Multilateral Free Trade Research Articles

How U.S. Agriculture Will Fare Under the USMCA and Retaliatory Tariffs

A hallmark of the Trump Administration has been to reverse the post-World War II consensus on lowering of trade barriers and a commitment towards multilateral free trade, towards a more protectionist and perhaps mercantilist position vis-A -vis trade policy. One of the Administration's first actions in this regard was the decision to leave the Trans-Pacific Partnership (TPP) agreement, followed thereafter by raising tariffs on steel and aluminum imports. President Trump left no doubt where he stood on the North American Free Trade Agreement (NAFTA), which he often stated was the worst trade deal maybe ever signed anywhere. The administration's actions on trade are likely to have significant implications for U.S. farmers as these actions target three of the largest markets for U.S. agricultural exports ”Canada, China and Mexico accounting for some 44% of U.S. agricultural exports representing an average of $63 billion from 2013 to 2015.

How Differing Trade Policies May Impact U.S. Agriculture: The Potential Economic Impacts of TPP, USMCA, and NAFTA

In the last two years, the United States has reversed the post-World War II trend toward the lowering of trade barriers and a commitment towards multilateral free trade. Citing a need to “level the playing field” and hold trading partners accountable to their commitments, the current Administration has moved towards a more protectionist and perhaps mercantilist position vis-a-vis trade policy. One of the Administration’s first actions in this regard was the decision to leave the Trans-Pacific Partnership (TPP) agreement, followed thereafter by raising tariffs on steel and aluminum imports. The Administration’s actions on trade are likely to have significant implications for U.S. farmers as these actions target three of the largest markets for U.S. agricultural exports – Canada, China and Mexico – accounting for some 44%, and representing an average of $63 billion, of U.S. agricultural exports 2013 to 2015. Commissioned by the Farm Foundation Farm Foundation Forum (March 4, 2019) Forum audio Food and Agricultural Trade Resource Center Farm Foundation Forum (October 31, 2018) van der Mensbrugghe Interview

US Withdrawal from the Trans-Pacific Partnership: Prospects for China

Underneath the first executive stroke exercised by President Donald Trump, the US has withdrawn the Trans-Pacific Partnership (TPP). Trump has his own logic of resurrecting the US economy, creating more jobs, protecting industries, arresting currency devaluation by the Asian countries and banning the corrupt practices of dumping cheap imports from the Asian trading partners, notably by China. However, the Asian partners think otherwise. They were demanding for the great opportunities offered by the US market and consumers. For them, the US withdrawal is a severe setback to the robust economic ties with the US and for the multilateral Free Trade Agreements (FTAs) in the Asia-Pacific region. As the TPP was considered to jointly target the Chinese economy by the 12 partners. On the contrary, the US withdrawal, furnished with an unprecedented leverage to China to continuously grow in the 21st century and to overcome its economic slowdown while further expanding its economy.

Economic implications of the Comprehensive and Progressive Agreement for\xa0Trans-Pacific Partnership (CPTPP) on Pakistan: a CGE approach

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is one of the recently negotiated multilateral free trade agreements which aims to establish a free trade agreement between 11 economies (after US exit) on both sides of the Pacific. The formation and implementation of this proposed partnership is a valid threat for other economies, particularly for Pakistan. Pakistan will likely to suffer from this agreement due to trade diversion of textile and apparels in favor of the CPTPP members. The reason can be extended in terms of the likely ‘yarn forward rule,’ according to which, it is obligatory for the CPTPP member economies to import all the components of manufactured products from other CPTPP member economies. So, the implementation of the CPTPP will have an impact on global supply chain of textile and apparels. With this backdrop, this study evaluates the likely impacts of the CPTPP on the regional trade flows and other macroeconomic aggregates of Pakistan using a global computable general equilibrium model. The economy-wide results show the proposed CPTPP will have a negative impact on Pakistan’s real GDP, sectoral exports and imports and at household level. However, if Pakistan joins CPTPP, there is an overall positive impact on Pakistan’s economy. Thus, keeping in view Pakistan’s ideal geographical and strategic location and its potential to be a transit economy with a junction of south Asia, west Asia and central Asia, this study suggests that Pakistan’s proposed entry to CPTPP will not only yield a wide gain to the region but will reduce the gap between poor and rich in Pakistan and hence will have a positive impact on overall income inequality in Pakistan.

How Free Trade Agreements Affect Exports and Imports in Vietnam

The important year of 1995 marked Vietnam’s first integration as a member of ASEAN. By 2016, Vietnam had negotiated, signed, and implemented sixteen free trade agreements. They include both multilateral and bilateral free trade agreements such as the China-ASEAN, Vietnam-Chile, and Vietnam-Japan agreements. By signing free trade agreements Vietnam can increase trade flows in bilateral and multilateral developed-country FTA scenarios. Trade creation and diversion can be found in multilateral developing-country FTA scenarios and the author finds the impacts of each free trade agreement is different if analyzed for each 2-digit commodity.
 Keywords
 Free trade agreement, trade, import, export.t commodity
 References
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Market access and technology adoption in the presence of FDI

This paper theoretically investigates whether improved access to the domestic market speeds up new technology adoption by foreign firms. Foreign firms choose between exporting and foreign direct investment (FDI) to serve the domestic market. If two firms compete in the domestic market, multilateral liberalization of FDI or the realization of multilateral free trade may deter or delay technology adoption, while they always promote and accelerate technology adoption if only a single firm serves the domestic market. Technology adoption can be quickest and consumer welfare greatest when the fixed cost of FDI and the trade costs are neither very high nor very low. Preferential liberalization of FDI promotes the technology adoption of the targeted firm but may not benefit consumers because it discourages technology adoption of the non-targeted firm.

Do South–South preferential trade agreements undermine the prospects for multilateral free trade?

AbstractDue to trade diversion, there have been concerns expressed over the proliferation of preferential trade agreements (PTAs) that include South countries. In this paper, we compare welfare across different geographic configurations of bilateral free trade agreements (FTAs) and customs unions (CUs) and examine their implications for the stability of multilateral free trade. While North–North PTAs do tend to yield higher global welfare than South–South PTAs, a single South–South FTA may make free trade more sustainable than any other single agreement. With pre‐existing North–North agreements and a large enough cost asymmetry between regions, an additional South member or a new South–South agreement always makes free trade harder to sustain.

The Great Shift of Globalization: From the Transatlantic Axis towards China and Emerging Asia

Since the mid-2010s, global economic integration, as measured by world trade, investment and migration, has come to a standstill. During the global crisis of 2008–2009, the negative demand shock in the advanced West and the drastic trade plunge in the emerging East highlighted the increasing inter-dependency in the global economy. Nevertheless, in the past few years, world trade has been falling; world investment continues to stagnate while slower migration has given rise to elevated global displacement and refugee crises, despite peace time conditions. In the Trump era, the eclipse of the U.S. postwar trading regime is accompanied with the rise of new protectionism that has a historical precedent. While China seeks to promote globalization, the White House is moving from multilateral free trade toward bilateral deficit targeting, despite its ongoing secular rebalancing and associated cyclical fluctuations. Although the first Trump-Xi Summit suggests that there may be more room for policy compromises than initially anticipated, the eclipse of U.S. globalism will make any reconciliation difficult. Nevertheless, the global economy is now amid a secular transition that is characterized by increasing South-to-South trade, investment and migration. In this new era, globalization, responsibility and accountability in the international community can no longer be subject mainly to the interests of major advanced economies. While global economic integration was initiated by advanced economies in the 20th century, it will be completed by emerging economies in the 21st century. The drivers of globalization are moving from the transatlantic axis to China and emerging Asia.

Avoiding the Labors of Sisyphus: Strengthening U.S.-India Relations in a Trump Administration

Avoiding the Labors of Sisyphus:Strengthening U.S.-India Relations in a Trump Administration Ashley J. Tellis (bio) For close to two decades now, the transformation of U.S.-India relations has been a bipartisan project in Washington. It has also been uniquely successful, as alternating Republican and Democratic administrations have worked with governments led by both the Bharatiya Janata Party and the Congress Party to exorcise the ghosts of old corrosive Cold War disagreements. As a result, the United States and India, once sharply divided by the issues of alliances and alignment, today routinely declare their commitment to a durable strategic partnership. Former Indian prime minister Atal Bihari Vajpayee, arguably the progenitor of the new collaboration, once boldly declared the United States and India to be “natural allies.”1 At that moment in 1998, the vision of fraternity seemed like fatuous rhetoric. But to the credit of Vajpayee’s successors (Manmohan Singh and Narendra Modi) and their U.S. counterparts (George W. Bush, in particular), his ambition was brought to fruition rapidly and productively enough for Barack Obama to assert that U.S.-India ties could become the “defining partnership” of the century ahead. The first section of this essay discusses the potential implications of the “America first” agenda that Donald Trump outlined during his presidential campaign for U.S.-India relations and regional security more broadly. The second section then assesses several challenges facing the bilateral relationship. The Outlook for U.S.-India Relations during the Trump Administration Although it is not inevitable, Donald Trump’s election as the 45th president of the United States could interrupt the dramatic deepening in U.S.-Indian ties to the disadvantage of both nations. If this outcome were to materialize, it would not be necessarily because Trump harbors [End Page 43] any particular animus toward India. During the election campaign, he admittedly did complain that “India is taking [U.S.] jobs” and that the United States was being “ripped off” by many Asian countries, including India.2 But he also declared that he was “a big fan,” and that “if…elected President, the Indian and Hindu community will have a true friend in the White House.”3 The variety of positions expressed by Trump suggests that the potential threat to the continuing transformation of U.S.-India relations comes less from his views on India—which are probably unsettled—than it does from his iconoclastic convictions about the relationship between the United States and the world. Throughout the campaign, Trump emphatically affirmed his opposition to the existing international order, arguing that the United States, far from being its beneficiary, was in fact its principal victim. To remedy the inconveniences flowing from this pernicious “globalism,” his America-first campaign promoted an agenda that rejected multilateral free trade agreements such as the Trans-Pacific Partnership, demanded that allies bear a greater share of the burdens associated with their defense, and eschewed U.S. military intervention in virtually all instances other than to avert direct threats to the U.S. homeland. While many elements of this nationalist agenda are understandable—even defensible—the worldview it represents diverges from that which initially cultured the evolving U.S.-Indian partnership. Going back to the earliest years of the George W. Bush administration, the United States’ rapprochement with India was premised on the assumption that the principal strategic problem facing both countries consisted of the rise of China and the threat it posed to both U.S. primacy and Indian security—not to mention the safety of the United States’ other Asian partner and allies—simultaneously. Since it was assumed that the United States would subsist as the principal protector of the liberal international order, and the Western alliance system in particular, even in circumstances where the containment of China was impossible because of the new realities of economic interdependence, the Bush administration slowly gravitated toward a strategy of balancing China by building up the power of key states located on its periphery. [End Page 44] India’s large size, its geographic location, and its own rivalry with China made it the ideal partner in such a strategy. Hence, it was not surprising that the Bush administration...

Roundtable: The Trump Presidency and Southeast Asia

The accession of Donald Trump to the US presidency has triggered serious discussion within Australia's policy community over the future of Australia-US security relations and Australia's role in Southeast During his first days in office, President Trump pulled out of the Trans-Pacific Partnership (TPP) trade deal, an integral part of his predecessor's pivot strategy towards Asia and an initiative strongly supported by the Australian government. The United States' withdrawal from the TPP has led various Australian commentators to question Washington's commitment to maintain a viable economic and strategic presence in the Asia Pacific. (1) Such uncertainty is aggravated by Canberra's growing disquiet over intensified tensions between China and the United States in the South China Sea. President Trump's posture of challenging Chinese sovereign control over its man-made islands in the South China Sea has increased Australian concerns that it could soon face the nightmare of being compelled to choose between its largest trading partner--China--and its long-term security ally--the United States--if the two Great Powers were to clash militarily in Southeast Asia's critical maritime littorals. (2) ASEAN Fragility and Australia's Concerns Shortly after Trump's election victory, former Australian Prime Minister Paul Keating called for Australia to cut the tag of unmitigated support for US foreign policies and recognize that our future is basically in the region around us, in Southeast Asia. (3) Since its inception in 2011, successive Australian governments had extended unqualified backing to the Barack Obama administration's pivot strategy which was largely designed to reassure members of the Association of Southeast Asian Nations (ASEAN) that Washington was committed to playing a vigorous and sustained strategic and economic role in Southeast Asia in the face of China's rising power. (4) Trump's decision to withdraw America from the TPP undercut Australia's commitment to regional order-building by pursuing multilateral free trade arrangements and promoting an inclusive approach to shaping future rules for security conduct in Comments by Trump's nominee for US Secretary of State, Rex Tillerson, during his confirmation testimony before the US Senate Foreign Relations Committee--that the new administration would reserve the prerogative to resort to military force to oppose Chinese territorial claims and would ask US regional allies to provide backup for any such military operation--exacerbated Australian uncertainties about future US policy directions. Australian Foreign Minister Julie Bishop reiterated that her government's position would remain consistent: the South China Sea dispute should be settled by international law. For the Australian government to respond to such hypothetical situations prematurely, Bishop noted, would not be appropriate. (5) However, Keating and other Australian critics warned that any such US action would be tantamount to initiating a Sino--American war that would disrupt Australia's vital sea lines of communication (SLOCs), devastate its economy, and render global security null and void. Australia, he insisted, should tell the Trump administration from the get-go that it would not be a part of such adventurism. (6) ASEAN's brittleness in the absence of a regionally engaged United States ranks as perhaps Australia's most fundamental concern about Southeast As ASEAN's self-appointed locomotive, Indonesia's willingness to push back against China's maritime expansion southwards--in conjunction with China's territorial claims embodied in the so-called line--is viewed by Australian policy planners as increasingly critical. While Indonesia is not formally involved in the South China Sea dispute, and its control of the geographically critical Natuna Islands has not been formally challenged by Beijing, some Chinese maps have demarcated Indonesia's 200 nautical miles exclusive economic zone (EEZ) as being partly inside the nine-dash line. …

Brexit: Weighing Sovereign Gains and Losses

Theresa May has promised to make Britain once again ‘a sovereign and independent country.’ That is not as simple as it sounds. Brexit is bound to be accompanied by both gains and losses in sovereignty. By leaving the European Union the UK loses the co-decisional powers it has by virtue of participating in the EU’s supranational institutions. Whether the freedom gained can be used to enter into compensatory bilateral and multilateral free trade agreements, as Brexit proponents argue, is anything but certain. The purpose of this paper is to analyze the situation more closely. It begins in Part I with a definition of sovereignty, and in Part II goes on to examine the political situation prevailing in the UK and the EU. Part III, by looking at the upcoming negotiations, is an attempt to weigh de jure and de facto gains and losses. It is doubtful whether the massive Brexit effort will pay off. At the end of the day, Great Britain will hardly be more sovereign and independent.

Taiwan’s Challenges in the Changing Landscape of Regional Security and Economy in the Asia-Pacific Region after the Cold War

After the Cold War, international politics and economy of the Asia-Pacific region has changed tremendously. Regional economic integration accelerates up with the rapid increase of bilateral and multilateral free trade agreements between regional countries, whereas regional security is continually confronted with conflict flashpoints, including regional maritime sovereignty disputes. This article provides the recent development ofregional economy and security with emphasis on maritime disputes in East China Sea and South China Sea and Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) and discusses the possible challenges to Taiwan in these issues.

China and Trans-Pacific Partnership Agreement countries: Estimation of the virtual water trade of agricultural products

The Trans-Pacific Partnership Agreement (TPPA) is one of the most important multilateral free trade and investment agreements in recent years. Although as a major economic power in the Asia-Pacific region, China has yet to join the TPPA. Existing research on China and TPPA countries has mainly been conducted from political and economic perspectives. This paper first reports the relationship between China and TPPA countries from the perspective of virtual water trade of agricultural products and completes a diachronic analysis from 2001 to 2014. The results indicate that China was in virtual water trade surplus with TPPA countries for agricultural products and that the surplus had an expansion trend. The exported virtual water totalled 7.47 billion m3/y, whereas 63.45 billion m3/y was embedded in imported products. Malaysia was the biggest virtual water surplus partner of China and Japan was the biggest virtual water deficit partner. Additionally, the proportion of the grey water footprint of agricultural products that China exported to TPPA countries was about five times higher than that imported from TPPA countries. It reflected the difference of agricultural science and technology. Moreover, the products structure of China's virtual water trade was not reasonable and was excessively focused on several products. Finally, with respect to environmental and water allocation ethics, TPPA countries were classified into four types in terms of net import and water abundance: mutual benefit countries (Australia, Canada, New Zealand, the United States, Malaysia and Chile); unilateral benefit countries (Peru and Brunei); supported countries (Japan and Singapore); and double pressure countries (Mexico and Vietnam). With respect to the virtual water trade of agricultural products, there is a close relationship between China and TPPA countries. The virtual water trade promotes the sustainability of water resources and the findings are conducive to the adjustment of trade structure to achieve optimal state of ecology, economy and politics.

The Uruguay Round: It's Repercussion for India

To ignite the world trade, a number of global economic institutions have been formed to carry out multilateral free trade in the world of multilingual and multi religious community. General Agreement on Tariff and Trade is one of them, which was signed on 30.10.1947. The fundamental aims of GATT were to liberalize world trade negotiations among member countries. Therefore, reduction of tariffs on trade on manufacturers was adopted as major goal of GATT. One of the major activities of the GATT since its inception has been launching of a series of rounds of negotiations. The first one was Geneva Round (Switzerland, 1947) & the last one is Uruguay round (Punta del Este, 1986). Almost in all the rounds some trade related barriers have been tried to remove for free trade among countries.India is one of the signatory of Uruguay Round (UR). The basic thrust of UR Final Act attack was that the Indian government has surrendered its sovereignty under pressure from the US government and the multinationals. There is no doubt that some of the criticisms were politically motivated and value loaded.Any comprehensive analysis of the implications of the Uruguay Round for India would have to cover all-important concerns. However the present study is an attempt to delineate only the major concerns regarding the implication of Uruguay Round agreement for India concerning to Reductions in tariff, Agreement on Anti-dumping, Agreement on TRIMS, Agreement on Agriculture Agreement on Services, Agreement on TRIPS, Agreement on Textile and Clothing, Social causes in GATT, Dispute settlement body. Finally an attempt has been made to suggest the future avenues for further productive dialogues in future ministerial councils.

Mega External Preferential Trade Agreements and Their Impacts on Indian Economy

This study examines the impacts on India of three mega external preferential trading agreements (PTAs) from which the country is excluded using the Global Trade Analysis Project (GTAP) model combined with POVCAL poverty analysis tool. The simulation results show that each of these PTAs cause considerable trade diversion. However, the impacts on India’s trade flows, domestic output, returns to factors, aggregate welfare, inequality and poverty levels are rather small. In contrast, multilateral trade liberalization has significantly large and favourable impacts on all these variables. In particular, welfare improves by 1.7 per cent of GDP, inequality falls by over half percentage point and poverty head count lowers by 12.3 per cent over base levels under a multilateral free trade scenario. These results suggest that the country should continue with its efforts for achieving a multilateral trade agreement. At the same time, the country should hedge against the possibility that a global trade agreement does not materialize. One way to protect the country’s interest is to aggressively pursue preferential trading arrangements in parallel with key members of these three mega PTAs. This is likely to ensure that the country does not lose market share due to preference erosion.

The Best of Both Worlds? Free Trade in Services and EU Law on Privacy and Data Protection

The article focuses on the interplay between European Union (EU) law on privacy and data protection and international trade law, in particular the General Agreement on Trade in Services (GATS) and the WTO dispute settlement system. The argument distinguishes between the effects of international trade law in the EU legal order on the one hand, and, on the other hand, how EU data protection law would fare in a hypothetical challenge under the GATS. The contribution will apply international trade law and the general exception in GATS Article XIV to typical requirements stemming from EU data protection law, especially on transfers of personal data to third countries. The article enumerates the specific legal risks for defending EU law on privacy and data protection and explains the practical implications of its hypothetical challenge under the GATS. These insights could be useful for the EU’s negotiators of the future bi- or multilateral free trade agreements, notably the Transatlantic Trade and Investment Partnership and the Trade in Services Agreement.

Preferential versus multilateral trade liberalization and the role of political economy

In this paper we analyze the effect of the freedom to pursue preferential trade liberalization, permitted by Article XXIV of the GATT, on country׳s incentives to participate in multilateral negotiations and on feasibility of global free trade. We present a model, in which countries choose whether to participate in preferential or multilateral trade agreements under political pressures from domestic special interest groups. We show that heterogeneity in political preferences across countries plays an important role in determining the relative merits of preferential and multilateral approaches to trade liberalization. On one hand, the opportunity to liberalize preferentially may be necessary to induce countries with strong political motivations to participate in multilateral free trade negotiations. On the other hand, when countries share similar political preferences, multilateral free trade that would have been politically supported otherwise becomes unattainable if countries can pursue preferential liberalization.

Foreign Trade Policy in Realisation of Economic and Political Interests

In this research work, author focuses on the analysis of the theory of foreign trade policy and important political and economic interests. Realistic point is important trends in the trade regime. The decisions taken by the representatives of the governments participating in the World Trade Organisation (WTO) are, to a significant degree, influenced by various lobbies, such as organisations and unions of food producers or other non-governmental organisations, including trade unions. The main objective of the research task is to give a comprehensive analysis of the international trade policy. The particularly main concern the political economy models of foreign trade policy, protectionistic pressures in different political system, the level of protectionistic pressures, food producer pressures, international trade liberalization and environmental protection, bilateral tendencies in the foreign trade policy. It must be emphasis that on a theoretical level, understanding the choice of trade policies between liberalizm and protectionisme is very important. Despite the undeniable benefits of the multilateral WTO forum for trade liberalisation, the rapid increase of North-South bilateral and multilateral Free Trade Areas (FTAs) begs a systematic explanation for why some forums are prioritized relative to others.

Endogenous formation of free trade agreements in vertically related markets

We study the endogenous formation of free trade agreements (FTAs) in a symmetric three-country model with vertically related markets characterized by Cournot competition. We analyze the coalition-proof Nash equilibria in an FTA formation game in which each country forms an FTA with one, both, or none of its trading partners. We show that multilateral free trade is the unique stable equilibrium of the FTA formation game. In other words, FTAs act as building blocks for multilateral trade liberalization in the presence of vertical trade structures.

New regional economic partnerships under negotiation

Two potentially competing trading blocs are being negotiated between countries of the Asia Pacific to boost world trade in the absence of progress with the Doha Round of World Trade Organization negotiations. One is the Trans–Pacific Strategic Economic Partnership Agreement (TPP) in which all negotiating parties are also members of Asia–Pacific Economic Cooperation (APEC). This paper outlines the two proposals and discusses some of the expectations of the negotiating parties. It is clear that the TPP concept has led to a number of concerns being raised by the negotiating parties, invitee countries, and external parties including those with vested interests in the outcome of these negotiations. The RCEP concept which is essentially a large multi–lateral free trade agreement raises less concern. The paper then discusses the dilemma facing Thailand which for centuries has been a trading nation and was a founding member of the World Trade Organization. Subsequently Thailand has negotiated a number of bilateral and multilateral free trade agreements. As a leading member of Association of South East Asian Nations (ASEAN) Thailand has sought to engage in free trade agreements with its ASEAN neighbours and their external trading partners.