Non-member Countries Research Articles

The Impact of the Pacific Alliance on Trade Creation and Trade Diversion in the COVID-19 Period: A Robust Econometric Analysis

(1) Background: The COVID-19 pandemic severely disrupted global trade, posing challenges for regional trade agreements such as the Pacific Alliance, comprising Chile, Colombia, Mexico, and Peru. This study investigates the Pacific Alliance’s impact on trade creation and diversion during the pandemic, exploring how regional cooperation mitigated trade disruptions. (2) Methods: A quantitative approach utilizing econometric models, including ordinary least squares, Poisson pseudo-maximum likelihood, and the Heckman selection model, was employed. The gravity model of trade was applied to bilateral trade data from 1948 to 2021, incorporating COVID-19-specific variables to assess trade dynamics. (3) Results: The analysis revealed significant trade creation within the Pacific Alliance during the pandemic, with intra-bloc trade strengthening despite global disruptions. However, evidence of trade diversion from non-member countries was mixed and inconclusive. (4) Conclusions: The Pacific Alliance demonstrated resilience during the COVID-19 period, fostering regional trade creation and cushioning the impact of global trade shocks. While trade diversion remains uncertain, the study highlights the critical role of regional trade agreements in stabilizing trade flows during global crises, offering valuable insights for future policy and regional cooperation strategies.

Adherence to the OECD Model Tax Convention: A Textual Analysis of Member and Non-Member Countries’ Double Taxation Agreements

Abstract This paper examines the textual design of Double Taxation Agreements (DTAs). Using Natural Language Processing (NLP) techniques we analyze the heterogeneity of a country’s set of DTAs and the drivers that lead to (non-)adherence to the OECD Model Convention. We observe that wealthier countries hold a more diverse DTA set compared to poorer countries and more frequently diverge from the OECD Model Convention. Furthermore, we show that negotiation results are less likely to follow the OECD Model Convention when treaty partners are closely related in terms of trade volume or share a colonial history. Institutional factors, such as OECD or EU membership, can counteract this effect and thus lead to a stronger adherence to the OECD Model Convention. As such, our study highlights how socio-economic, institutional, and geopolitical factors influence (non-)adherence to the OECD Model Convention and how this depends on the article under consideration.

Trade circumvention in free trade areas

Do Regional Trade Agreements (RTAs) incentivize non-member countries to engage in trade circumvention through member countries, and how much does this behavior contribute to increased trade among RTA members? This paper provides empirical evidence on the prevalence of illicit transshipment through RTAs and quantifies its contribution to trade growth in a case study of NAFTA. Using global trade data and guided by a discrete choice model of shipment methods, we estimate the causal impact of tariff differentials created by RTAs on illicit transshipment, inferred from trade discrepancies. Our results show that circumvention increases more for products with larger preferential margins after the establishment of an RTA, with re-exports serving as a key channel. We also find substantial heterogeneity in these effects. In the case of NAFTA, we find that trade circumvention contributed to 16.4% of the increase in U.S. imports from Mexico in 2018, when the U.S. returned to protectionist policies.

Impact of Economic Integration on Trade: A Case Study of Pakistan

Purpose: This paper tends to examine the impact of economic integration on trade for Pakistan. It studied all trade agreements of Pakistan with partner and non-partner nations. We test whether the trade creation (TC) and trade diversion (TD) effects on trade flows are same across for the members and non-member countries. Also, we have measured comparative advantage and comparative disadvantage. Design/Methodology/Approach: We have used correctly specified gravity model on the data of imports and exports of Pakistan starting from 1988 till 2020. We have also used Revealed Comparative Advantage (RCA) index in this research work. Findings: The results revealed from the RCA index shows that Pakistan recorded comparative advantage in most of the commodity group and less comparative disadvantage. Similarly, Pakistan is enhancing trade with partner and non-partner nations in majority of the commodity groups respectively. Implications/Originality/Value: We may conclude that Pakistan is having trade creation with its partner countries and non-partner countries in most of the agreements.

The Impact of Oil Price on Carbon Dioxide Emissions in the Transport Sector: The Threshold Effect of Environmental Policy Stringency

Carbon dioxide emissions from the transport sector make a significant contribution to global greenhouse gases, and understanding the factors that influence these emissions is beneficial for devising effective emission reduction policies. Oil prices are an important influencing factor since the fuel used in the transport sector is primarily based on oil, and fluctuations in oil prices directly impact the sector’s CO2 emissions. Additionally, environmental policies, as a key means of controlling CO2 emissions, can affect the relationship between oil prices and CO2 emissions in the transport sector. Therefore, this study aims to examine the impact of oil prices on CO2 emissions in the transport sector and explore the nonlinear role of environmental policy stringency in this relationship. Based on data from 27 OECD member countries and 6 non-member countries from 1990 to 2019, we used the environmental policy stringency index as a threshold variable to construct a panel threshold regression model. The analysis results indicate a double-threshold effect: when the environmental policy stringency index is low, the impact of oil prices on CO2 emissions in the transport sector is not significant. However, when the index reaches the first threshold, the impact of oil prices significantly increases; upon reaching the second threshold, the effect is further intensified. This paper also analyzes the three subindicators—market-based policies, non-market-based policies, and technology support policies—to clarify the distinct impact mechanisms of different types of environmental policies. Finally, based on the research findings, we propose policy recommendations to achieve carbon dioxide emission reduction targets in the transport sector.

Evaluating Economic Efficiency through Digital Technologies

Abstract The rapid advancement of digital technologies has generated increased interest among researchers to investigate and evaluate the impact of these technologies on economic efficiency. The purpose of this study is to identify and analyze the influence of digital technologies on economic efficiency in the countries of Europe and the European Union (EU) over seven years (2016-2022), for which the necessary data was found. The fundamental question of the study is: which countries in the European Union and across the entire European continent exhibit a trend of increasing revenues from the ERP system market, and among these, where is an influence on GDP observed? A group of 42 countries was analyzed, consisting of 27 countries from the European Union and 15 non-member countries, and the period studied ranges from 2016 to 2022. The study reveals that, generally, in countries where revenues from the ERP market are on the rise, there is a positive trend in economic efficiency. The study's estimates suggest that the level of internet usage in a country and the workforce with an advanced level of education significantly influence GDP per capita at the level of the countries in the European Union and the entire European continent. The conclusions of our study are based on theoretical predictions and the relevant results of other studies. The research indicates that ERP systems, as part of digital technologies and other macroeconomic factors, play an important role in stimulating economic efficiency in the European Union member states and those outside the union.

Centralized climate clubs and decentralized governance: A model of global CO2 mitigation

AbstractThis paper extends the climate literature by examining the feasibility of integrating sub‐national governance into global club governance for mitigating CO2 emissions. Global climate clubs become an argument for having separate bundles of emission targets and incentive mechanisms in the form of opportunities for climate finance and technology sharing among the club members. An exploratory analysis is important to examine the role of import and export taxes and other channels, such as the clean development mechanism, in meeting the objective of nonmember countries to join the club. The crux, however, is how, after determining national‐level quotas, the mitigation responsibilities are shared with subnational entities. We propose a design of a carbon entry tax at the subnational level, namely states, districts, and municipalities. The carbon entry tax uses the nighttime luminosity data published by NASA as a measure of carbon, which constitutes the tax base. The carbon entry tax serves as a fiscal instrument of decarbonization in a decentralized framework.

ICC Jurisdiction: Against Israeli War and Humanitarian Crimes Targeting Palestinian Civilians 2023

The article explains the jurisdictional policy of the International Criminal Court (ICC) regarding Israeli war crimes targeting Palestinian civilians, during the attack on Gaza on October 7, 2023. The article shows that based on articles of the Rome Statute, Israel committed war crimes and crimes against humanity that occurred on October 7, 2023. therefore, the ICC has authority in this matter. ICC policy towards conflict 7 October 2023, ICC jurisdiction took action to continue the investigative process and will accelerate investigations related to the conflict, while Israel in 2024 and the latest update is not part of the non-member states of the ICC. However, given the jurisdiction of the ICC, it has jurisdiction regarding its investigations in countries that are not parties to the ICC. This is influenced by several factors in upholding the ICC's jurisdictional investigation law against Israeli criminals even though Israel is not an ICC member state: First, Palestine is a state party to the ICC which is supposed to provide justice for civil society. Second, there is pressure and encouragement from member countries and non-member countries of the ICC to carry out investigations regarding the conflict attack in October 2023.

The Eurovision song contest and the potential of unintended events and public diplomacy: how exposure to an international mega-event shapes external views of the EU

ABSTRACT This article focuses on the Eurovision Song Contest (ESC) as a potential tool for EU public diplomacy. Institutionally, the ESC, a pan-European international mega-event that forms images of Europe, is not related to the EU. Yet, given the strong link between the ESC and the notion of Europe, the article suggests that the ESC might have unintentionally become a public diplomacy tool for the EU. This argument is supported by showing how public views of the EU in a nonmember country, Israel, changed following its hosting of the ESC in 2019. A longitudinal survey was used to examine the impact of the ESC on Israelis’ sympathy for the EU six months before the 2019 ESC and immediately after hosting the contest. The findings indicated that watching the ESC final increased sympathy for the EU. This demonstrates the positive influence of exposure to the ESC on the views of the EU, highlighting the potential role of the ESC as a tool of public diplomacy for the EU. The findings also illustrate a broader potential for understanding public diplomacy consequences from real-life events.

An Overview and Membership Process of PIC/S and ICH and its Requirement for Global Regulatory Harmonization of Drugs

Abstract: Due to the increased globalization of regulatory authorities, it has become important to enhance harmonization efforts in creating regulatory requirements, checking and determining GMP compliance, licensing production locations, recalling defective batches, and boosting information interchange. ICH and PIC/S are the international platforms that provide an appealing and stable framework for addressing such globalization concerns. A country having a membership of PIC/S or ICH gives an assurance of the quality, safety, and efficacy of their medical products exported across the globe. Joining such international platforms helps the Pharmaceutical Industries and Regulatory System of that country to improve quality standards. In the present study, the main objective is to gain knowledge regarding the procedures to obtain membership in international platforms such as ICH and PIC/S, and to know the changes/modifications that needs to be done at the institutional/organizational level before applying for the membership, also, to gain knowledge of the eligibility criteria for the application and to know the differences in regulatory guidance in GMP aspects of different regulatory authorities. By joining these international platforms, ICH and PIC/S, non-member countries will be able to tap into the potential for pharmaceutical exports, especially in the largest countries of the globe. After joining these international platforms, the semi or low-regulated nations’ pharmaceutical industries will be benefited greatly in terms of cost savings, export convenience, and most importantly, market access. Membership in ICH and PIC/S will be able to provide the semi or low-regulated Drug Regulatory Authority a global footprint and give foreign regulatory agencies confidence in semi or low-regulated regulatory agencies.

A Review of the Theoretical Developments and Challenges in Regional Trade Agreements

Purpose - The core of the debate on RTAs is the economic welfare effect resulting from the provision of preferential treatment among member countries and discrimination against non-member countries, and the resulting implications for the multilateral trading system. This study aims to answer these questions by reviewing theoretical and empirical research on RTAs from an economic perspective. It also presents theoretical challenges that may reflect changes in RTAs.
 Design/Methodology/Approach - This study examines the development of RTAs from an economic perspective, covering both traditional and new approaches. It does so by reviewing the literature on the theory and empirical evidence of RTAs.
 Findings - Concerns that RTAs will cause trade diversion and have a negative impact on the multilateral trading system are greatly exaggerated in our study. We also find that deep integration is less discriminatory than RTAs, resulting in more favorable effects on economic welfare and the multilateral trading system.
 Research Implications - Beyond the theoretical for and against RTAs, given that RTAs exist as a realistic entity, a more practical approach is to explore institutional ways in which RTAs and multilateral trading systems coexist. In other words, in a situation where the WTO system is facing a crisis, a realistic answer must be found as RTAs may be the only means to supplement the WTO system.

Analisis Pengaruh Implementasi AANZFTA terhadap Kreasi dan Diversi Perdagangan Impor Daging Sapi di Indonesia

The ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) represents an economic integration among ASEAN, Australia, and New Zealand. Within the AANZFTA framework, a commitment was made to reduce beef import tariff barriers. This reduction in beef import tariffs has the potential to impact Indonesia as a net importer of beef. Beef imports from AANZFTA member countries gain a competitive advantage due to reduced import tariffs, unlike beef imported from non-AANZFTA member countries. Hence, this research aims to: (1) Analyze the influencing factors on beef imports in Indonesia from 2005 to 2020, and (2) Assess the impact of AANZFTA implementation on the creation and redirection of Indonesia’s beef imports. The study involves comparing the volume and value of Indonesian beef imports from AANZFTA member countries (Australia, New Zealand, and Singapore) and non-member countries (United States, India, Japan, and Spain) during the 2005-2020 period. The analytical method employed is panel data regression analysis using a gravity model. The research findings indicate: (1) Beef imports in Indonesia between 2005 and 2020 were influenced by various factors including Indonesia’s beef production, real exchange rate, real GDP per capita of Indonesia, real GDP per capita of exporting countries, trade creation dummy, and trade diversion dummy; (2) AANZFTA implementation resulted in a 2,97% reduction in Indonesia’s beef imports from AANZFTA member countries and a 2,39% increase in beef imports from non-AANZFTA member countries compared to the scenario without AANZFTA implementation.

INTERNATIONAL TRADE IN AGRI-FOOD PRODUCTS IN THE CONTEXT OF REGIONAL PECULIARITIES AND INTERNATIONAL ECONOMIC INTEGRATION

This paper examines world trade in agri-food products in the context of international economic integration. This is due to the importance of foreign trade for the economic development of countries, especially in the context of globalisation, the increase in the number of integration groups whose participation affects the terms of trade of their member and non-member countries, and the aggravation of the food crisis. The purpose of this article is to identify the state and trends of world trade in agri-food products, taking into account regional characteristics and the participation of countries in integration groupings, and to determine their role in the future. Methodology. The research is based on a comparison of parts of individual regions and integration groups in world trade, identifying trends and features. The publication uses the methods of analysis, synthesis, generalisation, comparative assessment, and graphical methods, in particular, to identify the main trends, draw conclusions, etc. Results. The study shows that world trade in agri-food products is growing significantly, both globally and by region. The countries of Europe and the Americas are the main exporters, but the countries of Asia, South and Central America and Africa are the fastest growing exporters. However, the main suppliers remain the member countries of the most advanced integration groupings - the European Union, the North American Free Trade Agreement (NAFTA) and the Southern Common Market (MERCOSUR). It is proposed to divide the main exporters into regions, integration groups and countries. The issue of food security is one of the most important in modern conditions and within the integration groups. It is advisable that they contribute to some extent to solving this problem at the regional level and in relation to third countries. To this end, it is advisable to develop measures to provide food aid to countries affected by natural disasters, climate change or other adverse circumstances on several fronts: within integration groups, in the region and at the global level. These groups are expected to remain among the largest suppliers of agri-food products in the future, and one of the main reasons for this is their participation in integration groups, which facilitates the liberalisation of the movement of new technologies, in particular to the agricultural sector.

COMPARATIVE ANALYSIS OF REGIONAL TRADE BLOCS

This research paper investigates the impact of regional trade blocs (RTBs) on global trade and economic growth, adopting a comparative perspective. Regional trade agreements (RTAs) have gained significant prominence in the global economy due to their role in promoting trade liberalization and economic integration among member nations. This study aims to assess the potential for multilateral liberalization within these blocs and examines how political and ideological differences influence the effectiveness of RTBs. Additionally, it explores the consequences of the proliferation of RTAs on international trade dynamics and their broader economic implications. The analysis begins by examining the effects of RTBs on global trade. The study compares the trade performance of RTB member countries with non-member countries to assess the extent to which RTBs contribute to trade expansion. Furthermore, the research investigates the impact of RTBs on economic growth. The economic integration fostered by RTBs can lead to increased investment flows, technology transfer, and productivity gains. It considers the potential spillover effects of RTBs on non-member countries, as increased regional integration may create both opportunities and challenges for economies outside the bloc. The analysis also delves into the complexities of multilateral liberalization within RTBs. While RTBs aim to promote trade liberalization among member countries, the presence of political and ideological differences can hinder the achievement of comprehensive agreements. The study explores the challenges faced by RTBs in reaching consensus on sensitive issues such as agriculture, intellectual property rights, and services trade. It examines the role of political dynamics and power asymmetries within RTBs in shaping the outcomes of negotiations.

Can Regional Comprehensive Economic Partnership Alter the Direction of Global Textiles and Clothing Trade? A Computable General Equilibrium Analysis

The purpose of the article was to investigate the criticality of Regional Comprehensive Economic Partnership (RCEP) to the direction of the international trade regime of the textiles and clothing (T&C) sector. The reason for selecting this sector is because RCEP block exported 50% of the global share of T&C products in 2019. Besides, this industry has been quite important from an employment generation point of view and a leading earner of foreign exchange for many nations around the world. Given the free trade agreement and an ambitious approach towards removing the majority of tariff lines pertaining to this sector, RCEP can potentially alter the direction of T&C trade and have related spillover benefits and trade-off in the global supply chain. This study undertakes an evaluative investigation through computable general equilibrium modelling. The article tries to analyse the impact of a potential free trade agreement specific to the RCEP block on the member nation’s gross domestic product, exports, industrial production, employment and welfare. The impact on exports is reportedly a mixed bag where countries such as China and Vietnam stand out to gain enormously while a few others are expected to lose. On similar lines, production in this sector appears to rise for RCEP members such as Singapore, Vietnam, South Korea, Japan, China and Cambodia while for other members the same is seen to decline. Also, T&C trade is noticed to divert away from non-RCEP members. An important policy implication for non-member RCEP nations is to ratify individual trade agreements pertaining to T&C trade. The study shows the mitigation of the trade diversion effect of RCEP by taking India’s example and incorporating its free trade agreements in T&C trade with RCEP non-member country like the UK and then with RCEP nation like Australia. The supposed trade agreements of India have been incorporated in the main model along with RCEP.

Estimating the effects of regional value chains of the RCEP in a GVC-CGE model

The Regional Comprehensive Economic Partnership (RCEP) is regarded as a value chain accelerator that will support global value chains (GVCs) and unlock regional value chains (RVCs) in particular. However, there is a lack of quantitative evidence to support this claim. This paper constructs a GVC-CGE model with embedded GVC trade structure and RVC participation measurement to assess the comprehensive impact of RCEP’s tariff and non-tariff reductions on global trade and RVCs. The simulation results show a significant expansion of bilateral trade among member countries that only have trade agreements through RCEP, and the trade of intermediate goods boosts more than final goods for most member countries. The participation in RVCs among member countries has increased while the participation in extra-RVCs has decreased. This trend is especially noticeable in the textile, wearing apparel, motor vehicle, and food sectors in most member countries, except for the ASEAN apparel sector, which has seen a decrease in forward RVC participation. The financial and pharmaceutical sectors have experienced an increase in forward RVC participation in both member and non-member countries. The RCEP has significantly reconfigured regional production networks more than demand networks. China, Japan, and Korea have shifted their part of production and demand value chains from global to regional, which has elevated their importance in the RVCs at both the overall and sectoral levels.

Assessing the impact of regional laboratory networks in East and West Africa on national health security capacities.

National laboratories are a fundamental capacity for public health, contributing to disease surveillance and outbreak response. The establishment of regional laboratory networks has been posited as a means of improving health security across multiple countries. Our study objective was to assess whether membership in regional laboratory networks in Africa has an effect on national health security capacities and outbreak response. We conducted a literature review to select regional laboratory networks in the Eastern and Western African regions. We examined data from the World Health Organization Joint External Evaluation (JEE) mission reports, the 2018 WHO States Parties Annual Report (SPAR), and the 2019 Global Health Security Index (GHS). We compared the average scores of countries that are members of a regional laboratory network to those that are not. We also assessed country-level diagnostic and testing indicators during the COVID-19 pandemic. We found no significant differences in any of the selected health security metrics for member versus non-member countries of the either the East Africa Public Health Laboratory Networking Project (EAPHLNP) in the Eastern Africa region, nor for the West African Network of Clinical Laboratories (RESAOLAB) in the Western Africa region. No statistically significant differences were observed in COVID-19 testing rates in either region. Small sample sizes and the inherent heterogeneities in governance, health, and other factors between countries within and between regions limited all analyses. These results suggest potential benefit in setting baseline capacity for network inclusion and developing regional metrics for measuring network impact, but also beyond national health security capacities, other effects that may be required to justify continued support for regional laboratory networks.

Re-assessment of Bilateral and Unilateral Trade Effects of ASEAN FTAs: A Theory-Consistent Structural Gravity Estimation

This paper reinvestigates the bilateral and unilateral effects of five ASEAN free trade agreements (FTAs) by applying a theory-consistent structural gravity model that remains untouched in the existing literature. The findings suggest that ASEAN-China and ASEAN-Australia-New Zealand FTAs led to a decrease in the international trade among member countries and between member and non-member countries in relation to their internal trade. The ASEAN-Korea, ASEAN-Japan, and ASEAN-India FTAs did not have any significant impact on the member countries and non-member countries’ trade.

The Belt and Road Initiative: Inclusive Globalization and Poverty Reduction

The Belt and Road Initiative (BRI) aims to increase connectivity between regions and countries that market forces excluded from the previous wave of economic globalization. Foreign direct investment (FDI) can create the conditions for the economic takeoff of least-developed countries (LDCs) and developing countries. Although Chinese FDI has nearly doubled since the launch of the BRI in 2013 compared to 2005–2013, it does not seem to be directed toward BRI member countries more than the non-member countries. One exception is South American BRI member countries, which have significantly increased their FDI inflows from China. This is not the case, however, for West Asian countries, where FDI growth has been lower for BRI countries than for the West Asian countries as a whole, and especially for sub-Saharan BRI countries, for which the amount of FDI has even decreased compared to the 2005–2013 period. The BRI’s slow start and the countries’ gradual entry may explain the delay in seeing the positive results expected from it reflected in the data.

Why carbon border adjustment mechanisms will not save the planet but a climate club and subsidies for transformative green technologies may

We find that both empirical results and economic theory show that carbon border adjustment mechanisms (CBAMs) will be ineffective at meeting global goals for carbon emissions reduction; but CBAMs will be effective at improving the competitiveness of the domestic industries by assuring that imports bear equal costs of carbon pricing. We elaborate two complementary proposals that hold greater promise for meeting climate goals: (i) a Climate Club, where member countries impose a minimum price for carbon emissions at home and a tariff surcharge on all imports from non-member countries; and (ii) a 0.2%-of-GDP subsidy by high-income countries for transformative research designed to make green energy cheaper than fossil fuels. We discuss multiple paths for a Climate Club to be accommodated within the rules of the World Trade Organization and recommend use of the exception clause under GATT Article XX.