Free Trade Agreement Negotiations Research Articles

Linking GVC with Trade Dynamics between India and the United Kingdom: A Sector-Level Analysis

In the foreseeable future, the potential for deeper integration into the global value chain (GVC) between India and the UK lies within the establishment of a prospective free trade agreement (FTA). Such an agreement holds promise in facilitating market access, thereby fostering increased participation in the GVC for both countries. This study delves into nine specific sectors, carefully examining the factors that shape India's export flows to the UK within the framework of GVC. This research raises an important question: how will the trade dynamics evolve beyond tariff easing and trade liberalisation, emphasizing the development of robust value-added linkages between these sectors? The findings reveal the pivotal role of GVC participation in sectors like textiles, clothing, and base metals, increasing India's exports to the UK. Conversely, sectors like chemicals and pharmaceuticals thrive on factors such as intensive margin and research and development expenditure, augmenting export performance. These insights underscore the necessity for nuanced, sector-specific approaches in crafting trade policies and conducting FTA negotiations, unravelling the intricacies of trade dynamics between India and the UK, and laying the groundwork for mutually beneficial economic cooperation in the future.

Post-Brexit trade policy in the UK: placebo policy-making?

ABSTRACT Trade policy and negotiations have lain at the heart of the Brexit process. Initial UK trade policy has been characterised by: (1) the need to limit the impact of changes in trading relations (mainly with the EU) to minimise challenges for businesses and the possibility of economic losses; (2) a strong ideological commitment to free trade, and related to that; (3) symbolic and ‘placebo’ actions designed to show that the UK can enact an independent trade policy. Negotiation of free trade agreements (FTAs), thus, became a priority of trade policy. This article explores how approaches to FTAs have evolved, focusing specifically on post-Brexit FTAs with Australasia. Overall, the desire to complete speedy agreements has at times trumped business and societal interests, and precluded the development of a coherent long-term UK FTA vision, revealing the symbolic motivation of being seen as ‘delivering Brexit’ behind the initial years of post-Brexit trade policy.

An Analysis of India's Revealed Comparative Advantage in Merchandise Trade with Australia

India's export sector has considerably improved since 1991 economic and trade reforms. It has gained momentum after the signing of various trade agreements with several countries. India and Australia started free trade agreement (FTA) negotiations over a decade ago in 2011 and finally concluded a landmark Economic Cooperation and Trade Agreement (ECTA) on 2nd April 2022. This study examines India's trade relations with Australia using the revealed comparative advantage (RCA) index and trade intensity index (TII) for exports and imports, to determine the patterns of exports and areas of specialisation of the two countries. The findings suggest that the bilateral trade between India and Australia has not strengthened. However, India enjoys a comparative advantage in several product groups, which fall into the category of primary goods, low-technology manufacturers, and manufactured goods as well. Overall, the RCA is much higher for India's exports than that for Australia's exports to India. The study finds that India has trade potential in several product groups with Australia and efforts should be made to bring greater benefits from the trade agreement for both countries in the years to come.

Public Support: A Missing Variable in the Trade Policy Equation

As Canada considers launching free trade agreement (FTA) negotiations with Ecuador, the government wants to know what Canadians think. Ottawa makes it easy for citizens to weigh in, inviting Canadians to “join the discussion” and submit their “views, reflections and priorities” on the potential FTA through a Global Affairs Canada web page that is clear, inviting, and user-friendly. Under a section titled, “Who should participate?” the first answer given is “individuals.” Although the Biden administration has been clear that it will not seek new FTA negotiations, taking a page from Canada’s public consultation playbook may be instructive, at least when it comes to understanding what Americans really think about trade and trade agreements. The conventional wisdom emanating from Washington is that new trade agreements are political nonstarters. Even trade policy observers who believe that the American public should support trade and trade agreements often claim that “the politics are too difficult.” But whose politics are they talking about?

Negotiating Capital and the EU-Japan Economic Partnership Agreement

The 2019 European Union (EU)-Japan Economic Partnership Agreement is, so far, the EU’s largest bilateral free trade agreement. While the agreement itself is an example of the growing strength of the EU-Japan relationship, it is also an example of how two vastly different trade regimes can overcome entrenched structural and administrative styles to reach a consensus. This paper analyzes one of these barriers: negotiating capital. This concept represents the political economy of how trade negotiators utilize their legal expertise, negotiating flexibility, and limited resources to maximize free trade agreement outcomes. However, trade negotiators have differing amounts of negotiating capital, which depends on their home states’ structural and administrative constraints and how the trade negotiators define and develop their trade expertise. The EU’s and Japan’s contrasting structural and administrative approaches to trade negotiations and how trade experts define and develop their expertise lend a unique opportunity to understand how changes in negotiating capital can alter free trade agreement negotiation outcomes. Ultimately, the EU’s inclusive, quasi-federal structure and the negotiators’ need to consider the limitations on their trade mandate show how their negotiating capital is relatively limited and translates into a more integrated agreement text, i.e., provisions on public opinion. On the other hand, Japan’s top-down reformist trade regime leads to a more reactive strain of negotiating capital relying heavily on adherence to hierarchy and limited inclusiveness, resulting in agreement commitments that are generally weak and narrow. Negotiating capital is an important reality that all trade negotiators face. It is politically and strategically important for parties to understand how these various factors’ political economy impacts free-trade negotiations and outcomes.
 Received: 10 May 2022Accepted: 18 July 2022

Systematic literature review on trade liberalization and sustainable development

This paper compiles a systematic review of research papers that identify the effect of international trade and trade liberalization policies on socio-economic targets linked to the sustainable development goals (SDGs). A comprehensive overview of the existing literature is provided, focusing on papers that identify causality and covering topics that have not been systematically analyzed previously. While existing literature reviews have focused on the effects of trade openness on economic growth, its consequences for other social- and sustainable-related goals have received much less attention. We restrict the review to social- and sustainability-related SDGs and classify the empirical findings in four categories. First, we analyze the extent to which trade affects poverty (SDGs-1, 2, 8). The findings indicate that trade increases average incomes in most cases and that trade reforms that include the agricultural sector generally reduce poverty. Second, we examine labor market outcomes and analyze how international trade affects wages, unemployment, and informality (SDGs-1, 5, 8). We find that with more trade, employment and wages increase in the most dynamic sectors, but decrease in others with increases in informality in some developing countries. The third bloc documents papers that evaluate whether trade is good or bad for environmental quality, evaluating how trade reforms and increases in openness affect the environment at the macro and micro level (SDGs-3, 7, 11, 12, 15). The reviewed research indicates that the effects of trade on environmental quality are complex and depend on the sectors that liberalize and the existence of environmental standards linked to trade agreements. The fourth category concerns the effect of trade flows on food security, hence questioning whether opening the economies could contribute to better performance in SDG-2 and SDG-9. In this area, the literature is still incipient and deals mainly with correlations. More research is needed to better define the concept of food security and related indicators and to collect better data. In summary, this systematic review should guide policymakers in developing countries in the decision-making process related to trade and industrial policies. The main recommendation is to consider the main findings when designing new trade policy strategies concerning both unilateral trade liberalization and free trade agreements negotiations.

THE LONG-DRAWN-OUT FREE TRADE AGREEMENT NEGOTIATIONS BETWEEN THE EUROPEAN UNION AND INDIA: A TWO-LEVEL GAME ANALYSIS

This article examines the arduous free trade agreement negotiations between the European Union and India. The talks, which started in 2006 and were suspended for a while, could not lead to an agreement in more than 15 years. By employing the two-level game theory, developed by Robert Putnam, this article attempts to explore the role of the domestic realm on the extension of the negotiations. Therefore, it investigates the win-sets of the negotiating parties, by focusing on the domestic factors such as interest groups, political structure and political culture in order to determine which of these factors make it difficult to find common ground. On the basis of the said analysis regarding the free trade agreement negotiations between the European Union and India, this article further aims at finding out why trade negotiations pursued by the European Union usually require a long period of time.

Sub-Federal Deliberative Exclusions and Free Trade: Mexico’s Centralized Federalism and Weak Institutional Capacities

This article explores the relationship between trade and sub-federal deliberative exclusions in the case of Mexico. Mexican centralized federalism explains the absence of sub-federal governments (SFGs) in the negotiations of free trade agreements, even if they are responsible for dealing with trade outcomes at the local level. This article argues that sub-federal deliberative exclusions are not only evident under the federal allocation of powers but also by their limited institutional capacities (restrictions in budgets and personnel, lack of professionalization, and absence of inter-institutional coordination). This is the case of NAFTA, the USMCA, and the Mexico-European Union Free Agreement in its original and recently renegotiated versions. Despite constraints by federalism and institutional limitations, SFGs engage in trade and investment promotion through inter-institutional agreements (IIAs) allowed by secondary legislation.

EU aid for trade as contested trade policy intervention: The case of the EU-MUTRAP project in Vietnam

Abstract This paper explains the EU's Aid for Trade (AfT) and trade relations with Vietnam, and examines how EU AfT influences Vietnam's trade policy reform. It provides an analysis of EU AfT as a contested trade policy intervention by using the results of the EU-MUTRAP project in Vietnam. The finding is that EU AfT can interfere as an “external impacts” on Vietnam's trade policy reform. Based on the priorities of EU trade policies towards Vietnam, the EU uses AfT projects to support and change the Vietnamese trade environment. The paper partially proves the contribution of the EU-MUTRAP on the EU-Vietnam Free Trade Agreement negotiations and implementation.

Trade strategy of European Union and the impact of EU-South Korea FTA

When the global financial erupted, European Union (EU) had suffered from unprecedented economic downturn. Unemployment soared and consumption declined, causing negative effects on Europes per capita income growth. EU then started to realize the need for the utilization of Free Trade Agreements (FTAs), to alleviate the low growth trend of European economy. As the first initiative of EU Global Strategy, which was intended to significantly expand EUs export markets to offshore countries through FTAs, South Korea was selected as one of the first targets. After eight rounds of FTA negotiations started from 2006, FTA between EU and South Korea came into effect in 2011. Using UN Comtrades export and import data from 2000 to 2017, this paper discusses about changes in trade patterns of EU and South Korea before and after the EU-South Korea FTA, and empirically analyzes the impact of EU-South Korea FTA. The results of our regression models show that the FTA indeed has positive effects on growth of both trade volume and trade share in the world, between South Korea and the EU, with significance. The fact that there were increases not only in commodity trade, but also in service goods trade and foreign direct investment suggests that the virtuous cycle of EU-South Korea FTA can expand to related areas. Furthermore, as South Korea is East Asias FTA-centered country which signed FTAs with both US and China, the two largest economies in the world, the indirect benefits from the EU-South Korea FTA will become greater for the EU. This advantage is expected to help creating a virtuous cycle that induces economic growth of EU through increases in trade, productivity, and job creation.

ISDS Reform in the Context of China’s IIAs

Abstract The investor–state dispute settlement mechanism enables investors to seek remedies in the face of a violation of related international investment agreements, which are crucial to maintaining the standards of investor protection that have been consented to by the contracting parties. On the other hand, more and more problems in the system have been exposed as the number of investor–state dispute settlement cases has increased. These range from substantive issues, such as the treatment granted to investors, to procedural ones, such as cost management and related procedures. Debates on investor–state dispute settlement reform have led to various options for reshaping the relevant mechanisms. Amid the new trend of investment liberalization and facilitation, China is undergoing a new round of bilateral investment treaty revision and free trade agreement negotiation. How the investor–state dispute settlement process is to be framed boils down to how China assesses its own interest vis-à-vis its partners and how it prioritises its objectives in international investment agreement negotiation with its partners. It is submitted that China should take a calculated risk on the investor–state dispute settlement provisions in international investment agreements with adequate consideration of competing interests.

Toward an ASEAN-EU FTA: Examining the Trade and Sustainable Development Chapter in the Prospective Indonesia-EU CEPA

The successful outcome of bilateral free trade agreement (FTA) negotiations with individual ASEAN Members can be an important precursor toward the intra-regional FTA between ASEAN and the EU. The EU’s bilateral approach with Singapore and Vietnam appears to be fruitful thus far. Meanwhile the Comprehensive Economic Partnership Agreement (CEPA) negotiation with Indonesia is still in progress. Indonesia’s most important export commodity to the EU, palm oil, epitomises a potential challenge to the CEPA in particular in the area of trade and sustainable development (TSD). This article seeks to explore sustainability-related provisions potentially agreed upon in the Indonesia-EU CEPA which together with EU-Vietnam and EUSingapore FTAs will be a sound indicator for a future ASEAN-EU FTA, and how to deal with the issue of palm oil in the CEPA. ASEAN, EU, environment, FTA, Indonesia, labour, palm oil, sustainable development

What Changes Should be Made by China under Article 20.16 of CPTPP

For the first time, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) presents the series of environmental provisions as a separate chapter in a multilateral economic and trade agreement. This chapter deals with specific areas of environmental protection. Article 20.16 of the CPTPP is about marine capture. This article contains requirements for fisheries management systems of the contracting Parties, restrictions on illegal, unreported and unregulated Fishing (IUU fishing), and prohibitions and modifications of fishery subsidies granted by the contracting Parties. China is the largest fishing nation in the world, so Article 20.16 of the CPTPP will have a significant impact on China if China successfully joins the CPTPP after its application in September 2021. The issue of legal convergence is particularly important currently. WTO has passed the Agreement on Fisheries Subsidies, reaching an agreement on the issues such as the identification of IUU fishing and fishery subsidies based on Special and Differential Treatment. However, there are still several additional provisions waited to be negotiated, which China needs to keep working hard on.[1] In addition, although China has relatively domestic legislation in this area and has actively signed and participated in relevant international documents, it still lacks legal provisions on fishery subsidies and has not signed The Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels (Compliance Agreement). All of these will limit China's voice and basis for environmental provisions in bilateral free trade agreement negotiations. China should clarify the relevant concepts, improve its domestic legislation, accelerate its accession to relevant international documents and treaties, and upgrade its bilateral investment agreements in a timely manner.

Building on open economy politics to understand the stalled EU–India trade negotiations

Abstract Global trade governance is increasingly characterized by a growing fragility in multilateral institutions and a preference for bilateral negotiations. The literature on such negotiations focuses primarily on successful agreements. Academic research on unsuccessful or stalled bilateral talks is limited, although better understanding of such outcomes may provide lessons for future negotiations. This article contributes to such understanding by proposing a revised open economy politics (OEP) framework, adapted to ‘second generation’ OEP analysis. Our framework highlights the multidirectional linkages between the trinity of interests, institutions and international interactions within trade negotiations, while adding the role of power and ideas to the analysis. We leverage our revised framework to explore why the European Union–India Free Trade Agreement (EUIFTA) negotiations stalled, thus providing insights as negotiators seek to revive them. Drawing on 45 semi-structured interviews conducted over a seven-year period in the EU and India, we examine what impact these different factors had on the progress of talks. Our results suggest that our revised OEP approach provides a multi-layered and integrated framework which enables us to better understand negotiating outcomes. Furthermore, our findings suggest that the shifting balance between emerging economies and developed economies as a result of the geopolitical (power) shifts and ideational change will affect future trade negotiations.

The role of side payment requirements in free trade negotiations under asymmetric information

Recent free trade agreements (FTAs) have two outstanding features: they have been drawn among countries with different market size, and relatively small market-sized countries have offered implicit side payments (i.e. concessions pertaining to non-trade aspects). The present study examines FTA negotiations between two asymmetric market-sized countries (one large and the other small) in which the former is unaware of the latter's demand and is allowed to require the latter to transfer side payments. The analysis clarifies that the side payments required by the large country depend on its beliefs about the small country's demand. If the large country expects that the small country's demand is sufficiently high, the FTAs derived from the former's requirement for moderate side payments could be either building blocks or stumbling blocks to global free trade, depending not only on each country's relative market size but also on the required side payments. Otherwise, the large country's requirement for huge side payments leads to or prevents FTAs that serve as stumbling blocks to global free trade, depending on the small country's actual demand.

Import demand elasticities revisited

Import demand elasticities are regularly used to compute trade restrictiveness indices, to transform estimated effects of trade policies into ad-valorem equivalents, or to judge on the prohibitive level of various tariff and non-tariff policy instruments. The fast rising number of negotiations of free trade agreements and the fact that non-tariff measures are at the core of these strongly motivates for an update of the import demand elasticity estimates provided by Kee, Nicita, and Olarreaga in 2008 which are based on trade data for the period 1988–2001. Following their GDP function approach, we present import demand elasticities for more than 150 countries and over 5000 products over the period 1996–2014. Countries exhibiting the highest average elasticities belong to the economically biggest countries in their respective regions, while countries with the lowest import demand elasticities are typically small island states. Import-weighted results suggest that especially countries rich in natural resources are facing an inelastic import demand, with the agri-food sector being more price-responsive than the manufacturing sector. Finally, import demand for intermediate goods seems to be more elastic than demand for products destined for final consumption.

A Comparison of Approaches to Modelling Non-Tariff Measures

Non-tariff measures (NTMs) are a prominent feature of many recent free trade agreement (FTA) negotiations. The implementation of NTMs within computable general equilibrium (CGE) models has been relatively simple to date, with modelers generally incorporating NTMs as tariff equivalents via export or import taxes or as import-augmenting technological (iceberg) change. Our study compares and contrasts two new methods with the traditional mechanisms used. The first new method is the willingness to pay method developed by Walmsley and Minor (2020); and the second, introduced here, provides a new mechanism for adjusting the exporters’ production costs directly, referred to as the export cost method. We find that the choice of mechanism can have important consequences for the estimated impact of changes in NTMs, with mechanisms that raise productivity leading to larger changes in real GDP than those that treat NTMs as associated with economic rents or demand shocks. We emphasize the importance of careful consideration being given to the nature of the NTMs being investigated, the econometric estimates of the associated trade costs, and the CGE model mechanisms being used to assess the impacts of changes in NTMs.

Impact of free trade agreements on Internet domain name arbitration cases: A cross‐national comparison of the Uniform Dispute Resolution Policy

AbstractThis study examined whether the presence of a free trade agreement (FTA) between the United States and a foreign country significantly affected the outcomes of Internet domain name dispute arbitration cases, conducted within the framework of the Uniform Dispute Resolution Policy (UDRP). Data were collected for 2797 arbitration cases filed during the 2001–2019 period from ten countries, five with US FTAs and five without. Logistic regression analysis, with controls for additional variables, found that complainants are less likely to win in FTA countries. The expectation from political economic theories predicting that FTA negotiations are used to obtain favorable legal environments for US businesses and individuals is not supported. This finding suggests that a more complicated and nuanced relationship exists between FTAs and UDRP decisions.

Brexit’s Impact on Japan’s Trade with Europe

In the context of globalization, the Japanese government emphasizes the importance of reinforcing the free trade system. Due to European Union’s (EU) reluctance, the free trade agreement (FTA) negotiations between Japan and the EU took 4 years to conclude. However, Brexit prompted the conclusion of Economic Partnership Agreement (EPA) with the EU as to maintain the economic interests of both sides after the British exit from the EU. The UK wants to maintain economic relations with Japan and to become a ‘Global Britain’ in the post-Brexit era. This article analyses both Japan–EU and Japan–UK FTAs. The core of the article looks at the impact of Brexit on Japan’s access to the European single market through a review of Japanese sectors and large corporations, particularly the automobile industry.

Úloha Evropského parlamentu při prosazování lidských práv ve společné obchodní politice

The Common commercial policy of the European Union has been changing its nature after the adoption of the Lisbon Treaty as the protection of human rights is today its important dimension. There are several reasons for this development and the expanding role of the European Parliament is undoubtedly one of them. This article aims to assess and demonstrate the European Parliament’s role on the basis of several specific case-studies in the area of negotiations of free trade agreements, the Generalised System of Preferences, and the debate on responsible business conduct of multinational enterprises. It comes to the conclusion that the European Parliament has become an influential actor in the Common commercial policy advocating for the use of trade instruments to promote human rights abroad.