Export Subsidies Research Articles

International Process R&D Competition in the Presence or Absence of Government Intervention

This paper analyzes and compares the equilibrium levels of R&D, output, price, firm profit, social welfare, and consumer surplus in a third country in the presence and absence of government intervention. Moreover, it compares some results in the case that governments intervene in the market with R&D subsidies or taxes to those in a case in which governments intervene in the market with export subsidies or taxes. We show that the optimal R&D subsidy is positive regardless of the efficiency of R&D and the nature of goods, except independent goods. This result is similar to the case of an export subsidy. We also show that the results from the comparison of the equilibrium levels of output, price, firm profit, and social welfare with and without government intervention are similar to those from a case where governments intervene in the market with export subsidies or taxes.

The macroeconomic effects of trade tariffs: Revisiting the Lerner symmetry result

We study the robustness of the Lerner symmetry result in an open economy New Keynesian model with price rigidities. While the Lerner symmetry result, i.e. the absence of allocative and trade-flow effects of an equally-sized change in import tariff and export subsidy, holds up approximately for a number of alternative assumptions, we obtain quantitatively important long-term deviations under complete international asset markets. Direct pass-through of tariffs and subsidies to prices and slow exchange rate adjustment can also generate significant short-term deviations from Lerner. Deviations from symmetry, however, do not necessarily imply an impact on global output and are often limited to a redistribution of production and consumption across countries. Finally, we quantify the macroeconomic costs of a trade war and find that they can be substantial, with permanently lower income and trade volumes. However, a fully symmetric retaliation to an unilaterally imposed border adjustment tax can prevent any sizable adverse real or nominal effects.

Strategic Trade Policy Cina di Negara-Negara Sub-Sahara Afrika

<p class="06IsiAbstrak"><strong>The Strategic Trade Policy of China in Sub-Saharan Africa Countries</strong>.<strong> </strong>In the past decade, Sub-Saharan Africa has been transformed into the 'rising continent'. The growth of the Sub-Saharan economy averages 6%. Some countries in Sub-Saharan are included in the most developed countries in the world. Economic growth, abundant natural resources, and a large population become the potential of Sub-Sahara to become a main trading partner for China as a global economic power. To enhance trade cooperation, China formed a Forum on China-Africa Cooperation (FOCAC). Through this forum, China offers a new development model, namely the Beijing consensus by prioritizing the principle of non-interference. This research aimes to find out the strategic trade policy of China to enhance economic benefits from multilateral cooperation. This research applies descriptive qualitative research method with the strategic trade policy as the research analytical framework. This research finds that China applies some of strategic trade policy in Sub Sahara Africa : sectoral targets, Special Economic Zones (SEZs), liberation of foreign investation, and export subsidies.</p><p class="07KatakunciKeywords">Keywords: FOCAC Strategic Trade Policy (STP), Sub-Sahara Afrika</p><p class="07KatakunciKeywords"> </p>

Background: Introductory Remarks by Jeannette M.E. Tramhel

This is a panel on agricultural trade; but it is not just a trade law panel. As has been clearly recognized in the 2030 Agenda for Sustainable Development, the Sustainable Development Goals (SDGs) are “integrated and indivisible.” Lawyers, too, are called upon to look at these complex issues through an integrated lens. Accordingly, although this panel will examine SDG #2 through the lens of trade, we will attempt to do so using an integrated and holistic perspective. After providing the contextual background, the panel will consider first, the role of export subsidies and the importance of their elimination and secondly, the broader implications of trade for food security and the actualization of SDG #2.

지방정부 수출지원제도의 운영성과에 관한 연구 - 강원도․인천광역시․충청북도를 중심으로

In order for Korea to maintain steady growth through trade, SMEs" participation in exports is urgently required. In order to increase exports of SMEs, efficient operation of the export subsidy system implemented in each city and province is important. In this study, the export performance of Gangwon - do, Incheon and Chungcheongbuk - do was studied. The implications of the study are as follows. First, awareness of export support system has a positive effect on utilization, and utilization has a very positive effect on satisfaction. Therefore, comprehensive public relations and marketing strategies should be provided to promote the awareness and utilization of the support policies implemented by local governments. Second, it is necessary to analyze the imbalance between utilization and satisfaction for each export subsidy item, and consider reorganization of business. Businesses with high satisfaction but low utilization should increase their utilization, and businesses with low utilization and high satisfaction should adjust their business or improve their operation methods. Finally, as the sufficient supply of export support has a positive effect on the expected effect of export support, it is necessary to continuously expand the support project.

Intra-Regional vs. Extra-Regional Trade Liberalization in Central America

ABSTRACT Although the Central American countries trade very extensively with the USA, the remarkable growth of their intra-regional exports is prone to create more internal added value for the region. Taking this background into account, we use and compare a standard, perfectly competitive and an imperfectly competitive GTAP CGE model based on the GTAP 9 database, to assess different scenarios. Our simulations evaluate the elimination of all existing import taxes and export subsidies in 2011, both at the intra-regional level and vis-à-vis the USA. The results emphasize the preference by most of the Central American countries for the completion of the Customs Union at the expense of a deepening of the DR-CAFTA agreements.

Canada-United States agricultural trade under the shadow of NAFTA: liberalization, conflicts and challenges

ABSTRACTThis article investigates the ability for regional trade agreements (RTAs) to push forward agricultural liberalization. Our study of the North American Free Trade Agreement (NAFTA) demonstrates that RTAs alone cannot overcome the main problems related to protectionism in the agricultural sector. RTAs can, under certain conditions, increase market access but have a limited capacity to deal with export subsidies and domestic support. Our data shows that NAFTA has improved market access for agricultural products between Canada and the United States, and that internal agricultural trade between the two countries has grown at a faster rate than with the rest of the world. Yet, in the context of the recent United States-Mexico-Canada Agreement (USMCA), many challenges remain.

International institutions and domestic policy: assessing the influence of multilateral pressure on the European Union’s agricultural policy

ABSTRACT There is a debate in international relations on how, when, and why international institutions influence domestic policy. This article contributes to this debate by looking at the influence of the World Trade Organization (WTO) on the European Union’s (EU) Common Agricultural Policy (CAP). It shows that the transfer of authority to international institutions may transform an external factor into a permanent influence on domestic policy. The transfer of authority in agriculture to the General Agreement on Tariffs and Trade (GATT – now included in the WTO) in 1994 led to the introduction of a dormant clause on export subsidies in all subsequent EU CAP regulations. This clause provided the legal foundation for the 2015 EU decision to remove export subsidies. Multilateral pressure (i.e. the demands of third countries in GATT/WTO negotiations) is not the only determinant of CAP, but it is important, and affected by the GATT/WTO having authority on agriculture.

The Macroeconomic Effects of Trade Policy

We study the short-run macroeconomic effects of trade policies that are equivalent in a friction-less economy, namely a uniform increase in import tariffs and export subsidies (IX), an increase in value-added taxes accompanied by a payroll tax reduction (VP), and a border adjustment of corporate pro.t taxes (BAT). Using a dynamic New Keynesian open-economy framework, we summarize conditions for exact neutrality and equivalence of these policies. Neutrality requires the real exchange rate to appreciate enough to fully offset the effects of the policies on net exports. We argue that a combination of higher import tariffs and export subsidies is likely to trigger only a partial exchange rate offset and thus boosts net exports and output (with the output stimulus largely due to the subsidies). Under full pass-through of taxes, IX and BAT are equivalent but VP is not. We show that a temporary VP can increase intertemporal prices enough to depress aggregate demand and output, even when wages are sticky. These contractionary effects are especially pronounced under fixed exchange rates.

The Local Impacts of Agricultural Subsidies: Evidence from the Canadian Prairies

AbstractWe estimate the impact of removing an export subsidy on the local economies of Alberta, Saskatchewan and Manitoba, exploiting the large regional variation of a 1995 reform. We find that the loss of the subsidy resulted in significantly lower farm value‐added, farm asset values and local non‐farm employment. The results suggest that the subsidy removal had detrimental spillover effects on the local non‐agricultural economy that varied spatially across the Prairies. The point estimates suggest that the marginal effect of the subsidy loss on non‐agricultural employment was five times as large as those obtained from traditional estimates of the multiplier effect.

Russian Grain Exports in the Context of Regional Economic Policy

Over the past two years, Russia has become the world leader in grain exports and intends to maintain growth rates. The authors enter into polemics with scientists who estimate the export of grain as the success of the agrarian economy. The purpose of the study is to find arguments for proving that the current model of the food market formation is erroneous. This model is based on the export of grain in combination with the import of the food with high added value. Our hypothesis is that the export of grain abroad was the result of low demand in the domestic market, which is due to the structural deformation of agricultural production. The study is based on the works of scientists in foreign trade policy (D. Ricardo, F. List, B. Ulin, S. Witte, D. Mendeleev). Statistical data, include the period before the embargo on food (2012–2014) and after it (2015–2016). In the conditions of inflation, preference was given to the indicators of the physical volume of output. The situation on the food market is complicated by a decrease in consumer demand and a fall in real incomes of the population. The imposition of an embargo on food imports reoriented imports to other countries. We propose measures of state regulation of the agro-food market: the introduction of export duties on grain and export subsidies for products with high added value. The research results can be used to develop mechanisms for regional economic policy in the agro-food sector.

Kicking away the financial ladder? German development banking under economic globalisation

While extensive literature exists on how economic globalisation has limited developing countries' policy space for industrial policy, the literature on how it has affected advanced economies remains scant. We utilise original archival material to analyse the activities of the German public development bank, the Kreditantstalt für Wiederaufbau (KfW), in order to shed light on an important, but neglected aspect of German industrial policy. We analyse how the KfW responded to multiple challenges after the rise of economic globalisation, including a funding crisis, international agreements to limit export subsidies and Europeanisation. We argue that KfW successfully managed to navigate these challenges in order to retain, and even increase, its ability to conduct selective industrial policy in the post-1980s era. This was possible because of Germany's hard currency and low sovereign credit risk, large market size, which was augmented by membership in the European Union, and Germany's position as regional hegemon within Europe. More broadly, this shows how, conditional on domestic politics, advanced economies are able to shape and exploit the rules of the international economic system to implement industrial policies to their advantage, even as developing countries are given the opposite policy recommendations.

World Trade Organization’s Agreements Affecting Pak-Afghan Border Tribes

This paper attempts to highlight the perceived threats of World Trade Organization’s certain agreements to the livelihood of the tribes residing erstwhile FATA and adjacent five-border provinces/wilayatona of Afghanistan. There are seventeen agreements of WTO that deals with issues related to trade and commerce. The Agreement on Agriculture offers obligations for member states in the area of market access, tariff regulations, export competition, domestic support, export subsidies, food security, and environmental protection. If agreements such as Agreement on Agriculture, General Agreement on Trade and Services, Trade Policy Review Mechanism and Social Clause are extended without adjustment to the needs of poor nations and sub-nations living on the peripheries, then it may prove detrimental to their survival. To substantiate my argument, I have briefly discussed the adverse affects and recorded protests against such agreements by the poor indigenous people living across the world’s different peripheries.

A reappraisal of strategic trade policies with the endogenous mode of competition under vertical structures

ABSTRACTThis paper examines the endogenous choice of competition mode with strategic export policies in vertically related markets when each upstream firm located in each country determines the terms of the two-part tariff contract by maximizing generalized Nash bargaining. We show that (i) choosing Cournot (Bertrand) competition is the dominant strategy for both downstream firms when goods are substitutes (complements), which leads Pareto superior regardless of the nature of goods under the optimal trade policies; (ii) irrespective of rival’s competition mode, the optimal trade policy is an export subsidy under Cournot competition and an export tax under Bertrand competition; and (iii) trade liberalization may give rise to changes of competition mode and increase of social welfare.

Identifying opportunities for value chain development in the Kenyan coffee sector

By developing a model that describes the Kenyan coffee value chain, this study evaluates opportunities emanating from four scenarios representing productivity gains in the various value chain stages of the coffee sector and additional three scenarios reflecting shifts in market situations. Results show that productivity-enhancing policies have stronger effects on coffee output and export performance if they target the milling stage of the value chain. Export subsidy and favourable external marketing conditions also have stronger effects, distributed comparably across the various value chain stages. We, however, found that these gains in the coffee sector come at the expense of other cash crops such as cotton, tea, sugar and tobacco. The approach followed in this study is relevant as this trade-off between coffee and the other cash crop sectors may not be visibly shown using standard value chain approaches.

Government Subsidies, Industrial Competition and Enterprises’ Export Technology Complexity

Since the twenty-first century, China’s export trade has become significant changes in the export technology structure while realizing the scale growth. Scholars mostly explain this phenomenon from the perspectives of internal factors such as human capital, factor endowments, and technology development, but few explanations are made from the perspectives of the two external factors of ‘government’s hands’ and ‘market hands’. Therefore, this paper examines the impact of Chinese ‘government subsidies’ and ‘market competition’ on enterprises’ export technology complexity and its internal mechanism from the micro perspective, so as to provide theoretical reference for current market reform and the upgrading of trade structure. This paper has research ideas and methods as follows: firstly, it constructs the theoretical model of enterprises’ export technology complexity based on the Hausman（2005）, and puts forward related theoretical hypotheses; secondly, it examines the effect of China’s government subsidies and industry competition on enterprises’ export technology complexity by propensity score matching（PSM）and difference-in-difference method; finally, it further examines the internal mechanism about how government subsidies and industry competition affect enterprises’ export technology complexity from the perspectives of RD secondly, the negative effect of government subsidies on enterprises’ export technology complexity is more significant in the middle-and-high-degree competition industries than that in the low-degree competition industries, and the increase in industrial competition is beneficial to the correction of negative effect of government subsidies on enterprises’ export technology complexity; thirdly, further observation of affecting mechanism shows that RD secondly, this paper uses enterprises’ micro data, and most literature estimates the export technology complexity at industrial and regional levels, which ignores enterprise heterogeneity; thirdly, this paper uses propensity score matching（PSM）and difference-in-difference method to make an empirical analysis; as a policy variable, government subsidies may not be a random event; if we continue to adopt OLS, our conclusions would have serious endogeneity; so our research method overcomes the endogenous problem to some extent. In general, the conclusions are good for us to understand the policy implications of current governmental cuts in export subsidies, and also provide theoretical reference for how to use the government’s hands and market hands to improve export technology structure.

Perspectives of meat production in EU countries

Meat products are an important element of the diet of most European consumers. The most common types of meat consumed in the European Union (EU) are beef and veal, pork, poultry (from which chicken and turkey are the most common), as well as young lamb. Moderate growth of meat production is forecast in the EU countries, which in 2030 will attain 47.5 million tons, that on 0.5% anymore by comparison to 2017 year. An increase will take place, above all things, due to the increase of volumes of poultry meat («plus» 4.6% by comparison to 2017), a small increase is expected on pork («plus» 0.4%). The production of beef will reduce on 7.4%. Basic pre-condition to the increase of production of meat in the EU countries of the expected increase of volumes of his export which will be stipulated world tendencies to growth demand on meat products. During the next 14 years EU plans to grow the volumes of meat export almost on 9% to 4.7 million tons, and it will remain net exporters. Thus, if both pork and poultry meat a general export will exceed an import substantially, balance on a beef is expected negative, and the volumes of its import to EU for indicated period will grow on 22%. In the EU, beef production continues to decrease slightly. The general decline was less than 1%, which is due to the conservation of animals in order to increase the size of the dairy herd, as a result of an increase in milk quotas. The EU has a high degree of self-sufficiency in relation to pork and therefore imports little. Import quotas are not used, because the import of some licensed countries does not meet veterinary standards. Thus, imports are effectively prohibited, although tariff quotas would be favorable. The EU does not interfere in the domestic pork market, nor does it play a leading role and export subsidies. The poultry meat is represented by a very diverse group of meat varieties from chickens, turkeys, geese, ducks to cesarocks. The production of chicken meat accounts for 70% of the total poultry production in the EU, while the production of turkey meat is 20%. The remaining 10% are distributed among other poultry in the EU. Internal consumption of meat in European Union by the populations beginning from 2018 year will have a tendency to the unimportant (within the limits of 1%) decrease. In 2030 an index of meat consumption per inhabitant in EU will be at high level and will make 85.3 kg per person in for slaughter weight. In the pattern of consumption in the nearest decades, as well as today, will championship be kept after pork (almost 48%), farther poultry meat (32%), beef (18%) and other kinds (2%). For the European experts forecast, during 2017–2030 price tendencies on the world and European markets of meat will look thus: on a beef – costs of EU-28 will decline on 1%; is a world price a decline on 19%; on the pork – costs of EU-28 a decline is on 5%; global price a decline on 4%; on a poultry meat are costs of EU-28 a decline is on 4% and global price will increase on 15%.

Offshoring Quotas and Strategic Export Subsidies

ABSTRACTWe present an analysis of strategic export subsidization in the presence of exogenous limits on the extent of offshoring that is permissible for a domestic firm. Rather than offsetting a quota’s cost-raising effect, the government reduces its optimal strategic subsidy compounding the negative effects on the domestic firm’s market share. This double jeopardy of lower subsidies and greater offshoring restrictions must reduce domestic profits as well as domestic welfare. Finally, we show that there is no guarantee that such an offshoring quota will raise domestic employment in the oligopolistic sector, calling into question the efficacy of such a barrier.

The Paradox of the Nairobi Ministerial Decision on Export Competition: Lessons for the Future

The Nairobi Ministerial Decision on Export Competition was lauded as WTO ’ s most significant outcome on agriculture negotiations. However, despite the Decision ’ s requirement that WTO developed country Members immediately eliminate their export subsidies, only Australia has revised its schedule of commitments, scrapping all its export subsidy entitlements. This article therefore analyses the relationship of the Nairobi Decision with the existing obligations under the WTO Agreement on Agriculture; the legal value of the Decision; the challenges in identifying the nature of the Decision; and, whether and how it could have been drafted in a better way to facilitate its implementation.

The Effect of Export Promotion on Firm-Level Performance

Most countries promote exports. This paper answers two questions: Does export promotion improve firm performance, and do any benefits outweigh costs? We solve self-selection problems by accounting for an extensive set of firm characteristics. In addition, we distinguish firms that self-selected into promotion services from firms the Danish Trade Council approached based on observed information. We find that export promotion increases sales, value added, employment, and value added per worker. For small firms, summing expenditures on export promotion, subsidies, and tax distortions, the gain in value added is roughly three times higher than the direct costs of export promotion. (JEL D22, F13, F14, L25, L53)