should: promote the sales of low cost firms to all countries, but especially to disadvantaged ones; trim the sales of high cost firms to all countries, but especially to disadvantaged ones; reduce firm entry in all countries, but especially in disadvantaged ones. This would not only restore efficiency but also reduce welfare inequality between advantaged and disadvantaged countries if their differences in market size, state of technology and geography are large enough.
    Keywords: International trade policy, monopolistic competition, firm heterogeneity, pricing to market, multilateralism.
    JEL: D4 D6 F1 L0 L1
    Date: 2019–03–12
  41. By: Shepherd, Ben (Asian Development Bank Institute)
    Abstract: This paper uses a theory-based measure of productivity-based comparative advantage to examine the trade performance of developing Asian economies in manufacturing and services over the 1995–2011 period. We find that the growth in service exports was nearly as rapid as that in manufacturing over this period—a little-appreciated fact. Services are therefore an integral part of “Factory Asia.” Moreover, the results from a quantitative model of trade show that revealed productivity measures are often comparable between manufacturing and services at a disaggregated level, although the results differ markedly across sectors and economies. We also find evidence of rapid growth in revealed productivity in some service subsectors, comparable to that in manufacturing. Our findings suggest that oversimplifying the relationship between patterns of specialization and subsequent economic transformation and growth patterns misses important elements of reality.
    Keywords: services; trade; comparative advantage; productivity; Asia
    JEL: F14 F15 L80
    Date: 2019–01–16
  42. By: Jan David Bakker; Stephan Maurer; Jörn-Steffen Pischke; Ferdinand Rauch
    Abstract: Stephan Maurer and colleagues investigate the growth effects of one of the first trade expansions in history: the crossing of the Mediterranean by the Phoenicians
    Keywords: growth,trade
    Date: 2019–03
  43. By: Daniel Stock (Center for International Development at Harvard University)
    Abstract: While foreign direct investment may play a transformative role in the development of economies, foreign-owned firms are also said to be more “footloose” than comparable local firms. This paper uses a semi-parametric approach to examine the link between firm ownership and exit rates, tracking a set of export-oriented firms operating in Sri Lanka in years between 1978 and 2017. We find that foreign firms are in fact 42-56% more likely to exit than local firms, but only for their first years of existence. In their later years, foreign firms are actually less likely to exit than local firms, though this late advantage is not statistically significant when conditioned on the firms’ initial characteristics (such as employment size). This pattern supports the theory that foreign firms face a steeper early learning curve in adapting to local conditions.
    Keywords: Foreign Direct Investment
    Date: 2019–03
  44. By: Sun, Xiaonan
    Abstract: In 2007, China implemented a policy requiring automobile producers to distribute through at most three trade intermediaries and list their intermediaries on a registry. Motivated by the registration requirements and granularity in the order sizes handled by most intermediaries, this paper develops a model to describe the matches between automakers and intermediaries.The model shows market division arises endogenously due to the regulation. It creates inefficiencies in matching and double marginalization. The model predictions coincide with a number of stylized facts: a strong decline in the number of auto intermediaries, assortative matching, export price increases for intermediaries, and substantial churning in the sets of intermediaries registered by the automakers. Welfare analysis in terms of total profit shows that this regulation benefits automakers, especially those relatively less efficient ones while intermediaries are made worse off.
    Keywords: trade intermediary, matching, export regulation, F13, F14
    Date: 2019–03
  45. By: Thomas J. Prusa; Edwin A. Vermulst
    Abstract: The WTO Appellate Body report United States – Certain Methodologies and Their Application to Anti-Dumping Proceedings Involving China is yet another in a long line of disputes involving U.S. Department of Commerce’s dumping margin calculation methodologies. The AB ruled against the United States on three important aspects: (1) the use of the Nails test to rationalize the exceptional method in Article 2.4.2 of the Anti-Dumping Agreement so as to justify using the weighted average-to-transaction methodology in dumping margin calculations; (2) the treatment of multiple companies in a non-market economy as a single NME-wide entity; and (3) the USDOC’s policy of using adverse facts available for such an entity. Yet, some aspects of the AB’s decision – most notably affirming the use of average prices – significantly weaken Article 2.4.2’s pattern requirement and potentially open the door to greater use of the exceptional method.
    Keywords: Dumping, zeroing, targeted dumping, single rate dumping duty, non-market economy dumping
    Date: 2018–11
  46. By: Ufuk Akcigit; Sina T. Ates; Giammario Impullitti
    Abstract: Giammario Impullitti and colleagues show that it was the Reagan administration's innovation policy - not a retreat from globalisation - that promoted US growth.
    Keywords: innovation, protectionism
    Date: 2019–03
  47. By: Katherine Eriksson; Katheryn Russ; Jay C. Shambaugh; Minfei Xu
    Abstract: Using data over more than a century, we show that shifts in the location of manufacturing industries are a domestic reflection of what the international trade literature refers to as the product cycle in a cross-country context, with industries spawning in high-wage areas with larger pools of educated workers and moving to lower-wage areas with less education as they age or become “standardized.” We exploit the China shock industries as a set of industries that were in the late-stage product cycle by 1990 and show how the activity in those industries shifted from high-innovation areas to low-education areas over the 20th century. The analysis also suggests that the resilience of local labor markets to manufacturing shocks depends on local industries’ phase in the product cycle, on local education levels, and on local manufacturing wages. The risk of unemployment and detachment from the labor force rises most when a shock hits in areas where an industry already has begun phasing out, wages are high, or education levels are low. The results are consistent with the belief that there are long-term, secular trends in U.S. industrial structure driving the movement of industries, which shocks may mitigate or accelerate.
    JEL: F10 F16 F43
    Date: 2019–03
  48. By: Uri Dadush; Guntram B. Wolff
    Abstract: The global trading system, a source of prosperity, is under attack on various fronts. The causes run deep and require a strategic response from the European Union and from the main trading nations. The future of the system hinges on the answer to three questions, and the scenarios associated with them - Can the World Trade Organisation be reformed? Is the United States’ scepticism about the system a new normal? Can China undertake reforms that would make its system more compatible with the WTO? The possible outcomes for the global trading system could be good or bad, depending on how each of these issues is resolved. Under a good set of scenarios, the EU should persist on its current course with some significant adjustments. We call this Plan A, which would aim to preserve the multilateral trading system. Under a bad set of scenarios, the EU will have to contend with a possible break-up of the multilateral trading system, requiring the formulation of a Plan B. The EU needs today to put in place its Plan B, not only to prepare for a far less favourable trading environment, but also to clarify the trade-offs implicit under Plan A. All major trading nations must recognise that the alternative to making compromises is not the status quo, but something much worse.
    Date: 2019–03
  49. By: Randall Akee; Maggie R. Jones
    Abstract: Using a novel panel data set of recent immigrants to the U.S. (2005–2007) from individual-level linked U.S. Census Bureau survey data and Internal Revenue Service administrative records, we identify the determinants of return migration and earnings assimilation. We show that by 10 years after arrival almost 40 percent have return migrated. We show, for the first time, that return migrants experience downward earnings mobility over two to three years prior to their return migration. This finding suggests that economic shocks are closely related to emigration decisions. As a result, standard calculations of immigrants earnings growth may be understated.
    JEL: F22 J15 J61
    Date: 2019–03
  50. By: Rezart Hoxhaj; Maarten Vink; Tijana Prokic-Breuer
    Abstract: Does citizenship facilitate access to employment and higher status jobs? Existing case studies have produced mixed results across mostly single case studies in Europe and North America. To investigate whether this heterogeneity depends on varying institutional and socio-economic conditions, in this paper we analyse the labour market outcomes of immigrants who have naturalised in 13 West European countries. Our empirical analysis draws on data from the 2014 European Labour Force Survey Ad Hoc Module on immigrants. In order to cope with the selective nature of the naturalisation process, we employ a bivariate probit model that accounts for unobserved characteristics of naturalising immigrants. Our main results show a positive relationship across these destination countries between citizenship and the probability of employment for both immigrant men and women, as well as between citizenship and occupational status for men. Liberalising the access to citizenship does not diminish the positive returns on employment from naturalisation. For immigrant men there is evidence of a trade-off between easier access to citizenship and the returns on occupational status.
    Keywords: Citizenship, Employment, Job status, Western Europe
    JEL: J15 J61
    Date: 2019–02
  51. By: Craig VanGrasstek
    Abstract: The evolution of American trade policy is best understood over the long run as a function of the international distribution of power and wealth, but in the short run policy it is dominated by the exigencies of domestic politics. The decline in that country’s position has long raised doubts regarding its readiness to lead, and those doubts have been greatly amplified by the Trump administration. The arc of the administration’s policy thus far appears as a series of year-long phases by which almost inchoate sentiments have been progressively transformed into ever more concrete policy, culminating in the resuscitation of trade laws that were nearly forgotten but not gone. Chief among them were a “reciprocity” statute that gives the president broad powers to define and enforce U.S. rights; a global safeguards law that had been quiescent since the Bush administration used it to protect steel in 2002; and especially a national security law that the president invoked to restrict steel and aluminum imports. In 2019 the Trump administration has supplemented its trade war with new negotiations, including talks with the European Union, the United Kingdom, and Japan. While these talks do not directly engage China, the U.S. strategy is driven largely by a desire to isolate that rival. The world may well be headed towards a system where most commercially significant countries are pressed to align with one or another of these giants. No matter who occupies the White House, trade policymaking will remain perennially challenging for a system of government that is always divided by branch and frequently by party. Donald Trump was able to act in 2017-2018 with little restraint from Congress, but some of the things he aims to do now will require the acquiescence of Congress. Securing that cooperation will be more challenging as a result of the 2018 elections, in which Democrats recaptured control of the House of Representatives. Over the long term, Trumpism may well survive Trump, unless pro-trade forces manage to retake control of one of the two major parties.
    Keywords: Trade, investment and international cooperation
    Date: 2019–02

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