Effects Of Trade Policies Research Articles

A comparative analysis of EU and US trade policies towards least developed countries and the African Growth and Opportunity Act beneficiaries

AbstractMotivationThe European Union (EU) and the US have specific trade preference programmes in place directed towards developing countries in general and, primarily in the case of the EU, towards least developed countries (LDCs) in particular. This article examines the relative merits of these programmes.PurposeThe article compares the trade policies of the EU and the US with respect to LDCs and the countries eligible for the US African Growth and Opportunity Act (AGOA) and examines the relative success of the two donors’ trade policies vis‐à‐vis these two groups of beneficiaries in terms of increasing imports from them.Approach and methodsEconometric evidence from a gravity model is used to compare the effects of EU and US preferential trade policy on imports from the beneficiary countries. First, regressions are carried out using total EU and US imports as dependent variables and, second, EU and US duty‐free imports are used.FindingsThe descriptive part of the article shows that (a) a larger share of EU imports benefits from duty‐free MFN tariffs; (b) the EU offers preferences on all imports from the LDCs (except arms and ammunition), while the US extends preferences to three quarters of all imports; (c) EU preferences are better utilized; and (d) the EU imports more goods duty free. The econometric analysis shows that EU trade policy towards the LDCs and the AGOA beneficiaries has generated approximately twice as much in imports as US policy, when imports of mineral fuels are excluded from the analysis.Policy implicationsEU trade policy is found to outperform US trade policy in terms of generating imports from the LDCs and the AGOA beneficiaries. Hence, if any trade policy ought to be copied by other countries, as suggested by some observers, it should be EU trade policy rather than US trade policy.

Differential Tariffs and Income Inequality in the United States: Some Evidence from the States

This paper explores the macroeconomic and distributional consequences of consumption tariffs and materials tariffs. It highlights the contrasting effects of consumption and raw materials tariffs on the dynamics of key measures of aggregate economic activity and inequality. We perform empirical estimation of these effects using a panel of annual data that spans the U.S. states over the period 1980–2015. We find that consumption tariff increases lead to statistically significant reductions in income inequality, while having contractionary effects on domestic output in the short term. Materials tariff increases also have a negative impact on economic activity while increasing income inequality. Our empirical results are robust to different model specifications and measures of income inequality, consistent with the predictions of the underlying theoretical model. This work shows the importance of disaggregating tariffs when studying the distributional effects of trade policy.

Trade War, PPE, and Race

Tariffs on Personal Protective Equipment (PPE), such as face masks and gloves, weaken the American response to COVID. The United States has exacerbated PPE shortages with Section 301 tariffs on these goods, part of a trade war with China. This has a disparate impact felt by minority communities because of a series of health inequity harms. COVID’s racial disparity appears in virus exposure, virus susceptibility, and COVID treatments. This essay makes legal, policy, and race-and-health arguments. Congress has delegated to the U.S. Trade Representative expansive authority to increase tariffs. This has made PPE supplies casualties of the trade war. In political terms, the Trump administration has prioritized increasing tariffs over public health readiness. Regarding race, PPE shortages exemplify the socio-economic effects of trade policies and add to COVID’s racial disparities.

The impact of trade liberalization on child labor in Pakistan

ABSTRACT This study investigates the impact of trade liberalization on child labor using micro-level datasets of urban Pakistan. It is anticipated that when economies are open to external competition, this will benefit the poor in those economies, and hence lead to a contraction of child labor. We analyze the geographical differences in the effects of trade policy directed toward the reduction of import tariffs. Trade liberalization and child labor are associated in the case of Pakistan. Trade liberalization reduces child labor in urban Pakistan. Our findings also reveal a statistically significant association between lagged tariffs and child labor. Our findings are robust to various control variables.

EU economic integration agreements, Brexit and trade

The effects of regionalism on trade have been extensively evaluated within a gravity model framework. With the expected exit of the United Kingdom (UK) from the European Union (EU), the prospect of regional disintegration has brought about a new impetus to studying trade policy effects. Using actual and forecast data for a panel of bilateral imports between the EU15 and the rest of the world, this paper examines the trade effects of EU economic integration agreements (EIAs), their evolution over time and the related counterfactual Brexit trade policy scenarios. Distinct trade effects are obtained for the EU trade related agreements; positive, significant and of similar magnitude for the EU and free trade agreement (FTA) coefficients, but negative and significant (and smaller in magnitude) for the regional economic partnership agreements (EPAs). The subperiod results suggest the positive coefficients of EU and FTA membership tend to diminish over time, implying earlier membership of EIAs came with greater trade benefits. Finally, in generating the predicted values for the trade effects of three alternative counterfactual Brexit scenarios (hard Brexit, hard Brexit plus, global Britain), the findings suggest an asymmetric effect depending on the perspective of the UK versus the EU. Whereas the UK’s trade would decline substantially with all three country groups (the EU, the FTAs and regional EPAs) and rise substantially with the rest of the world, only minor percentage changes are predicted for EU bilateral trade.

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.

Assessment of the role of renewable energy consumption and trade policy on environmental degradation using innovation accounting: Evidence from the US

Renewable energy technologies are promising, yet, very little is known about its role as a limiting factor in fossil fuel-attributable environmental degradation — especially in high-income countries. This study investigated the dynamic effect of renewable energy consumption, economic growth, biocapacity and trade policy on environmental degradation in the United States from 1985Q1 to 2014Q4. To achieve this objective, the study applied an autoregressive distributed lag (ARDL) model to obtain the long-run and short-run dynamic coefficients. Toda-Yamamoto causality test was used to examine the direction of causality while Cholesky decomposition test was for innovative accounting to validate the estimated models. The empirical results divulged that a decline in environmental degradation can be attributed to an increase in renewable energy consumption through its negative effects on ecological footprint. Economic growth and biocapacity were found to exert upward pressure on ecological footprint; however, trade policy exerts downward pressure on ecological footprint. A two-sided causal relationship was established between economic growth and ecological footprint as well as economic growth and biocapacity. In contrast, a one-way causality was confirmed running from trade policy to renewable energy consumption and from renewable energy consumption to biocapacity. The innovative accounting revealed that 14.79% and 8.41% of renewable energy consumption and trade policy caused 0.60% and 9.88% deterioration in the environment. Hence, country-specific energy policies that increase the share of renewable energy in the energy portfolio are recommended.

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.

일방적 통상정책의 국제적 확산과 무역구조의 변화에 관한 연구 (A Study on Unilateral Trade Policy and International Trade Structure)

일방적 통상정책의 국제적 확산과 무역구조의 변화에 관한 연구 (A Study on Unilateral Trade Policy and International Trade Structure)

Developing Trade

Executive SummaryThe UK faces no easy options in determining how to develop its approach to international trade post-Brexit. If it finally decides to leave the European Customs Union and Single Market, it faces the possibility either of simply crashing out of the EU without a deal; trying to form market-access agreements and Free Trade Areas (FTAs) with the EU and other countries; or unilaterally reducing tariffs and liberalising trade with all countries. Each course raises significant practical difficulties, and entails major disadvantages compared with staying in the Customs Union and Single Market.The economic costs of a ‘no-deal’ approach stand to be very large, including inevitable tariffs, obstruction of UK access to EU markets, physical disruption at borders, a damping of investment and the much-discussed problem of the Irish border. Assuming ‘no-deal’ does not happen, negotiating FTAs with other countries would be possible only after a lengthy transition period, as in the Withdrawal Agreement voted down in Parliament, and would depend on the shape of the ultimate post-Brexit trading relationship between the EU and the UK. The process would be difficult, costly, and protracted; would likely be concluded on disadvantageous terms; would be even harder to apply to trade in services; and would yield extremely small gains given the volume of UK non-EU trade that is already covered by FTAs. Finally, unilateral liberalisation, while ameliorating some of the drawbacks of the first two options, faces the same problems of loss of access to European markets and disruption to trade; and would entail severe economic pain with only very gradual gains.The UK needs to conduct a much more profound and considered debate on these issues before deciding to set aside the large benefits of membership of the Customs Union and Single Market for the significant difficulties and tenuous gains offered by the alternatives. Public debate on the economic effects of trade policy has so far lacked the detailed but necessary analysis of these questions. It seems essential to establish a national policy review institution, modelled on the Australian Productivity Commission, in order to stimulate such a debate.

International trade and the neoliberal diet in Central America and the Dominican Republic: Bringing social inequality to the center of analysis

Scholarship on international trade and health analyzes the effects of trade and investment policies on population exposure to non-nutritious foods. These policies are linked to the nutrition transition, or the dietary shift towards meat and processed foods associated with rising overweight and obesity rates in low- and middle-income countries. We argue for expanding the trade and health literature's focus on population exposure through the concept of the neoliberal diet, which centers subnational social inequality as both an outcome of neoliberal agri-food trade policies and a determinant of dietary change. We develop this perspective through a regional analysis of non-nutritious food availability following the implementation of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), together with an extended case study, from the late 1990s to the present, of household expenditure and food price changes in the Dominican Republic, the region's largest food importer. Our analysis demonstrates that low-income consumers face increasing household food expenditures in a context of overall food price inflation, in addition to relatively higher price increases for healthy versus ultraprocessed foods. Neoliberal policies not only contribute to restructuring the availability and pricing of healthy food for low-income consumers, but they also exacerbate social inequality in the food system through corporate-controlled supply chains and farmer displacement. Our findings support policy proposals for socially distributive forms of healthy food production to stem the negative effects of the nutrition transition.

東南アジアの経済発展と消費財輸入の増大について －ASEAN 3カ国の貿易政策の効果を中心に－

東南アジアの経済発展と消費財輸入の増大について －ASEAN 3カ国の貿易政策の効果を中心に－

Long-Run Effects on Chinese GDP from U.S.-China Tariff Hikes

In this Note, we employ a particular model of trade policy effects following Caliendo and Parro (2015) that focuses on the role of tariffs in spurring adverse resource reallocations.

TRADE POLICY AND MARKET POWER: FIRM‐LEVEL EVIDENCE

AbstractThis article identifies the effect of trade policy on market power through new data and a new identification strategy. We identify market power by observing how exporting firms price discriminate across markets following variations in bilateral exchange rates. Pricing‐to‐market is prevalent in all countries in our sample, even among small firms, although it is increasing in firm size. More importantly, we find that the effect of nontariff measures (NTMs) is not isomorphic to that of tariffs. Whereas tariffs reduce the market power of foreign firms through rent‐shifting effects, NTMs reinforce the market power of nonexiting firms, domestic and foreign alike.

Non‐discriminatory Trade Policies in Panel Structural Gravity Models: Evidence from Monte Carlo Simulations

AbstractThis paper provides Monte Carlo (MC) simulation evidence on the performance of methods used for identifying the effects of nondiscriminatory trade policy (NDTP) variables in panel structural gravity models. The benchmarked methods include a fixed effect (FE) estimator that utilizes data on intra national trade flows, the bonus‐vetus (BV) and the two‐stage fixed effect (FE‐2S) estimator. The results indicate that only the FE estimates are unbiased and consistent under very general assumptions of the data generating process. The favourable asymptotic properties of the FE estimator unfold as the number of period T increases.

The effect trade and exchange rate policies on the export of stone fruit in Iran

This study aims to investigate the effect of foreign exchange rate and trade policies on crop exports in Iran. Regarding foreign exchange policies, the exchange rate volatility index and the dummy variable of currency uniformity policy were considered, while economic openness index as well as the trade bias coefficient index was studied for business policies. Logarithmic model of export supply function based on the ARDL and error correction model were used to estimate long- and short-term relations between variables. The research data were collected from the websites of the International Trade Statistics Database and the Central Bank of Iran from 1997 to 2014. The results showed that variables of commercial deviation coefficient, real exchange rate, economic openness, domestic product price, stone fruits export value in previous years and the dummy variable of currency uniformity policy all had a positive effect, in the long term, on Iranian stone fruits export. The coefficient for error correction model equals -0.42, which is quite significant indicating a very high modulation pace to a long-term equilibrium. In addition, the results revealed that, in the event of shock and distortion in balance in each period, 0.58% of the short-term imbalance has been adjusted to achieve long-term equilibrium.JEL Classification: Q17, Q18, F13, F17, F39

ASSESSMENT OF INTERNATIONAL TRAD EFACILITATION MEASURES

The article discusses some approaches to evaluation of trade facilitation measures developed by international economic organizations. The main benchmarks showing the effect of foreign trade policy conducted by public authorities have been identified. The author named the main evaluation criteria applied to the analysis of measures implemented in order to simplify trade procedures, and also considered the approaches (general, special) to the analysis of the effectiveness of public policy in this area. Using the results of the ranking of the EAEU member states as an example, a comparative analysis was made of various ratings used in evaluating the implementation of trade facilitation initiatives, which are compiled according to different approaches to the analysis of the effectiveness of trade facilitation measures. The research shows that the use of the approaches described in the article has certain limitations, and to obtain a reliable evaluation, it is necessary to betake a comprehensive analysis. Also, these limitations should be taken into account when using statistical information from the sources considered when building economic models.

Aid-Growth Association and Role of Economic Policies: New Evidence from South and Southeast Asian Countries

The present article aims to study the implications of foreign aid on GDP per capita in the seven middle-income countries of South and Southeast Asia from 1990 to 2016. The influence of foreign aid on GDP per capita is studied in a policy-driven environment, for which a policy index using government consumption expenditure, inflation and trade openness is constructed. The outcomes of the study confirm that aid–policy interaction has a significant and positive impact on economic growth in the region. The results are calculated using the two-stage least-squares model, as foreign aid is included as an endogenous variable in the study. This approach enables us to assess the indirect effect of monetary, fiscal and trade policies on GDP per capita, as the constructed policy index is used as an instrument for foreign aid. The results of the study ascertain that besides current aid–policy interaction, the preceding years’ aid–policy interaction also has a positive and significant impact on GDP per capita in the region. The inclusion of a policy index in the analysis enables us to evaluate the effectiveness of economic policies while determining the level of GDP per capita in South and Southeast Asian countries. Therefore, the study proposes that while assessing the influence of aid-financed programmes on GDP growth of a country, the economic policies of recipient countries need to be considered. The bottom line is that foreign aid, economic policies and economic growth of aid-recipient countries are inextricably linked.

Colombia’s potential for trade with the European Union and other major global markets

This paper identifies potential for trade between Colombia and the European Union following the implementation of a free trade agreement as from 2013. Predictions of potential are based on estimates produced by the Poisson pseudo maximum likelihood estimator applied to a gravity model, controlling for unobserved omitted variable bias with exporter and importer time-varying fixed effects on a sample of 153 countries, from 1980 to 2012. Untapped potential is found in both directions of trade flows. The results could increase the effectiveness of trade policy and define companies’ expansion plans in international markets.

Arising of Trade Disputes among the G20: Evaluation of US-China Trade Relations in the Context of World Trading System

Trade policy among the G20 has emerged as one of the challenges the group faces during the last decade after the 2008 global financial crisis. This paper aims at analyzing the current trade disputes between China and the United States and the efforts the G20 has taken to settle these disputes. The fundamental questions this study attempts to answer are as follows: (1) what the US–China trade dispute means for the world trading system? (2) what the G20 can do to prevent destructive trade wars? We confront this view by critically examining a large body of evidence on the effects of trade policy on economically important outcomes. We begin with a discussion of the role of G20 in stabilizing world economy. We show the G20’s recent economic and trade development challenges and measurements of trade policy and identification of its causal effects. We present the trade balance between the United States and China. We also illustrate the efforts made by the G20 in promoting the development of China–US trade cooperation. Data were collected from different sources. Data are collected from the World Bank, the World Trade Organization (WTO) publications, and the G20 summits’ reports. The results show that the United States has a trade deficit with China, and the global growth would be notably curtailed as investment and consumer spending fall back. The G20 should focus on supporting the WTO, being upfront about the mixed effects of trade and investment, and improving G20 measures to tackle protectionism.