Domestic Content Research Articles

Does the WTO government procurement agreement influence steel imports?

Purpose Government procurement policies containing domestic content requirements have faced increasing attention, as more traditional forms of trade discrimination have declined in recent decades. The most important effort to reduce discriminatory government procurement policies is the plurilateral Agreement on Government Procurement (GPA), in which a subset of WTO countries has agreed to provide increased access to imports from fellow signatory countries. This paper focuses on the Buy American policy, which mandates domestic content for all US Federal government purchase above the micro-purchase level. The author tests whether steel imports from GPA and US Free Trade Agreement (FTA) partners, both of which receive preferential access to US federal procurements, increase as the value of federal construction contracts rise. Design/methodology/approach The author tracks federal construction contracts and seeks to determine whether there is a link between these contracts and construction grade steel imports from GPA and US FTA members. The author uses two-stage least squares to regress the import quantity of steel from GPA and US FTA countries on the value of US federal construction contracts. Imported and domestic steel prices as well as macroeconomic variables such as industrial production and non-residential construction are controlled for. A panel data set is used that includes three different construction-grade steel products and covers years 2004-2013. Findings The results indicate that increased federal construction contracts increase imports of construction-grade steel from GPA and FTA partners. This effect is relatively small, however, which may be due to the fact that federal construction is a small share of overall US construction. In general, the results suggest that the primary determinant of US import sourcing behavior is the business cycle as well as the price of steel. Nevertheless, the findings indicate that the preferences provided by the GPA and FTAs do have some impact on where US construction firms source their steel. Originality/value Previous research has studied the effect of the WTO’s GPA on foreign access to federal construction and other service contracts. This is the first study, however, to investigate whether these contracts impact the import sourcing behavior of the steel that is used in construction. Furthermore, while previous research measures the impact of GPA membership on the overall trade of goods and services, this paper is the first to link a particular industry with the inputs that are restricted by local content requirements such as the Buy American policy but freed up under the GPA. In general, previous research on the GPA has tried to capture the broad effect of GPA membership on trade, while this study focuses on the relationship between the GPA, federal procurement in a particular industry (construction) and import behavior of a key input, construction grade steel.

Missing the wood for the trees: a critique of the WTO ruling in India: solar cells and modules

Both India, a developing country and Canada, a developed country, suffered serious setbacks when the WTO invalidated their program to harvest solar energy to produce electricity. The main issue in both the cases was the domestic content requirement, i.e. solar power developers must purchase their capital equipment to produce electricity from local sources, if they want to sell their electricity to the Government at guaranteed prices. The countries exporting these capital equipment challenged this domestic content requirement mainly under Article III of the GATT, 1994. India and Canada tried to justify their measures under Article III: 8(a) of the GATT which protects government procurement from challenge under Article III:4. Finally, it turned out to be the tussle between free trade and protection of infant industries. As it always happens under the WTO, the free traders won. The paper explains this tussle and the implications thereof in legal terms.

Развитие отечественной начальной школы в 20–30-е гг. прошлого столетия

The article considers features of the domestic education content and organization of the pedagogical process in primary school in 20-30s of the
 XX century. The main attention is paid to the features of the primary school functioning in Srednevolzhskiy Region. The educational process
 orientation to the forming of schoolchildren pro-active attitude, development of self-dependence and initiativity, trust in bright future of the
 country.

The Evolution of Measurement Methods of Comparative Advantage and New Trends in IntraProduct International Specialization

In the development and the evolution of international trade theory, comparative advantage has always been a core concept. A great deal of research pertains to the calculation methods of comparative advantage. However, most previous research on measurement methods of comparative advantage is mainly based on a country's import/export volume of a specific industry or product. Under the circumstances of contemporary intra-product international specialization, previous measurement methods are not appropriate. It is imperative to improve original measure methods of comparative advantage through stripping overseas contents of exports, and putting forward a new measurement index reflecting the domestic contents of export.

Rethinking the Exchange Rate Impact on Trade in a World with Global Value Chains

ABSTRACTGlobal value chains (GVCs) are a prominent feature of global production and trading systems. Using the OECD-WTO database on trade in value added, this paper examines the exchange rate elasticities of GVC-related exports and imports and compares them with elasticities for trade in traditonal goods. We find that a real depreciation raises both the foreign and domestic value-added content of GVC-related exports. The size of these elasticities is found to be smaller when the import content of GVC exports is larger. Among the key policy implications of these results is that exchange rate changes by small contributors of value added have little effect on their own production or the production of their supply chain partners. On the other hand, large contributors to the value-added of the final product create spillovers to their smaller supply chain partners, obviating traditional beggar-thy-neighbor concerns.

GATS and the Over-the-Top Services: A Legal Outlook

Over-the-Top (OTT) services refers to content delivery through an Internet platform; hence, an OTT application is any service that provides a product over the Internet and bypasses traditional distribution. Examples of OTT services may include chat applications (e.g., WhatsApp, Line, WeChat) and streaming video services (e.g., Netflix, Apple TV).This article is of the view that, based on the GATS jurisprudence, it is at least arguable whether OTT voice and messaging services fall under the GATS definition of Computer and Related Services. This article also suggests that the OTT TV, in the case that a Member did not base its “audiovisual services” schedules on the CPC and makes no reference to CPC codes, should fall under section 2. D. of W/120 as the use of a different medium to provide a service did not create a new service. In addition, with respect to the vertical competition between “infrastructure” and “content,” there is a “disconnection” between traffic and revenue, leading many operators to block or degrade OTT traffic. This article stresses the position that any further action to introduce the concept of “network neutrality” into TiSA should bear in mind that a proper balance should be struck between developed countries’ trade interests and developing countries’ development needs. Moreover, with respect to the horizontal competition between “foreign content” and “domestic content,” local broadcasters who supplied services within a Member’s jurisdiction are at a significant disadvantage compared to OTT service suppliers who housed their servers outside the member’s territory. The recent leak of TiSA negotiating texts on e-commerce, in which the U.S. advocates the need to ensure that governments do not require ICT service suppliers to use local infrastructure or establish a local presence as a condition of supplying services, have also caused some concern.

Government Procurement with Strings Attached: The Uneven Control of Offsets by the World Trade Organization and Regional Trade Agreements

This article explores the practice of governments imposing domestic content based requirements known as ‘offsets’ on suppliers in order to secure public procurement contracts. Known to cause economic harm and distortions in international trade, offsets are forbidden under the WTO’s GPA and in the procurement chapters of several RTAs, although these restrictions have severe limitations with full offset prohibitions only accepted by a handful of developed countries. Given the sensitivity of procurement policy and the pressing need to stimulate local economies, Asian countries in particular show a lack of willingness in addressing offsets in their international agreements. While other WTO agreements restrain the use of local content rules, these regimes are ill-suited to control the harmful effects of offsets in a procurement context because of their focus on traditional commercial markets. The article suggests that an enlargement of offset prohibitions would be advisable given the expected expansion of global procurement markets commensurate with economic development.

Challenges Facing India's National Solar Energy Development: The Pitfalls of the National Solar Mission and Alternatives Available

In this paper, I argue that domestic content requirements should be removed from India’s Jawaharlal Nehru National Solar Mission (National Solar Mission or Mission) because such requirements are inconsistent with India’s multilateral obligations under the World Trade Organization (WTO). Subsidies that are contingent upon the use of domestic instead of foreign products are inconsistent with the WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the National Treatment obligation under Article III of the General Agreement on Tariffs and Trade (GATT) and Article 2 of the Agreement on Trade Related Investment Measures (TRIMs Agreement). The Government of India (or India) should seek alternative measures to promote the development of the country’s renewable energy industries.Governments have recently responded to the impact of climate change and global warming in various ways, from instituting domestic regulatory measures to entering into multilateral agreements with an aim to cut global emissions of greenhouse gases. One of the leading contributors to global warming is the burning of fossil fuels for energy consumption. Fossil fuels not only hurt the environment, they are also non-renewable. Eventually these fuel sources will be depleted. With this in mind, governments have actively attempted to develop renewable energy alternatives that have little to no impact on the environment.To accomplish these goals, many governments across the globe have implemented subsidy schemes to promote renewable energy development within their countries. Many of these subsidy schemes require renewable energy producers to use a certain amount of local resources and labor in order to qualify for the subsidy schemes. While these programs would have the intended effect of developing renewable energy industries within a country, the programs are susceptible to challenges under the WTO. This paper examines why the domestic content requirements of India’s National Solar Mission are inconsistent with India’s WTO obligations and suggests alternative measures available to India that are not susceptible to challenges at the WTO.

Domestic Value Added in Exports: Theory and Firm Evidence from China

China has defied the declining trend in domestic content in exports in many countries. This paper studies China's rising domestic content in exports using firm- and customs transaction-level data. The approach embraces firm heterogeneity and hence reduces aggregation bias. The study finds that the substitution of domestic for imported materials by individual processing exporters caused China's domestic content in exports to increase from 65 to 70 percent in the period 2000–2007. Such substitution was induced by the country's trade and investment liberalization, which deepened its engagement in global value chains and led to a greater variety of domestic materials becoming available at lower prices. (JEL F13, F14, L14, O19, O24, P31, P33)

The GATT Article III:8(a) Procurement Derogation andCanada – Renewable Energy

This article compares and reviews the panel and Appellate interpretations of the GATT Article III:8(a) procurement derogation in Canada – Renewable Energy. When this derogation is available, discriminatory domestic content requirements fall outside of the general GATT Article III:4 national treatment obligation, and are capable of challenge only under the more limited coverage of the plurilateral Agreement on Government Procurement (GPA). It is argued that the panel’s understanding should be preferred over that of the Appellate to preserve the operation of the derogation in paradigm situations and to avoid the multilateralization of obligations acceded to, or possibly not yet acceded to, under the GPA.

Platform proliferation and its implications for domestic content policies

The rapid rise in audio-visual distribution platforms is challenging regulators’ abilities to fashion and maintain domestic content policies designed to support national production and national cultural protection and promotion objectives. Broadcasters in a number of nations and regions operate under content regulatory schemes designed to serve cultural and economic purposes, put into place during the age of terrestrial broadcasting in which national policymakers could tightly control the availability of content in the country. This article explores these issues through an analysis of the rationales, policy approaches, and effectiveness of domestic content policies in four countries (Australia, Canada, Ireland, and South Korea) and considers the implications of these approaches in a globally connected environment. The researchers identified common issues across the four countries: (1) development of national content industries does not necessarily imply the promotion or protection of national culture, (2) production companies and broadcasters have interests and incentives that diverge from those of policymakers, and (3) it is difficult to assess the relevance and quality of broadcast content with regards to domestic culture other than in terms of conventional standards: critical acclaim and audience share.

Canada–Renewable Energy: Implications for WTO Law on Green and Not-So-Green Subsidies

AbstractIn the first dispute on renewable energy to come to WTO dispute settlement, the domestic content requirement of Ontario's feed-in tariff was challenged as a discriminatory investment-related measure and as a prohibited import substitution subsidy. The Panel and Appellate Body agreed that Canada was violating the GATT and the TRIMS Agreement. But the SCM Article 3 claim by Japan and the European Union remains unadjudicated, because neither tribunal made a finding that the price guaranteed for electricity from renewable sources constitutes a ‘benefit’ pursuant to the SCM Agreement. Although the Appellate Body provides useful guidance to future Panels on how the existence of a benefit could be calculated, the most noteworthy aspect of the new jurisprudence is the Appellate Body's reasoning that delineating the proper market for ‘benefit’ analysis entails respect for the policy choices made by a government. Thus, in this dispute, the proper market is electricity produced only from wind and solar energy.

한국의 수출에 함유된 국내외 탄소배출 비중과 탄소사슬(carbon chain): 주요 교역상대국들을 중심으로 한 다지역 산업연관분석

The concept of consumption-based greenhouse gas (GHG) inventory is directly related with the carbon content of international trade. Along the lines of the consumption-based GHG inventory, we investigate domestic and foreign carbon contents embodied in sectoral exports of Korea. In addition to the analysis of carbon content of exports, it is investigated how much share of responsibility for carbon emissions of Korea belongs to each major trading partner of Korea. We also compute the carbon intensities of Korean exports in carbon chain with other trading partners and find some characteristics revealed in Korea`s carbon emissions embodied in its exports.

Measuring Value Added in the People's Republic of China's Exports: A Direct Approach

We apply a direct approach to estimate domestic value added embedded in the People’s Republic of China’s (PRC) exports. The estimates suggest that the domestic value added of processing exports and processing high-tech exports gradually increased from 30% and 25%, to 44% and 45%, respectively, between 1997 and 2012. On the other hand, the domestic content of processing exports with supplied materials fell to 14% from the peak of 35%. In 2012, the domestic value added of the PRC’s total exports remained below 77%. Our estimates prove to be the upper limits of the corresponding trade in value added. Compared to our estimates, the Organisation for Economic Co-operation and Development’s Trade in Value Added database (TiVA) significantly overestimates the domestic content of the PRC’s exports. TiVA’s estimates are also inconsistent with the fact that the share of processing exports in the PRC’s total exports has decreased steadily. In addition, we show that the PRC’s processing exports demonstrate significant heterogeneity across its trading partners; processing exports account for a large portion of total exports to high income countries but a relatively small portion of exports to low income countries. This heterogeneity implies that the domestic content of the PRC’s exports varies significantly by destination.

Foreign Investment and Supply Chains in Emerging Markets: Recurring Problems and Demonstrated Solutions

Multinational corporations account for 80 percent of all transfers of goods and services across borders, either within their own affiliate transactions or through networks with independent providers. As a result, the term supply chains is rapidly becoming the new norm in discussing the spread of trade and investment around the globe.From the point of view of developing countries, however, the ability to link host economies into international supply chains is anything but normal. There are important market failures and tricky obstacles that inhibit creation of supply chains in emerging markets. This working paper identifies the most important market failures and impediments that hinder the spread of supply chains in developing economies -- with findings quite at variance with much conventional wisdom -- and examines how some host governments have been successful in overcoming these obstructions. The evidence provides a useful perspective on the debate about the need for something that might be called industrial policy for countries that want to use foreign direct investment (FDI) to diversify and upgrade their production and export base. A sample of six diverse case studies -- chosen because they offer detailed information about information asymmetries, market failures, and coordination externalities -- shows clearly that developing country authorities should not merely sit back and wait to see what international market forces bring to them. The public sector that is needed takes the form of creating effective investment promotion agencies and funding industrial parks, reliable infrastructure, and vocational training with curricula designed by companies that wish to employ the graduates. These interventions surely qualify as a kind of industrial policy, and definitely cost public money. This approach might be called light-form industrial policy to harness FDI to development and generate backward linkages as deep as possible into the host economy.This light-form industrial policy contrasts with policies that target specific domestic industries for special government support and protection while excluding foreign investment altogether from the targeted industries or subjecting foreign firms therein to performance requirements in the form of domestic content mandates, joint venture mandates, and/or other technology-sharing pressures. This latter approach could be called heavy-form industrial policy. Country experiences, including evidence from China, reveal counterproductive outcomes from the imposition of explicit performance requirements on foreign investors.To a certain extent, emerging market hosts can carry out policy interventions on their own. But the evidence presented here shows that external support is often crucial to success. Contemporary policy discourse often implies, indeed sometimes assumes, that with the explosion of international private sector investment flows there is less need for developed country donors and multilateral financial institutions to support growth and development programs -- as opposed to pure poverty reduction programs -- especially in middle-income emerging markets. But the evidence introduced in this working paper shows that there is a vital role for external donors, including the aid agencies of developed countries, the World Bank Group, and the regional development banks, to work with host country governments to improve the functioning of markets so that emerging countries can better harness FDI for development.

Domestic content in China’s exports and its distribution by firm ownership

Processing trade and foreign-invested enterprises (FIEs) account for a large share of total Chinese exports. In producing exports, they also use imported inputs disproportionately, which complicates the measurement of domestic content embedded in exports and the distribution of income generated from exports. In this paper, we extend the method developed by Koopman et al. (2012) to further distinguish between Chinese exports by FIEs and Chinese-owned enterprises (COEs), in addition to processing and normal exports. We propose an accounting framework and a detailed estimation procedure that separately account for the production and trade activities of FIEs and COEs. First, we decompose gross exports into domestic and foreign content by firm types. Then, we estimate factor ownership by firm types based on enterprise surveys. Finally, we compute the distribution of domestic content by factor ownership. Empirical estimation is based on China’s 2007 benchmark input–output tables, supplemented by detailed trade and production statistics. Firm heterogeneity within each industry is identified by linking the NBS enterprises survey and the Customs’ firm-level trade data. The empirical results from 2007 indicate the following: (1) domestic content accounted for around 59% of total exports; (2) FIEs operating in China created nearly 45% of the domestic content in Chinese exports, whereas processing COEs only contributed by less than 5%; (3) in terms of income distribution, about 52.6% of the value of Chinese exports was captured by foreign factor owners.

Microstructures and Properties of Typical Zirconia Tubes for the Determination of Oxygen Content

The measurement of oxygen content in liquid iron and steel has been a challenge for decades and there have been many attempts to develop oxygen sensor to adjustment the smelting process on the basis of the probe for monitoring oxygen dissolved in molten liquid. However, there was still not a common standards of zirconium tubes about domestic product, which limited their application and improvement This work selected several domestic enterprises oxygen measuring half-cell system to study the relationship between the physical properties and microstructure at room temperature. Furthermore, we also analyzed about the typical performance of the domestic Oxygen content products, which would be beneficial to test and improve the quality of domestic products. Keywords: zirconia tubes, oxygen content, oxygen sensor

Global Structures, Scarce Local Agency; on Teen Magazines in Romania

Who are the actors, where is agency in the Romanian teen magazines? Whose agency is it? How powerful are the teens in shaping the media dedicated to them? These are the main questions that I raise in this paper. Under market conditions, teen magazines can plausibly be considered as platforms for cross promotion of media products and for advertising, the new markets allowing for the youth brands and international cultural products to become visible. Thus, the youth become knowledgeable of global brands and of global media products. The phenomenon that I explore is the limited scope of original domestic content at the level of teen magazines that are global brands, and the consequences it entails for the reception of these magazines by the teen users.

Clustering Value-Added Trade: Structural and Policy Dimensions

The paper uses exploratory data analysis to propose a typology of exporters according to the value-added content of their exports as well as other economic and trade policy characteristics. In the process, it defines clusters of countries according to the multi-dimensional criteria defined by value-added, economic and trade policy indicators. Results show that natural resources and services orientation are among the most determinant variables. The level of economic development remains a crucial determinant of the Trade in Value-Added profile, more than the sheer size of the economy. Pro-active value-chain up-grading strategies foster a higher foreign content in exports, compensating the lower domestic margin by higher volumes. Protectionist policies are not particularly successful in increasing higher share of domestic content, except in services exports; but in this case, volumes remain marginal.

Keeping Up with the Changing Climate: The WTO’s Evolutive Approach in Response to the Trade and Climate Conundrum

Canada – Certain Measures Affecting the Renewable Energy Sector (Canada FIT), appears to be the first-ever case at the World Trade Organization (WTO) to address the tenuous ‘trade versus climate’ debate in the context of renewable energy policies. Feed-in Tariffs (FIT) for renewable energy, which have emerged as a popular domestic policy tool to address climate change, share an extremely controversial relationship with the international trade regime, especially with the legality of such support schemes increasingly coming under the WTO scanner. In this article, the authors focus on four aspects that emerge from the decisions made by the WTO’s Panel and Appellate Body in this case, namely the clarification of the blurred legal status of renewable energy support schemes under WTO law; a new ‘public goods’ exception; an evolving, “activist” WTO jurisprudence; and the imminent end of domestic content requirements in renewable energy policies. The authors argue in this article that the WTO Panel and Appellate Body’s decisions represent a development of the law, one that is aimed at settling the ever-so-contentious clash between the WTO law on subsidies and climate change support schemes.