Trade Policy Changes Research Articles

Trade Policy Changes Based on the Result of the US Presidential Election

Trade Policy Changes Based on the Result of the US Presidential Election

Changes in world trade and trade policy in the time of the COVID-19 pandemic: challenges and opportunities for Ukraine

The article analyzes the trends of world trade and features of trade policies across the world during the period of economic restrictions imposed to prevent the spread of COVID-19. It also analyzes the development of Ukraine’s foreign trade and trade policy measures, which are applied by the government in the pandemic. Based on the identification of challenges and opportunities for the development of this country’s foreign trade during this pandemic and the analysis of forecasts and recommendations of international organizations, the authors substantiate proposals on the directions of Ukraine’s trade policy with an emphasis on the agri-food market A comparison of world trade developments in 2020 and 2021 forecasted by international organizations is made in the article. In the first half of 2020, the world trade development was closer toward the optimistic scenario of the World Trade Organization (WTO) and the World Bank scenario, but the expected second wave of the pandemic may return the world trade trend to the WTO pessimistic scenario, where the world trade could be reduced by 31,9% in 2020. The development of Ukraine's foreign trade also shows a trend close toward the more optimistic scenarios of international organizations - in the first half of 2020 the country’s foreign trade volume only decreased by 10.6% compared to the first half of 2019. In the article, the main channels of the COVID-19 impact on the world trade are indicated, namely: reduction of the production of goods and services due to restrictions on economic activity imposed by countries, disruption of global value chains, rising commercial costs, sharp decline in services, and price decrease of goods with low degree of processing. As in the rest of the world, the negative effects of the COVID-19 pandemic in Ukraine are largely mitigated by the spread of digital technologies in trade, and conversely, the pandemic stimulates their development. Already in the second quarter of 2020, Ukraine’s exports of ICT services resumed growth and exceeded the pre-crisis level of the fourth quarter of 2019. The authors identify advantages and issues of accelerated digitalization of trade in the pandemic. The protection measures introduced by countries, including Ukraine, after the spread of coronavirus, are analyzed, with an emphasis on policy measures related to agri-food trade. It is proved that the limit of wheat exports during the pandemic is the result of annual memorandum of grain market players, so it cannot be considered a policy measure restricting trade. It was also proved that the ban on the export of buckwheat introduced by the Ukrainian government, which expired on July 1, 2020, had of a rather political nature, since the supply of buckwheat on the domestic market and the level of consumer prices for this product were guaranteed by import deliveries. This conclusion applies to other goods of significant social importance, whose imports increased significantly during the pandemic, especially for products of animal origin. The directions of the formation of Ukraine’s trade policy in the conditions of world trade changes and trade policies revision are determined. The spread of the trend towards country self-sufficiency in food will lead to a reduction in food chains, a decrease in import dependence, an increase in state support and, as a result, a strengthening of competitive position of domestic producers. Therefore, full and timely financing of state budgetary programs to support agriculture in Ukraine is of particular importance. In order to strengthen the competitiveness of small and medium-sized agricultural producers in the context of the accelerated digitalization of trade as a result of the pandemic, it is necessary to rapidly develop the infrastructure that provides rural areas with high-speed fixed broadband Internet access. Along with the spread of protectionism in world trade, there is an opposite trend of liberalization of agri-food markets, typical for food-importing countries. Thus, the countries-exporters of agri-food products, which include Ukraine, will have easier access to the markets of these countries, new markets will open, and the situation on export markets will improve.

Openness and factor shares: Is globalization always bad for labor?

This paper studies the response of factor shares to the liberalization episode in India during the 1990's, which is characterized by large and unexpected changes in trade and foreign investment policies. We find that access to foreign capital caused an increase in the labor-to-capital relative factor share. As lower tariffs on capital goods and FDI liberalization reduce the cost of foreign capital, firms increase their use of foreign capital relative to domestic capital. This shift in the composition of the capital stock improves capital's productivity per unit of expenditure, which in turn raises wages and the relative labor share. Consistent with this mechanism, firm TFP and the share of firms that import capital both increase in industries with the largest capital cost reductions, while the relatively larger rise of labor payments is observed predominantly for new capital importers. We identify domestic deregulation policies and reallocation to capital-intensive firms as potential determinants of the observed decline in the aggregate labor share. Finally, in a model where domestic and foreign capital are imperfect substitutes, we quantify the effect of a reduction in capital tariffs, and find that it explains a large part of the estimated increase in the labor share found in the reduced form analysis.

US-EU Trade Cooperation in the Context of Changing American Foreign Economic Policy

Abstract: The article examines changing dynamics and structure of US foreign with the EU countries, caused by the changes in US foreign policy after D. Trump came to power. The United States sets the general mood in the system of international economic relations, and in particular, in international trade. The strengthening of protectionism, the growth of disintegration processes (revision of the conditions of NAFTA / USMCA, US with­drawal from the TPP, stopping negotiations on the TTIP) is the response of Trump adminis­tration to the challenges faced by the United States. Globalization and liberalization have ceased to meet the interests of the American economy, which has led to a revision of the ideological foundations and practice of foreign economic activity. Statistics show that the United States' economic interest in the EU comes from the competi­tive advantages of individual EU countries. There is a possibility of continuing disintegration in the European Union, since after Brexit the Netherlands and other countries expressed the idea of leaving the Union. This will play into the hands of the United States, which is interested not in a strong united Europe, but in increasing the effectiveness of bilateral ties with individual countries of the European Union. The main conclusion of the study is the following: the globalization process and the interdependence of economies have weakened, and regardless of the results of the presidential elections, regardless of whether the United States will continue to pursue a policy of protectionism and conduct trade wars, whether the crisis of 2020-2021 predicted by UNCTAD and IMF will come true, the EU and the US willbe forced to seek compromises and revise the conditions for reformatting the failed TTIP.

Firm productivity gains in a period of slow trade liberalization: evidence from Brazil.

Existing literature recognizes the possible role of trade policy and firms’ exposure to international trade as determinants of productivity. A strand of the literature sheds light on the effects of trade policy changes on firm-level productivity. Another strand studies the relationship between firms’ trade status (exporting production or importing intermediates, but usually not both simultaneously) and firm-level TFP dynamics. However, the analyses that integrate both strands are scarce. This paper aims to disentangle the impact of input and output tariffs on firms’ productivity. Further, it analyses whether the impact of changes in tariffs is conditioned by the trade status of the firm (exporting and/or importing). At difference to most previous papers, we carry out our analysis for a large developing country in a period of slow trade liberalization. Thus, in the empirical part, we use data from firms belonging to Brazilian industrial sectors (manufacturing and mining) during 2000–2008. After estimating total factor productivity (TFP) at the firm level using updated methodologies, we estimate both the impact of trade policy and firms’ trade status on TFP dynamics. Our results suggest that trade liberalization (through reductions in input or output tariffs) increases TFP, being the effect associated to a reduction in input tariffs greater. Furthermore, the impact of trade policy on TFP spreads among all firms, which could be consistent with the existence of spillovers from trading firms to non-trading firms or with the notion that trade liberalization exerts competitive pressure on all firms, regardless of their initial exposure to international trade. Finally, we also find evidence of a positive effect of both the import and export statuses on TFP.

Study on the competitiveness of Russian-made wood panels in the development of import-substituting industries

The article examines the competitiveness of Russian-made wood panels in the world market, analyzes their competitiveness factors and determines the development paths of wood panels production within the framework of the import substitution policy. Today in the Russian Federation, there are tendencies towards the construction of competitive production of wood panel products. A few years ago, the Russian Federation was the clear leader in the import of these goods from the European Union. In view of the change in the foreign trade policy of the Russian Federation for the export of industrial wood such industries began to develop within the country. As a result, we analyzed the dynamics of the development of production and consumption of wood panels, conducted analysis of strengths and weaknesses of the competitiveness of wood panels. We have developed a mechanism for increasing the level of competitiveness of Russian-made wood panels. Within the framework of the mechanism, we propose to give a current assessment of the level of competitiveness of wood-based panels, using tools to conduct information monitoring, which allows predicting the values of the competitiveness of wood-based panels in the future and adjusting these values.

Technology, Geography, and Trade over Time: The Dynamic Effects of Changing Trade Policy

I study the dynamic effects of changes in trade policy in a multi-country model with firms that make durable and destination-specific investments in exporting capacity. Using Mexican exporter-level data, I show that incumbent exporters to minor trade partners account for a smaller share of bilateral exports than do incumbent exporters to major trade partners, indicating a systematic difference in the persistence of the export decision across destinations. The model is calibrated to capture the positive relationship between exporting persistence and export volume, and predicts that trade liberalizations with minor export destinations deliver higher bilateral export growth than liberalizations with major export destinations. Panel analysis on bilateral exports after free trade agreements is consistent with these predictions, con rming that the model is a useful tool for explaining export behavior. Furthermore, I find that heterogeneity in export churning across destinations is a key driver of aggregate dynamics and welfare gains from changes in trade policy.

State regulation of Ukraine's foreign trade in a global pandemic

The COVID-19 pandemic has caused problems in all sectors of the world economy. There is no doubt that the pandemic will have far-reaching negative consequences for the world economy, including Ukraine. It is established that in January-September 2020, exports of Ukrainian goods decreased by almost 6%, imports – by 19%. Exports maintained large harvests of grain and oilseeds. Monitoring of changes in trade policy in the context of the spread of COVID-19 allowed to identify groups of countries that have introduced restrictive measures in trade policy: in 24 countries no export-import restrictions were introduced, in 19 countries indirect measures were implemented to protect the economy. To offset the negative effects on business, governments are developing aid packages to support it. These are mainly the following instruments: loans at reduced rates, the grace period for the payment of tax liabilities, cash grants. It was established that only some developing countries impose temporary foreign trade restrictions to avoid shortages in the domestic market. Most countries use other economic incentives to mitigate the effects of a pandemic. Ukraine is implementing economic measures and temporary trade restrictions to counter the pandemic. In particular, the Government of Ukraine introduced temporary restrictions on exports with the establishment of a zero quota for alcohol, buckwheat and anti-epidemic goods. The alcohol export ban not only did not worsen the situation on Ukraine's foreign markets, but also marked almost triple their extension. The embargo on buckwheat and grain exports from Ukraine has tripled imports. Despite the embargo on exports of anti-epidemic goods, trade did not stop, but even increased significantly for some commodity subheadings. The results of the study allowed to identify measures to mitigate the effects of the pandemic in trade and economic cooperation of Ukraine on the international arena.

Spatiotemporal evolution of the international plastic resin trade network

Plastics are the paradigmatic material of the current era. Plastics’ trade articulates interest in trading partnerships and concerns about trade security. We focus on the International Plastic Resin Trade Network (IPRTN) and analyze its spatiotemporal evolution in 1988–2017 from global, regional, and national scales. As a profile of globalization, the network became increasingly interconnected under the combined effect of the involvement of more participating countries, the increase in the closeness of trade links, and the increase in trade volume, which grew by 0.4-fold, 7.7-fold, and 14.9-fold, respectively. Despite the growth, IPRTN maintained fairly stable topological characteristics including small-world property (average path length, 1.95 ± 0.10; clustering coefficient, 0.63 ± 0.06), high reciprocity (reciprocity value, 0.54 ± 0.03), disassortative mixing (assortativity value, −0.46 ± 0.23), and exponential degree distribution. Generally, the plastic resin trade was spatially heterogeneous with high intra-regional trade proportions (1988–1997, 78.4%; 1998–2007, 79.9%; 2008–2017, 75.1%), and Europe, Asia, and North America were the dominating regions. These facts brought IPRTN with a regionally dependent community structure. Five communities were finally formed: the Middle East-Africa community, the Eastern Europe community, the Western Europe community, the Americas community, and the East Asia-Southeast Asia-Oceania community. We found that the US-China plastic resin trade was mainly complementary. Thus, mutual tariffs in the US-China trade war, which covers plastic resins, will cause adverse effects and need to be resolved through active consultations. To ensure trade security, we remind countries with poor trade robustness to pay attention to changes in trade policies of these critical trade players and to enrich trade channels.

Identity Politics and Trade Policy

AbstractWe characterize trade policies that result from political competition when assessments of well-being include both material and psychosocial components. The material component reflects, as usual, satisfaction from consumption. Borrowing from social identity theory, we take the psychosocial component as combining the pride and self-esteem an individual draws from the status of groups with which she identifies and a dissonance cost she bears from identifying with those that are different from herself. In this framework, changes in social identification patterns that may result, for example, from increased income inequality or heightened class or ethnic tensions, lead to pronounced changes in trade policy. We analyse the nature of these policy changes.

Recovery from financial crises in peripheral economies, 1870–1913

What drives recoveries after financial crises? I address this question for the 1870–1913 “first era of globalization,” focusing on whether trade policy changes or positive movements in commodity prices played a bigger role in stimulating output growth after financial crises in peripheral economies. At this time before governments had modern fiscal and monetary policy tools to use while responding to crises protectionism was one of the few national-level policy options available for shaping economic activity. Improving terms of trade is another major factor that could influence output growth in the commodity-exporting countries included in this analysis. While previous studies of this period have looked at longer-run associations between these explanatory variables and economic growth, I focus on the aftermath of crises, and find that tariff rate increases had a positive impact on GDP per capita growth, while positive terms of trade changes did not have a significant effect on output growth. This suggests that governments played a substantial role in shaping post-crisis recoveries during this period.

Analysis of Performance Deviation of Wind Power Enterprises in China

Considering increased global emphasis on energy security, low-carbon economy and environmental governance, the proportion of renewable energy will increase in national power grid systems. Wind power generation will play an important role in China's future power systems. Environmental uncertainty will affect the time-varying correlation between carbon efficiency and the performance of the wind power enterprises. Panel data from 2011 to 2018 is used to analyze the development status and existing problems of the wind power industry; further, with the data, the dynamic conditional correlation coefficient is calculated through the DCC-GARCH model, and the breakpoint analysis method is used to analyze the impact of policy and the economic environment on the time-varying correlations between carbon efficiency and the performance of wind power enterprises. The results show that during the China-US trade war, the sudden trade policy changes that increased tariffs led to a sharp rise in interdependence. The relevant polices inspiring the wind power industry are positively correlated with the dynamic conditional correlation coefficient, while the financial performance of alternative fossil fuels is negatively correlated with the dynamic conditional correlation coefficient.

Can International Trade Help Africa’s Least Developed Countries Achieve SDG-1?

In order to reduce poverty and achieve Goal 1 of the 2030 Agenda for Sustainable Development, countries’ foreign trade flows must be a driving force for productive activity, as proposed by the WTO-led (World Trade Organization) Aid for Trade initiative. This work analyzes the evolution of international trade in goods and services between Africa’s Least Developed Countries and customers and suppliers from other countries between 2005 and 2015, based on the information provided by UNCTAD and the World Bank. The results confirm a greater degree of trade openness and especially an increase in service imports. Overall, the data show that the purchases made in the international market have a greater marginal effect on GDP than sales, leading to the conclusion that changes in trade policy are needed, at both international and national level. Actions should be aimed at ensuring that the growing integration of these economies in the world trade system does not result in continued deficits in the trade balance but, on the contrary, does contribute to GDP growth and poverty reduction.

Trade policy changes, tax evasion and Benford's law

This paper draws attention to import duty evasion as a margin through which firms adjust to changes in trade policy. This margin is different from the other forms of adjustment, as it can be employed very fast and thus it may constitute the initial reaction to the shock before a slower adjustment through the other channels takes place. The study also proposes a new method of detecting tax evasion in international trade, based on deviations from Benford's law. It applies the method in the context of an unexpected policy change in Turkey that increased the cost of import financing. The results are consistent with an immediate increase in tax evasion in the affected import flows, which dies down a year later. A standard approach to detecting tariff evasion, based on “missing trade”, confirms these conclusions.

Trade Liberalization and Mortality: Evidence from US Counties

We investigate the impact of a large and persistent economic shock on “deaths of despair.” We find that areas more exposed to a plausibly exogenous change in international trade policy exhibit relative increases in fatal drug overdoses, specifically among whites. We show that these results are not driven by pre-existing trends in mortality rates, that the estimated relationships are robust to controls for state-level legislation pertaining to opioid availability and health care, and that the impact of the policy change on mortality coincides with a deterioration in labor market conditions and uptake of disability insurance. (JEL F13, F16, I12, R12)

EVOLUTION OF INTERNATIONAL TRADE IN THE LIGHT OF THE WAR IN UKRAINE

The article focuses on the analysis of the main changes in trade policies and international trade flows in the light of the war in Ukraine, and the impact of other factors such as rising interest rates, inflationary pressures in many countries on internat

Rising Protectionism and Global Value Chains: Quantifying the General Equilibrium Effects

Quantifying the effects of trade policy in the age of 'global value chains' (GVCs) requires an enhanced analytical framework that takes the observed international input-output relations in due account. However, existing quantitative general equilibrium models generally assume that industry-level bilateral final and intermediate trade shares are identical, and that the allocation of imported inputs across sectors is the same as the allocation of domestic inputs. This amounts to applying two proportionality assumptions, one at the border to split final goods and inputs, and another behind the border to allocate inputs across industries. In practice, neither assumption holds in available input-output data sets. To overcome this limitation of existing models, we consider a richer input-output structure across countries and sectors that we can match with the actual structure reported in input-output tables. This allows us to investigate the relation between the effects of changes in trade policies and GVCs. When we apply the enhanced quantitative general equilibrium model to the assessment of the effects of Brexit, we find trade and welfare losses that are substantially larger than those obtained by previous models. This is due to the close integration of UK-EU production networks and implies that denser GVCs amplify the adverse effects of protectionist trade policies.

Rising Protectionism and Global Value Chains: Quantifying the General Equilibrium Effects

Quantifying the effects of trade policy in the age of ’global value chains’ (GVCs) requires an enhanced analytical framework that takes the observed international input-output relations in due account. However, existing quantitative general equilibrium models generally assume that industrylevel bilateral final and intermediate trade shares are identical, and that the allocation of imported inputs across sectors is the same as the allocation of domestic inputs. This amounts to applying two proportionality assumptions, one at the border to split final goods and inputs, and another behind the border to allocate inputs across industries. In practice, neither assumption holds in available inputoutput data sets. To overcome this limitation of existing models, we consider a richer input-output structure across countries and sectors that we can match with the actual structure reported in inputoutput tables. This allows us to investigate the relation between the effects of changes in trade policies and GVCs. When we apply the enhanced quantitative general equilibrium model to the assessment of the effects of Brexit, we find trade and welfare losses that are substantially larger than those obtained by previous models. This is due to the close integration of UK-EU production networks and implies that denser GVCs amplify the adverse effects of protectionist trade policies.

The Economic Effects of the 2018 U.S. Trade Policy: A State-Level Analysis

We evaluate, empirically, the effect of changes in trade policy during the 2018-19 trade war on U.S. economic activity. We begin by documenting that sectors and states across the United States are heterogeneous in their exposure to international trade.

Trade Policy Responses to the COVID-19 Pandemic Crisis: Evidence from a New Dataset

This paper presents new high frequency data on trade policy changes targeting medical and food products since the beginning of the COVID-19 pandemic, documenting how countries used trade policy instruments in response to the health crisis on a week-by-week basis. The dataset reveals a rapid increase in trade policy activism in February and March 2020 in tandem with the rise in COVID-19 cases, but also uncovers extensive heterogeneity across countries in both their use of trade policy and the types of measures used. Some countries acted to restrict exports and facilitate imports, others targeted only one of these margins, and many did not use trade policy at all. The observed heterogeneity suggests numerous research questions on the drivers of trade policy responses to COVID-19, on the effects of these measures on trade and prices of critical products, and on the role of trade agreements in influencing the use of trade policy.