External Trade Policy Research Articles

Outward direct investment as a shelter from external trade policy shocks: Firm‐level investigation of the US–China trade war

AbstractThis study examines the effects of external trade policy shock from the US–China trade war on firm value. Using a merged data set of Chinese‐listed companies, our empirical results reveal that Chinese firms conducting outward direct investment in the US have significantly higher stock returns around the date of the outbreak of the trade war as compared with the lower returns of exporting firms. This indicates a sheltering effect of pre‐existing outward direct investment activities. Moreover, we find that the sheltering effect is more pronounced for production‐oriented projects, high tech industries and tariff‐targeted sectors, while it is weaker for state‐owned companies.

Asymmetric Free Trade Agreements and Misalignment of Incentives: Lessons From the European Union–Turkey Customs Union

AbstractUnder the European Union (EU)–Turkey customs union, the EU can negotiate free trade agreements (FTAs) with third countries without Turkey's involvement. Simultaneously, Turkey is required to apply the same external tariffs and standards and negotiate its own FTAs in line with the EU. This leads to asymmetries and misalignment of incentives in Turkey's trade relationships. This study utilizes the peculiar nature of this arrangement to explore the asymmetric FTAs and their effects on Turkey and the Union. We find no effect of asymmetric FTAs on Turkish trade. This finding can be explained partially by evidence that Turkish compliance with EU tariffs is low for asymmetric FTAs. This is especially the case for the goods category in which Turkey specializes, and the divergence extends to at least 10 years after the EU signs an asymmetric FTA. As customs unions require that external trade policy be symmetric across all members for them to function optimally, this divergence in tariffs between Turkey and the EU needs to be addressed by removing the misalignment of incentives.

The Effect of Trade Policy Uncertainty on Green Technology Innovation: Evidence from China’s Enterprises

Promoting green technology innovation is essential for sustainable development and the transition to a low-carbon economy. Using data from listed manufacturing companies in China from 2000 to 2020, this paper takes the establishment of permanent normal trade relations with the United States after China’s accession to the WTO as a quasi-natural experiment and uses the difference-in-differences method to study the impact of the decline in trade policy uncertainty on firms’ green technology innovation. The results show the following: (1) Reduced trade policy uncertainty significantly enhances green technology innovation in firms. (2) Further research finds that the decline in trade policy uncertainty mainly promotes the level of the green technology innovation of firms by alleviating financing constraints faced by firms and intensifying market competition. (3) A heterogeneity analysis reveals that the impact is more pronounced in firms with lower capital intensity, higher growth, export firms, and firms exporting to the United States. This study offers micro-level empirical evidence from China on the economic outcomes of external trade policy changes from the perspective of firms’ green technology innovation and provides insights into how the government should respond to the risks of external trade frictions and improve firms’ sustainable development in the future.

Enforcing Sustainability

After the Lisbon Treaty, the European Union (EU) has prioritized sustainable development as a key aspect of its external trade and investment policy. This emphasis on sustainability has been reinforced through treaty- making and has received support from the Court of Justice of the European Union (cjeu). However, there are notable variations and nuances in the understanding and implementation of sustainability in the EU’s treaties. Moreover, these treaties introduce innovative dispute resolution mechanisms, such as arbitration and alternative dispute resolution methods, which can significantly impact international dispute settlement practices. Opinion 2/ 15 on the EU- Singapore Free Trade Agreement marked a crucial moment in clarifying the scope and nature of sustainable development chapters within the EU’s trade and investment policy. Different agreements concluded after the Lisbon Treaty reflect diverse approaches to sustainability. In the context of environmental protection, these agreements encompass a range of provisions, from generic to more specific clauses addressing particular aspects. This article critically analyzes the effectiveness and scope of “green conditionality” within the Sustainable Development Chapters of EU-established Trade and Investment Agreements. It examines the incorporation of environmental provisions in these agreements, evaluates their role in promoting sustainable development objectives, and explores the implications of dispute settlement and international arbitration mechanisms. This analysis aims to provide a cutting- edge perspective on the topic.

Enforcing Sustainability: Assessing the Effectiveness of the EU’s Trade and Investment Policy in Promoting and Implementing Sustainable Development Provisions

After the Lisbon Treaty, the European Union (EU) has prioritized sustainable development as a key aspect of its external trade and investment policy. This emphasis on sustainability has been reinforced through treaty- making and has received support from the Court of Justice of the European Union (cjeu). However, there are notable variations and nuances in the understanding and implementation of sustainability in the EU’s treaties. Moreover, these treaties introduce innovative dispute resolution mechanisms, such as arbitration and alternative dispute resolution methods, which can significantly impact international dispute settlement practices. Opinion 2/ 15 on the EU- Singapore Free Trade Agreement marked a crucial moment in clarifying the scope and nature of sustainable development chapters within the EU’s trade and investment policy. Different agreements concluded after the Lisbon Treaty reflect diverse approaches to sustainability. In the context of environmental protection, these agreements encompass a range of provisions, from generic to more specific clauses addressing particular aspects. This article critically analyzes the effectiveness and scope of “green conditionality” within the Sustainable Development Chapters of EUestablished Trade and Investment Agreements. It examines the incorporation of environmental provisions in these agreements, evaluates their role in promoting sustainable development objectives, and explores the implications of dispute settlement and international arbitration mechanisms. This analysis aims to provide a cutting- edge perspective on the topic.

The Application of Regulation 452/2019 in Response to Chinese Foreign Direct Investment

The Regulation establishing a framework for screening of Foreign Direct Investments (FDI) into the European Union (EU) represents a new chapter for the EU’s foreign policy. FDI is a divisive topic within the EU, particularly FDI originating from China. This article seeks to add to the existing literature by assessing the effectiveness of the Screening Regulation towards this Chinese FDI. This assessment shall elucidate the interplay of this Regulation with the internal market, the free movement of capital, freedom of establishment, and the duty of sincere cooperation in response to Chinese FDI. Whilst the Regulation has proven its effectiveness, several deficiencies still exist, brought to light by recent developments such as the COVID-19 pandemic and the Belt and Road Initiative (BRI). By framing this article against the backdrop of the golden shares case law, these deficiencies are highlighted and addressed. Allowing EU Member States (MS) to safeguard their public order and security considerations in screening through national measures would allow for a better control over their markets in conjunction with the Regulation, although further development is needed. Foreign direct investment, Chinese State-Owned Enterprises, Chinese economic statecraft, European External Trade Policy, EU trade policy, EU foreign policy, Bilateral Investment Treaties (BIT), Freedom of establishment, Free movement of capital, Golden shares

External trade and foreign investment policy reforms in economic growth of Sri Lanka

Sri Lanka Journal of Social Sciences (SLJSS) publishes social science articles on topics relevant to Sri Lanka in particular and South Asia in general. The journal also has a website at http://www.nsf.gov.lk/.

On the Optimal Size and Composition of Customs Unions: An Evolutionary Approach

Customs unions enable countries to freely access each other’s markets, which is thought to increase intra-regional trade and economic growth. However, accession to a customs union also comes with the condition that all members need to consent to a common external trade policy. Especially if countries feature different economic structures, this may act as a force against the creation of large customs unions. In this paper, we propose a new mathematical approach to model the optimal size and composition of customs unions in the form of a bi-objective combinatorial non-linear problem. We also use a multi-objective evolutionary algorithm (NSGA-II) to search for the best (non-dominated) configurations using data on the trade flows and economic characteristics of 200 countries. Our algorithm identifies 445 different configurations that are strictly preferable, from a global perspective, to the real-world landscape of customs unions. However, many of these non-dominated configurations have the feature that they improve outcomes for the world as a whole, on average, but not for all individual countries. The best configurations tend to favour the creation of a few large customs unions and several smaller ones.

Poland’s Extra-EU Trade After the EU Accession

When Poland joined the European Union (EU) on May 1, 2004, it transferred its national competences in the field of external trade policy to the EU institutions. As a result, on the one hand, as of that date Poland may neither change duties on goods imported from outside of the EU, nor may it conclude trade agreements with third countries. Nowadays, Poland’s intra-EU trade has reached ca. 65-75% of its total foreign trade at the expense of the exchange with the rest of the world. Although the aforementioned numbers are high, they have not changed substantially since Poland’s accession to the EU. However, due to the legal circumstances and limited national competences in the shaping of external trade relations, one could expect that geographic and product structure of Polish foreign trade havr changed and reshuffled over the last few years. Therefore, the article aims to identify changes in both directions and products in Poland’s extra-EU imports and exports since the EU accession. To this end, we analysed changes in the value of Poland’s foreign trade with partners from outside of the EU as well as some indices that show the concentration of Poland’s trade and similarities or differences to the EU average. In order to get a closer look at Poland’s position, we compared the aforementioned indices to those reported for other Visegrád Group (V4) countries. We examined changes that took place in the period of 2004-2019 and have identified trends in Poland’s extra-EU trade that provide evidence of its greater similarity to the EU average, an effect of EU integration and higher diversification in the mix of partners from outside the EU. 

Intellectual property as a cornerstone of the world economy: enhancing or restricting trade within the European Union’s external trade policy?

Intellectual property as a cornerstone of the world economy: enhancing or restricting trade within the European Union’s external trade policy?

Uruguay y la necesidad de modernizar su estructura institucional para desarrollar su estrategia de inserción comercial internacional. ¿Existe hoy una estructura institucional abocada a la inserción económica-comercial internacional del país?

Uruguay has an institutional structure dedicated to international economic and trade integration, which has been strongly influenced by our presence in Mercosur over the last 30 years. The institutional design of foreign trade policy is one of the pillars on which a country’s international insertion strategy is based. Foreign trade policy cannot be divorced from the institutions and processes that shape it. The contents of a policy are important, but so are the formal aspects that allow those contents to flow. For a country the size of Uruguay, development is closely linked to how it manages to insert itself into other markets. In addition, Uruguay needs to sustain its economic and trade insertion based on agreements whose legal and institutional nature allows it to deploy a proactive and dynamic external trade policy that has a positive impact on competitiveness. As a result of the poor results obtained by the regional trade bloc throughout its history in terms of its external trade agenda and considering a change of government in Uruguay in March 2020, it is perceived that the country is at a turning point that can generate new opportunities. That is why, in this research, we have decided to delve into what institutional architecture we have and what need for modernization and adaptation it requires to be efficient, dynamic, proactive, and able to work in a coordinated manner.

Competing Logics of Integration: EU Trade Post-Brexit

The European Union’s (EU) external trade policy has long been championed by scholars and practitioners alike as one of the great accomplishments for European integration. The UK’s exit from the EU in 2020 offers many precedents; one of which is the current negotiation of a trade deal between the EU and a former important member of the single market. This paper outlines the trade negotiation process between the EU and the UK and the resulting Trade and Cooperation Agreement (TCA) against the backdrop of the COVID-19 pandemic to forecast the broader potential evolution of EU trade policy. The increasing visibility of nationalist and protectionist statements in various instances of political communication suggests a major shift in multilateral norms away from the liberal-international emphasis on heightened trade and interdependence. The implications for the EU external trade policy are a re-direction of efforts toward internal single market cohesion, and a more cautious approach to future potential trade agreements.

Will India's Disengaging Trade Policy Restrict It from Playing a Greater Global Role?

AbstractIndia's ambition of playing a prominent role in regional and global affairs has been particularly visible since the assumption of office by Prime Minister Narendra Modi in May 2014. The ambition has resulted in India's external engagement, abandoning the posturing of non-alignment for a more proactive multi-alignment strategy. Its efforts to engage with major powers such as the US and China, as well as other global middle powers such as Japan, the UK, and Australia, have been positioned on rapid economic progress, enabled by one of the fastest rates of growth among major economies. Attempts to expand global strategic influence, a natural outcome of robust economic expansion, should have seen India pursuing an aggressive outward-oriented external trade policy for increasing its share in global trade. India, though, has shown a marked resistance to open trade, including being reluctant to engage in regional and bilateral trade negotiations. This paper examines the dichotomy between India's desire to play a prominent global role and its aversion to open trade policies. Attributing the inward-looking approach to lack of competitiveness of Indian industry, absence of domestic pro-trade constituencies, and discomfort in negotiating new-generation trade issues, the paper argues India's quest for greater global strategic influence might be adversely affected by its restrictive trade policies.

Intra-Bloc Tariffs and Preferential Margins in Trade Agreements

We study, theoretically and empirically, how countries choose intra-bloc tariffs and preferential margins when they form Preferential Trade Agreements (PTAs). Our model indicates that countries should set systematically lower preferential margins when the bloc takes the form of a free trade area (where members set external trade policies independently), relative to a customs union (where members coordinate external tariffs). Moreover, in customs unions (but not necessarily in free trade areas) preferential margins should increase with the supply of partner countries and decrease with the level of preferential imports. These relationships reflect, respec-tively, the internalization of political-economy goals within the bloc and the desire to curb trade diversion. Using a sample that covers most PTAs formed by Latin American countries in the 1990s, when their popularity in the region shot up, we find empirical support for each of those predictions. These findings make clear that the type of PTA matters significantly for the bloc’s tariff structure. Our results carry out important implications for the welfare consequences and the social desirability of different types of PTAs.

The Eurasian Economic Union: integration without liberalisation?

ABSTRACT The Eurasian Economic Union (EaEU) came into being in 2015 with the ostensible goal of increasing integration among its member states. An implicit assumption behind this goal was to further trade liberalisation, at least within the bloc, as a means to promote additional trade. This paper assesses the development of the EaEU against this promise. Going beyond an analysis of the dynamics of mutual trade, the main focus of this paper is to understand the EaEU’s institutional processes, examining if the commitments and framework put in place by the EaEU could actually contribute to trade liberalisation. Focusing on the trade policies at the level of the EaEU and the political economy of protectionism, our assessment is not favourable. In particular, the charge that the EaEU remains a geopolitical rather than economic project rings true, as trade liberalisation has been halting in individual member states and across the bloc as a whole. This reality is further illustrated in the external trade policies of the Union, most prominently in trade agreements concluded with Vietnam, Iran, Singapore and Serbia, and relations with other major trade partners. The paper argues that, in line with often overlooked theoretical predictions, the institutional framework of the EaEU is not robust enough to ensure that integration processes actually deliver on their stated objectives.

Pitching trade against privacy: reconciling EU governance of personal data flows with external trade

Key Points: * Global data flows underpinning cross-border digital trade have moved centre stage in international trade negotiations. New trade law disciplines on the free flow of data are included in a number of international trade deals. * The European Union (EU) has a key role to play in the global governance of the protection of personal data. The EU’s strict data protection regime has sometimes been framed as a digital trade barrier. * This article juxtaposes the EU’s governance of fundamental rights to privacy and data protection with external trade policy on cross-border data flows. * The process of aligning EU’s normative approach to personal data protection with its external trade policy has been, until very recently, riddled with contradictions. * The article concludes with an assessment of the EU’s recent horizontal strategy on cross-border data flows and personal data protection in trade and investment agreements, which aims to align EU external policy.

Simultaneous equation model for Indian sugar sector

India is the second-largest producer and consumer of sugar and sugarcane-based products. Changes in sugar production in India affect domestic and global markets of sugar and related industries. In this paper, a simultaneous equation model is developed to understand the interrelationship between sugar supply and demand in India using time-series data over 44 years from 1970–1971 to 2013–2014. Three-stage least square regression model was used to estimate the elasticities of supply and demand equations of sugar. Results revealed that price of sugar affected sugar supply positively and demand negatively. Recovery rate and amount of cane crushed have positive relationship with sugar production. Changes in current year area harvested, yield and FRP determine the future area under sugarcane cultivation. Rainfall and technology have supported to increase the yield. Sugar consumption has direct relationship with population rate. These results suggest that technological development, external trade and appropriate sugar policy measures are the primary choice to resolve the sugar complexities in future.

Principals and transceivers: regional authorities in EU trade negotiations

ABSTRACT The EU conducts its external trade policy under close scrutiny by member-states. Yet, what about the role of regional authorities in federal states? To answer, we look at the principal-agent chain of delegation and explore to which extent regions with stakes and competencies in the matter exert control over EU policies. We distinguish three ideal-type roles regions can perform: principals in their own right, members of collective principals, and introduce the new concept of ‘transceivers’. A region can perform the role of principal with formal competencies, as does Flanders, which as one of multiple principals can withhold a Belgian decision. A region can also be one of a collective group of principals, as is the case for the region Hesse. Regions can finally perform the role of a ‘transceiver’ of information from policy-makers to constituencies (and vice versa), akin to the role of endorser, without formal framework for involvement – as does Scotland. Since regions and states alike depend on private sector information, two conclusions prevail. First, despite formal competencies, regions that are members of collective principals struggle becoming the sole interlocutor for the private sector. Second, despite lacking competencies, transceiver-regions are crucial interlocutors complementing member-state control over EU trade policy.

Лексичні засоби реалізації емоцій медіальної людини (на матеріалі епічної поеми «Kudrun»)

The article deals with the peculiarities of objectification of the emotions of a medial man in the German heroic epos. The medial man is known to have focused on dual reality, including objective and imaginary. Objective reality includes feudalism, serfdom, colonial policy, internecine wars, the dominance of the church, the struggle between the papacy and the empire, the Crusades in the Middle East, the forcible Christianization of Slavic tribes, social differentiation of the people in the rich and poor, the establishment of towns, the organization of external trade, weak domestic and external policy, etc., the imaginary reality receives a mythopoetic interpretation. Comparing himself with both worlds, a man measures them through his body, activity, space, physical strength, operating on the mythological-religious type of consciousness. Against this background, human emotions are the result of a combination of sociological, religious, economic, political, psychological and cultural factors. The mechanism of their transition is metaphor and metonymy. Three categories of emotions were identified: negative, positive, indefinite. Negative emotions are identical to grief, resentment, hostility, emotional pain, emotional suffering, fear, doubt, anger, positive emotions are equivalent to joy, happiness, satisfaction, pride, affection, surprise, gratitude, love, interest, indefinite emotions are presented through negators, deny hatred, happiness, soul, loneliness, guilt, sadness, anger, disfavor. The activators of these emotions are evolution and attribution. The intensity of emotions is determined by the specifics of upbringing, origin, age, gender, individual psychological properties of the individual (type of temperament), subject / communicative situation. It was found that the lexical means of realization of the lion’s share of emotions appeal to the word, proper name, nickname, and phrase. The emotion of interest can be expressed by an interrogative sentence with or without a question word. On a lexical and grammatical basis, a word is relevant to a noun, adjective, adverb, verb, exclamation, on the structure – these are root and derivative elements. It has been found that the names of emotions of happiness, joy, resentment, grief, contentment, pride, surprise, love, shyness, anger, heartache and indefinite emotions are binary phrases, emotions of cruelty, anger, evil – ternary, respectively.

Reforma del comercio agrícola mundial: Inserción del sector agrícola de México bajo el TLCAN y el Acuerdo sobre Agricultura de la OMC, de 1994 a 2012

El capítulo agrícola del TLCAN y el Acuerdo Sobre la Agricultura de la OMC constituyen influencias externas de la reforma del sector agrícola de México como proceso histórico en constante transformación que moldean los términos de la operación económica del sector en un contexto de liberalización y apertura comercial. El trabajo sostiene que existe claramente una influencia de la política comercial externa, sobre la política agrícola interna y sus desenlaces en el marco institucional que conforma el modelo de regulación sectorial. La metodología de análisis revisa lo pactado en los ejes de “acceso a mercados”, “apoyos al productor” y “subsidios a la exportación” de la negociación dentro de estos tratados, y analiza el margen de acción y las decisiones de intervención estatal en cada uno de ellos en el periodo 1994-2012. Las conclusiones arrojan que estos dos acuerdos operan de manera complementaria y que existen rubros que otorgan al Estado un ámbito de acción que no ha sido utilizado suficientemente para intervenir en políticas que impulsen el desarrollo sectorial. Se analizan brevemente las características del orden alimentario internacional vigente, retomando los teóricos de la Economía Política Internacional (Gilpin, 1987, McMichael, 2009, Polanyi, 1957, Gray, 2000).