Export Subsidies Research Articles

The Relationship between Agricultural Production, Agricultural Exports and Economic Growth in Türkiye: Cointegration and Causality Analysis

This study aimed to assess the influence of agricultural production and agricultural product exports on economic growth within the Turkish economy. To achieve this, annual data spanning from 1980 to 2022 were utilized to construct a model, employing the ARDL Bounds Test to discern the long-term cointegration relationship among variables and the Fourier Toda-Yamamoto Causality Test to determine causality relationships. The empirical findings from the ARDL Bounds Test indicate that increases in both agricultural production and agricultural product exports positively impact economic growth. Moreover, results from the Fourier Toda-Yamamoto Causality Test unveil a two-way causal relationship between agricultural production and GDP, while a one-way causality relationship is observed between agricultural product exports and GDP. Despite the declining share of the agricultural sector in GDP over the years in Turkey, these findings underscore the enduring importance of agriculture in driving economic growth and creating value. As potential solutions to Turkey's balance of payments challenges, strategies such as boosting domestic demand, expanding the domestic market, and augmenting agricultural sector contributions to foreign exchange earnings through agricultural export subsidies are proposed. Furthermore, efforts to mitigate income disparities between the agricultural sector and other sectors could foster socio-economic development in rural areas, thus promoting a more equitable distribution of national income across society.

The Impact of Export Subsidies on the Volume and Price of Export: the case of agricultural products using difference-in-differences

The Impact of Export Subsidies on the Volume and Price of Export: the case of agricultural products using difference-in-differences

Effect of International Trade on the Economic Growth of Nepal

The study explores the relationship between exports, imports, remittance, and economic growth of Nepal for the 1974/75 to 2021/22 fiscal year. Descriptive and analytical research designs were employed on time series data obtained from secondary sources. The Augmented Dickey-Fuller unit root test, co-integration technique, and Error Correction Model (ECM) were employed for empirical investigation. The impact of exports, imports, and remittances on economic growth was analyzed through the ordinary least square regression method for the long run relationship. The result reveals the existence of a long-run relationship between imports, remittances, and gross domestic product. The effect of exports and imports was statistically significant on the economic growth of Nepal and the effects of remittance was statistically insignificant on economic growth. The result emphasizes that the Government should ensure the export promotion policies to achieve Nepal's high and sustainable economic growth by investing in trade infrastructure and export subsidies and creating a favorable environment that encourages using remittance money to support productive sectors of the economy.

Trade agreements when profits matter

This paper suggests a rationale for the GATT/WTO ban on export subsidies by showing that, in a linear Cournot profit-shifting model in which countries invest in a policy infrastructure before imposing trade policy, an agreement banning export subsidies tends to be more self-enforcing than one banning tariffs. Oligopoly introduces asymmetry between import tariffs and export subsidies: terms-of-trade and profit-shifting effects run in the same direction for import tariffs but in opposite directions for export subsidies. This asymmetry and the fact that it takes time for countries to change their trade policy infrastructure imply that the payoffs on the off-equilibrium path under an import-tariff-only agreement tend to be lower than those on the off-equilibrium path under an export-subsidy-only agreement. Specifically, punishment with tariffs is harsher than punishment with subsidies. When the set of instruments is restricted to import tariffs, a trade agreement needs to neutralize both the terms-of-trade and profit-shifting externalities.

Do export subsidies dampen export unit values across markets? A case study on Pakistan

Do export subsidies dampen export unit values across markets? A case study on Pakistan

CHINA’S AGRICULTURAL FOREIGN TRADE FLOWS: TRENDS, CHALLENGES, AND OPPORTUNITIES

Purpose. The aim of the article is to analyse China’s agricultural import and export in the context of global geopolitical transformations and identification of trends, challenges, and opportunities for the state’s agricultural policy based on this analysis. Methodology of research. The following methods were used in the research: analysis and synthesis to evaluate the dynamics, product, and geographical structure of China’s agricultural foreign trade; SWOT analysis to assess the strengths, weaknesses, threats, and opportunities of the state’s agricultural policy; abstract and logical method to summarize information from various sources and create a comprehensive understanding of the researched problem, forming theoretical conclusions and generalizations; and graphical method to visualize the research results. Findings. It was found that in 2023, the dynamics of China’s foreign trade in agricultural products continued to show a growth trend that has been observed over the past decade. It was demonstrated that the development of China’s agricultural exports has effectively contributed to the deep expansion and diversification of the agricultural value chain, opening new opportunities for promoting high-quality agricultural development. At the same time, it was noted that China has abolished non-tariff measures on agricultural products and export subsidies for all agricultural products, making it one of the most open markets for agricultural products. However, it was proven that in terms of imports, China remains one of the most dependent countries in the world, which is related to the relatively small area of arable land, large population, and insufficient intensification, technological development, and mechanization of tangible agricultural production. Originality. The research on trends in the development of China’s international trade in agricultural products in the post-COVID period has been further developed, taking into account new geopolitical realities. Using the SWOT analysis method, the strengths, weaknesses, threats, and opportunities of China’s agricultural policy were identified. Practical value. The substantiated conclusions and recommendations derived from the research can be used to determine the strategic directions for the development of China’s trade relations, as well as to intensify agricultural trade flows between Ukraine and China. Key words: international trade, export, import, agriculture, peripheral regions, foreign policy, global risks, competitiveness.

Strictly unofficial business: Australia’s trade policy towards the People’s Republic of China, 1951 to 1966

Between 1951 and 1966, Australia engaged in an expanding trade with China without extending diplomatic recognition. The Liberal–Country Coalition government not only allowed, but encouraged this connection, mostly by facilitating the exchanges of private citizens and even officials and, increasingly, providing export subsidies. It did so selectively, balancing between the eagerness of businesses and some officials, the pressure from the United States, and domestic critiques seeking either a more total containment of China or to pursue diplomacy with Beijing. By the end of the period, Canberra settled on the formula of making a sizable trade surplus with China without taking the political risk of either conducting formal diplomacy or modifying existing trade restrictions. The coincidence of needs saw the trade relationship assuming some significance in Australia’s agricultural sector, especially wheat production. But the political limitation to this trade also became clear, as did the constraints suffered by its Labor critics.

公众环境认知与绿色产品贸易的关系——政策法律文本的调节作用

In today's increasingly accelerating globalization, environmental protection and sustainable development have become the focus of common concern for all countries. Public environmental awareness, that is, the public's understanding and attitude towards environmental issues, has a significant impact on environmental protection work. Meanwhile, with the rise of green product trade, the market trading of green products is becoming increasingly active. As one of the means to regulate the relationship between public environmental awareness and green product trade, the role of policies and legal texts is increasingly prominent. This article will explore the relationship between public environmental awareness and green product trade and analyze the regulatory role of policies and legal texts in it. This article explores the impact of trade and environmental policies on the financial system through computer software. It constructs a theoretical hypothesis model to explore the moderating effect of policy and legal texts on the relationship between public emotional perception of environmental policies and green product trade. After empirical testing, all research hypotheses in this study have been supported. The results showed that at a test level of 0.01, consumers' perception of green efficacy, perceived green responsibility, green purchasing behavior, emotional arousal, and moderate values were significantly positively correlated. Among them, the R-value of perceived green efficiency and green purchasing behavior is 0.701, and the R-value of perceived green responsibility and green purchasing behavior is 0.638, indicating the degree of correlation between perceived green efficiency, perceived green responsibility, and green purchasing behavior. Green purchasing behavior is highly correlated. The conclusion indicates that the government has further increased export subsidies for the clean industry, implemented differentiated environmental tax policies, and emphasized the coordinated use of procedures, promoting the development of the clean industry and the upgrading of industrial structure.

COMESA Customs Union Commitments and the Impact on Kenya: Using the Wits-Smart Simulation Model

This research article included quantitative estimations of the likely outcomes of the welfare effects, trade diversion effects, changes in export and import quantities, revenue effects, and trade creation effects resulting from the Common Market for Eastern and Southern Africa Customs Unions Commitments (COMESA CU). Kenya was used as the case study in this research project, which utilized the Software for Market Analysis and Restrictions on Trade (SMART) and Pan-Euro-Mediterranean tools (PEM). The World Integrated Trade Solution (WITS)/SMART software has access to the most recent data on Kenya and uses databases and records of trade-related information, including those maintained by the United Nations Conference on Trade and Development (UNCTAD), the World Trade Organization (WTO), the Common Format for Transient Data Exchange for Power Systems (COMTRADE), and the Transportation Reporting and Accounting Information System (TRAINS). The results of the analyses show that COMESA CU has no indication of trade diversion and had a trade-creation impact of US$310.50 million. Further analysis revealed that the COMESA CU procedure is expected to record losses in the amount of US$327 million. Additionally, a US$56.27 million consumer welfare effect was projected for COMESA CU. Imports increased by 2.8% at COMESA CU, but exports fell. The research recommends that export-boosting actions be taken, including bolstering export processing zones, offering export subsidies, developing supply-side infrastructure, offering trade financing, and enhancing export-supporting institutions. Kenya and other developing countries now have the ability to implement policies that will make sure they benefit the most from the various regional trade agreements, thanks to the findings of this study.

Legal Analysis of Export Subsidies under the Agreement of Subsidy and Countervailing Measures

Export subsidies, for several decades now, have attracted significant attention due to their undesirable impacts on international trade. In the Uruguay Round 1994, the World Trade Organization (WTO) generated the Agreement on Subsidies and Countervailing Measures (ASCM) which contains global rules to regulate the different types of subsidies and to offset their adverse effects on other WTO Members. This paper, through its three sections, therefore aims to provide a legal analysis of the provisions of export subsidies contained in Articles 3 and 4 of the ASCM. By doing so, this paper answers the question of whether the ASCM is sufficient to cease the distortive effect of the export subsidy. To that end, doctrinal legal research has been conducted through analysis of the black letter of law and the case laws. In conclusion, the ASCM succeeded in giving the export subsidies per se prohibited nature, either in law or in fact. Unfortunately, the mere repayment of the amount of the subsidy is not always a sufficient remedy. As such, punitive countermeasures must be introduced to implement remedial provisions and to deter export subsidies.

Incentives for Levying Countervailing Duties on Foreign Competitive Goods

Objective: The relationships between firm profits, foreign export subsidy, and countervailing duties (CVDs) have not been discussed sufficiently in the existing related literature. The purpose of the present study is to analyze the effects of CVDs and formulate policy advice regarding CVDs to fill this knowledge gap. Methods: A game theoretic model with oligopolistic market structure is adopted. Results: The proposed model indicates that when a foreign country provides an export subsidy to a foreign final good, a domestic country has an incentive to levy a CVD whose value exceeds that of the foreign export subsidy on the foreign final good because domestic intermediate- and final-good firms might benefit from the CVD. Conclusions: A CVD whose value equals that of a foreign export subsidy is enough to counter the subsidy’s negative effects on the profits made by domestic intermediate- and final-good firms.

Centralized decision strategy in ownership investments and export policy

This research explores the optimal export policy of a domestic industry characterized by numerous multinational enterprises (MNEs) co-existing with cross-border ownership investments in foreign firms and exports to a foreign country. We demonstrate that the optimal export policy depends on whether MNEs make centralized or decentralized decisions in ownership investments. With decentralized decision-making, the optimal export policy can be either a subsidy or a tax, while with centralized decision-making, it is a tax. Furthermore, we examine how the optimal trade policy responds to the optimal strategy of centralized decision-making by MNEs. Our results show that under certain circumstances, the optimal trade policy is an export subsidy, and MNEs prefer to voluntarily relinquish centralized decision-making, even when they have the option to control the production levels of foreign partner firms.

Trade Policies and Fiscal Devaluations

Fiscal devaluations—an increase in import tariffs and export subsidies (IX) or an increase in value-added taxes and payroll subsidies (VP)—have been shown to provide as much stimulus under fixed exchange rates as a currency devaluation. We find that if agents expect policies to be reversed and the tax pass-through is large, VP is contractionary and IX provides a modest boost. In our medium-scale DSGE model, both features are crucial in accounting for Germany’s underperformance in response to VP in 2007. These findings cast doubt on fiscal devaluations as a cyclical stabilization tool when monetary policy is constrained. (JEL E32, E52, E62, F13, F33, H20)

Choice of trade policy for international oligopoly with incomplete information

This paper studies the design of trade policies in an uncertain third market with incomplete information. Governments in each of the two countries select either direct quantity controls or export subsidies in an attempt to shift profits in favor of their firms in an international oligopolistic setting. It is shown that the country with firms having an information disadvantage tends to choose direct quantity control, while the country with well-informed firms would use export subsidy (export quota, respectively) when the degree of uncertainty is sufficiently high (low, respectively).

The impacts of reforming agricultural policy support on cereal prices: a CGE modeling approach

PurposeThis paper investigates the effects of the total abolition of all forms of agricultural subsidies to producers and border tariffs on the prices of staple cereals.Design/methodology/approachThe authors use the GTAP global economy-wide model and focus on 27 countries and 8 regions. The GTAP database that is used contains information on budgetary transfers to producers and market price support such as domestic price support, tariffs, export subsidies, quotas on exports or imports and other border measures.FindingsThe removal of subsidies is estimated to significantly increase the prices of wheat and other cereal grains in Japan, paddy rice in Malaysia and Indonesia, processed rice in Malaysia and Indonesia and wheat in Brazil and India. When border tariffs are removed, cereal prices are projected to fall in several countries, but the decline is more pronounced for wheat in Kenya and Japan, other cereal grains in South Korea and all staples in Nepal.Research limitations/implicationsThe alternative scenarios on the removal of agricultural subsidies in all agricultural sectors and the elimination of border tariffs are purely speculative as the analysis ignores important political economy considerations of agricultural and food policy reforms.Practical implicationsThe findings from this study point to the importance of implementing additional policy measures to mitigate the possible negative effect of repurposing the support to agriculture and ensure the food security and welfare of those categories of buyers who heavily depend on the price of staple food for their livelihoods.Social implicationsThis study’s findings confirm that the elimination of agricultural subsidies would impact global food security directly by making staple food less affordable to the poorest and indirectly by decreasing the available household budget for other presumably more nutritious food groups. Consequently, it is expected that these price increases could make segments of the world population poorer, particularly the net-food buyers due to a decline in their real income.Originality/valueThe authors assess the impact of removing the subsidies on the economy in a comprehensive way, particularly given the recent policy focus on net zero emissions and Sustainable Development Goals that include healthy foods. The authors also consider the counter effects of tariff reduction on this, which is price-reducing.

THE AVAILABILITY OF FINANCIAL SOURCES TO SMALL AND MEDIUM-SIZED ENTERPRISES FROM NON-BANKING INSTITUTIONS IN THE REPUBLIC OF NORTH MACEDONIA

This paper examines the challenges and perspectives of SMEs in North Macedonia. The study was conducted through a survey for small and medium-sized enterprises in the country, which revealed significant challenges in access to finance, skilled labor, high taxes, administrative burdens, and limited market access. These challenges hinder the growth and development of SMEs, thereby affecting their contribution to the country's economy. Despite the challenges, small and medium-sized enterprises in North Macedonia represent a significant potential for growth and development, which is seen in their contribution to GDP and the country's employment. To address the challenges faced by SMEs, the government and other stakeholders must prioritize measures that reduce the tax burden on SMEs, simplify administrative procedures, provide export subsidies, invest in transport infrastructure, and explore alternative financing options. Investing in education and training programs tailored to the needs of SMEs will help address the skills gap and increase productivity. The study recommends that the government use opportunities such as the country's strategic location to attract foreign investment, promote trade and create favorable conditions for small and medium enterprises. Small and medium-sized enterprises in North Macedonia face significant challenges, but they represent significant potential for growth and development.

The Economics of Border Carbon Adjustment: Rationale and Impacts of Compensating for Carbon at the Border

International trade contributes directly to global greenhouse gas emissions, as the carbon content of high-emission products is priced differently in different countries. This phenomenon is termed carbon leakage. Thus, not putting a price on carbon is theoretically equivalent to an export subsidy, although that would be difficult to challenge in the context of multilateral trade law. Leakage can be alleviated by pricing the carbon embedded in imported products through a border carbon adjustment (BCA), be it a tax, a carbon tariff, or a regulation requiring the purchase of emissions allowances. The design of a BCA is a compromise between environmental effectiveness in preventing leakage, economic effectiveness in preserving competitiveness and ensuring acceptability, technical feasibility of the implementation, and World Trade Organization compatibility. An import-limited BCA is more effective than free emissions allowances in reducing leakage, but it does not preserve the export competitiveness of the country imposing it.

Officials' Foreign Experience and Firms' Exports: Evidence from China

AbstractThis study examines how the foreign experience of local officials affects firms' exports in China. Using a matched sample from 2000 to 2012, we found that the foreign experience of municipal Party secretaries had a significant impact on the promotion of firms' exports, especially for private firms. This positive impact was more pronounced when officials went abroad at a younger age, stayed abroad for a longer period, returned to China for a longer time, and had greater promotion incentives. We found that officials' foreign experience helped to mitigate the negative impact of institutional distance and provided firms with better access to export subsidies, both of which could promote exporting. There was also a complementary effect when officials and executives both had foreign experience. Overall, our study provides some insights into the economic outcomes of officials' foreign experience and sheds light on the export performance of Chinese firms.

Incomplete International Investment Agreements: Problems, Causes and Solutions

It was a tense negotiation. South Korea and Turkey had been bargaining over the conclusion of a free trade agreement (FTA) for four years when talks over the investment chapter hit a major roadblock in 2014. Korea pushed to insert a clause to limit performance requirements imposed on Korean investors. Turkey, in turn, opposed the clause to preserve policy space for a set of export subsidy programs it considered vital. A first compromise failed because the responsible Turkish ministry could not produce a list of specific subsidies to be carved out as non-conforming measures. The negotiators then had to get creative. They agreed to tinker with the scope of the treaty’s investor-State dispute settlement (ISDS) clause by exempting the enforcement of the exact subparagraphs that covered export subsidies from ISDS. It was a win–win. Turkey could be sure its subsidies would be shielded from ISDS claims and South Korea had succeeded in including a clause on performance requirements.2 The episode also underscored the pragmatism and creativity that negotiators routinely have to muster to prevent deadlock and conclude the most ambitious agreement possible.

Carbon border adjustment mechanism: a systematic literature review of the latest developments

ABSTRACT Carbon border adjustment mechanism aims to level the playing field and reduce carbon leakage through import taxes and/or export subsidies based on the carbon content for products from countries with different levels of carbon policy stringency. The introduction of an EU carbon border adjustment mechanism (CBAM) has triggered a lively debate on its potential impacts, especially among developing countries. In fact, introducing CBAM is not a new idea; researchers in fields of economics and law have investigated this policy over the last decade. Against this backdrop, this study conducts a literature review of the most recent economic studies of CBAM and provides an exhaustive synthesis of this literature. We employ the so-called ‘Preferred Reporting Items for Systematic Reviews and Meta-Analysis’ approach (PRISMA), which includes an exhaustive screening of studies. Specifically, we identified 97 relevant studies on CBAM from 2004 to 31 August 2021, and conducted descriptive and content analysis of these. Our content analysis highlights the potential impacts of CBAM in terms of its effectiveness across 3 policy objectives: protecting fair competition; reducing carbon leakage; and limiting global welfare costs. We synthesize findings on how policy design and characteristics of an economy lead to different levels and types of effectiveness of a CBAM, and we contrast alternative policy designs across various objectives. Armed with this systematic review of the literature, we spell out insights and challenges in formulating effective CBAM polices. This review thus offers evidenced-based guidance for the policy design of a CBAM and a foundation for further research. Key policy insights There is no one-size-fits-all approach to design and implement CBAM to tackle competitiveness and carbon leakage; policy design and characteristics of the economy matter. According to the effectiveness of CBAM across the 3 policy objectives, alternative policy designs should account for the coverage of trade, of sector(s), and also the means to determine carbon content of traded commodities, the use of revenues collected through CBAM, and the adjustment price. In formulating sound CBAM policies, competitiveness, carbon leakage and welfare evaluation are central economic concerns; however, consistency with the latest international climate policy architecture and fairness issues should also be addressed.