Preferential Trade Research Articles

A Primer on Rules of Origin as Non-Tariff Barriers

An explosion of different preferential rules of origin (PROO) has accompanied the spread of preferential trade agreements (PTAs) around the world. Complying with PROO requirements entail costs for producers, exporters, and customs officials. Observers, firms, customs officials, and policymakers have advocated simplification as well as harmonization. The paper surveys the literature drawing on the extensive database in ITC’s Rules of Origin Facilitator (ROF) database covering 54,000 distinct PROO spread across 370 PTAs to illustrate the issues covered in the literature. We review what we know about the compliance costs associated with PROO requirements. We illustrate these costs graphically and summarize through mathematical decomposition of compliance costs along two dimensions: distortionary costs resulting from the restrictiveness of PROOs and administrative costs. We survey the existing evidence in literature by themes: (i) determinants of the utilisation of preferences; (ii) effects on third countries outside the PTA; (iii) choice of rule; (iv) preference margin and complexity of rules; (v) trade deflection; and (vi) firm-level evidence. In conclusion, drawing lessons from the empirical literature is a complicated exercise because preference uptake, an important indicator of compliance costs, is only available for a handful of PTAs at the disaggregated product level.

Effect of the utilization of non-reciprocal trade preferences offered by the QUAD countries on beneficiary countries' economic complexity

This article aims to contribute to the nascent literature on the effect of non-reciprocal trade preferences (NRTPs) on economic complexity in beneficiary countries. It investigates the effect of NRTPs (Generalized Systems of Preferences - GSP - and other trade preferences) offered by the QUAD countries (Canada, the European Union, Japan, and the United States) on the beneficiary countries' levels of economic complexity. The analysis has used a panel dataset of 110 beneficiary countries over the period of 2002-2018, and the two-step system Generalized Method of Moments estimator. Results show that the utilization of NRTPs (either GSP programs or other trade preferences) influences positively economic complexity when beneficiary-countries' shares of exports under the relevant NRTP in total merchandise exports is very high. In addition, GSP programs and other trade preferences jointly promote economic complexity, if the utilization of either NRTP reaches high levels. The utilization of NRTPs also enhances economic complexity in countries that receive high shares of foreign direct investment flows in GDP. Finally, development aid flows are strongly complementary with the utilization of NRTPs in fostering economic complexity, especially when they reach very high amounts. One message conveyed by this analysis is that preference-granting countries (including QUAD countries) should offer both generous NRTPs and high amounts of development aid if NRTPs were to be effective in expanding the manufacturing base in the beneficiary countries, and in particular, in improving their economic complexity.

ASSESSING THE EFFECTS OF TRADE LIBERALIZATION WITH THIRD COUNTRIES: THE CASE OF THE EURASIAN ECONOMIC UNION

The processes of objectively conditioned integration in the economic, political, legal, and institutional spheres of the Eurasian Economic Union (EEU) Member States took place step by step, starting from preferential trade agreements, passing to the customs union, the common market and other stages of integration. This process is accompanied by the gradual deepening of trade liberalization with potential partners. The selection of potential partners should be carried out through a comprehensive and detailed analysis of the structure and volumes of foreign trade of the EEU Member States (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia) with third parties, their markets structure, existing customs regulation, trade barriers, and possible export potential. The research evaluated the EEU's possible enlargement effects on the Member States' economic indicators. The research aimed to assess the possible consequences of EEU expansion and signing free trade agreements, considering Pakistan, Korea, and Malaysia as potential trade partners. Modeling the effect of an FTA assumes horizontal zeroing of tariffs between partners. Then, using the GTAP model, a new state of general equilibrium was calculated corresponding to the changed parameters of customs and tariff regulation. In this case, most variables, such as change in GDP, production output, and export-import volumes, were estimated, manifesting the economic effect of trade liberalization.

How to manifest abundance: money and the rematerialization of exchange in Sedona, Arizona, USA

AbstractManifestation is a spiritual practice with material gains. It is a way for those involved with spirituality in Sedona, Arizona, to make money as required while maintaining a level of consonance between their economic life and spiritual path. Analysing the entwinement of economics and religion in everyday life, this article contributes to literature on spiritual economies and, more broadly, to the anthropology of money. Manifestation is a way of figuratively rematerializing exchange, mirrored in preferences for trade and barter and currency backed by gold. Dematerialized money – the stocks, bonds, and derivatives of high finance – is rejected as enacting a low vibration; it is negatively valenced in cosmologies of spirituality. Preferences for money forms reveal responses and reactions to neoliberal capitalism in an embedded, industrialized economy.

Intra-bloc tariffs and preferential margins in trade agreements

We study how countries choose intra-bloc tariffs and preferential margins in 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, relative to a customs union. 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, respectively, 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, we find empirical support for each of those predictions. These findings rationalize why governments often keep intra-bloc duties strictly positive. We show that this tends to worsen the welfare consequences of PTAs, and that requiring the elimination of internal tariffs would be socially desirable.

Economic Backlash on the Cameroon Development Corporation (CDC) at the End of British Rule in Southern Cameroons, 1961-1968

The Cameroon Development Corporation (CDC) was created in 1946 and went operational in 1947 through the enactment of two important ordinances by the government of Nigeria. As an agro-industrial company, the principal objective at inception was the management of the ex-German plantations in Cameroon for the welfare of the workers in particular, and the inhabitants of Southern Cameroons in general. Curiously, the creation of the CDC coincided with a rising spirit of nationalism in the territory, culminating in the granting of independence by reunification with the Republic of Cameroon in October 1961. Considering that the end of British rule was accompanied by reunification, and not integration with Nigeria, the objective of this paper is to highlight the post reunification implications on the CDC. Even though it drastically reduced Nigerian domination of the plantations and offered the corporation greater access to seaport facilities in Douala, the article posits that the CDC suffered enormous setbacks at the end of the British trusteeship in the territory. Using qualitative historical designs, the finding of the study admit that the end of British rule provoked the suspension of Commonwealth funding, cancellation of banana trade preferences, tariff imbroglio, cross-territory security concerns, among the other constraints. However, the article concludes that the federal government equally embarked on a number of remedial measures which went a long way in mitigating the post-independence challenges faced by the CDC.KEY WORDS: Economic backlash, Cameroon Development Corporation, British rule and Southern Cameroons.

The Low Use by Firms of ASEAN Trade Preferences: Will RCEP Follow the Same Destiny? An Agenda for Rescue to Reform Rules of Origin in the Asian and Pacific Region

The Association of Southeast Asian Nations (ASEAN) rules of origin (RoO) evolved from the original inception in early ’90 to the later formulation in the ASEAN Trade in Goods Agreement (ATIGA) in 2009. Even after the completion of ATIGA, RoO reform has remained high in the agenda of ASEAN Economic Community resulting in more than thirty years of efforts to improve RoO. In spite of repeated research findings of low utilization rates of ASEAN trade preferences by firms, the ASEAN negotiating machinery has been unable to address the main cause of such low utilization, i.e., the shortcomings of ASEAN RoO and their cumbersome administration by ASEAN Member States The region has recently embarked in the Regional Comprehensive Economic Partnership (RCEP) that has been branded as a solution to the panoply of proliferating sets of RoO existing in Asia and the Pacific. Yet recent research and findings from firms indicated that RCEP has inherited many of the shortcomings of ASEAN rules of origin. An ASEAN Secretariat study of 2021 shows an average utilization rate of ATIGA trade preferences of 50%. This does not bode well for RCEP, unless action is undertaken. This article argues that it is time that Governments of Asia and the Pacific region act on an overdue reform of rules of origin to create a stable and predictable trade facilitating environment. rules of origin, regional trade agreements, trade preferences, utilization rates, ASEAN regional integration

СІЛЬСЬКОГОСПОДАРСЬКИЙ ЕКСПОРТ УКРАЇНИ В УМОВАХ ВІЙНИ І ШЛЯХИ ЙОГО ВІДНОВЛЕННЯ

Оцінено втрати і визначено ризики для українського сільськогосподарського експорту, що виникли внаслідок блокування українських морських портів збройними силами РФ, обґрунтовано шляхи часткового відновлення сільськогосподарського експорту в умовах воєнних дій і повоєнного відродження експортних ринків. Визначено наслідки війни для зернового ринку. Встановлено, що Україна втратила можливість експортувати майже чверть обсягів зерна, призначених на експорт у 2021/22 маркетинговому році. Така ситуація тисне на світові ціни на продовольство в бік їх підвищення і несе загрозу для продовольчої безпеки країн з низькими доходами населення, залежних від імпорту продовольства. Протягом перших двох місяців воєнного вторгнення РФ уже розпочалися процеси релокації торговельних потоків на світових сільськогосподарських ринках, що в разі довготривалих воєнних дій можуть призвести до часткової втрати Україною експортних ринків. Найбільш очевидним частковим рішенням цієї проблеми є організація за допомогою країн ЄС спеціальних «зелених коридорів», які дозволять Україні експортувати продовольство через порти Балтійського моря. З метою відновлення вітчизняного експорту доцільно: 1) провести переговори щодо подальшої лібералізації торгівлі з торговельними партнерами, насамперед з ЄС та Великою Британією, з метою закріплення тимчасових торговельних преференцій, які були або, ймовірно, будуть надані українському експорту; 2) спростити процедури торгівлі з країнами ЄС і Молдовою для збільшення експорту сільгосппродукції залізничним й автомобільним транспортом; 3) підтримати діяльність Експортно-кредитного агентства в напрямі кредитування і страхування експорту переробленої сільськогосподарської продукції. Разом з тим ситуація з блокуванням сільськогосподарського експорту наочно продемонструвала вразливість сировинної експортоорієнтованої моделі сільського господарства України і зумовила необхідність її заміни на модель, спроможну забезпечити сталий розвиток сільського господарства і сільський розвиток.

PTAs and the incidence of antidumping disputes

We analyze whether preferential trade agreements (PTAs) affect the incidence and pattern of antidumping (AD) filings. We find PTA membership results in a 29 percent (15 percent) decrease in the incidence of intra-PTA AD actions (measures). We then exploit variation in the content of PTAs and find the reduction is due to PTAs with explicit AD rules. We find that intra-PTA AD filings (measures) decrease by about 46 percent (34 percent) for PTAs with explicit AD rules. Our results are robust in controlling for other PTA-related phenomena, the emergence of China as the largest target of AD actions, and the role played by EU and US PTAs. Our findings highlight the effectiveness of PTA AD rules in curbing AD disputes among members.

International sourcing, complementary inputs, and the structure of trade agreements: Deep, shallow, narrow, and wide

We analyze Preferential Trade Agreement (PTA) formation among a subset of members of a multilateral agreement when imported inputs are complementary to one another. A shallow (focused only on border policies) multilateral agreement does not place countries on the efficiency frontier. Furthermore, no subset of countries will form a shallow PTA. Alternatively, a deep PTA that addresses behind-the-border policies increases each country's welfare. This result suggests that the recent proliferation of PTA formation is driven by a need for deep integration. Although these deep PTAs increase welfare over a shallow multilateral agreement the efficiency frontier can only be reached by a deep multilateral agreement that covers both border and behind-the-border policies. Whether a deep PTA can generate consensus approval for further multilateral-deep integration depends on the structure of the PTA and the success of the multilateral-shallow agreement in lowering tariffs.

Standards of Scientific Evidence in Preferential Trade Agreements

ABSTRACT For a long time, international trade law’s interest in science has been limited to the provisions of the World Trade Organization’s (WTO) Sanitary and Phytosanitary (SPS) Agreement. However, the role of science in international trade law goes beyond the SPS Agreement. The Australia – Plain Packaging dispute has shown that the assessment of non-SPS provisions can also involve complex scientific questions. Moreover, the discussion should be extended to preferential trade agreements (PTAs). Against this background, this article investigates the nature and potential impact of standards of scientific evidence in PTAs. After the introduction, Section II lays out the methodology of the article. Section III opens with a brief recall of the relevant WTO provisions. Section IV reviews the standards of scientific evidence embedded in the PTAs concluded by the European Union (EU) and by the United States (USA), showing that both trading blocs have started introducing more stringent standards in recent PTAs. Section V describes the trends that emerge from the analysis. Some of these innovations seem to expand the application of the SPS science-based provisions to TBT chapters. Others simply introduce new standards of scientific evidence in WTO-X chapters on regulatory cooperation, environment, and labor. In conclusion, the article argues that we should pay much more attention to the role of standards of scientific evidence in PTAs.

Overview of basic methods for exiting the barrier impasse in international trade

The purpose of this article is to systematize the main approaches to solving the problem of foreign trade barriers. The search for ways out of the barrier impasse in foreign trade is carried out through a review analysis of scientific papers focused on studying such a problem, and building a classification of the main ways to prevent barriers based on the results of a review analysis of scientific literature. The latter showed that the scientific literature mainly identifies four significant areas for preventing trade barriers: membership in international organizations, preferential trade agreements, trade facilitation, and the use of trade compensation funds aimed at mitigating future foreign trade losses. Membership in international organizations is considered the most standard solution to the problem of barriers to international trade, but today, in the face of trade wars, it is insufficient to prevent barriers to foreign trade. The latter, in particular, is explained by the fact that in the world between different organizations there is a problem of heterogeneity of normative acts, which significantly slows down the movement of foreign trade flows. Thus, countries around the world need to focus on the use of preferential trade agreements and various methods of facilitating trade procedures in foreign trade practice. In addition, trade compensation and accumulation funds should also be formed to compensate for future trade losses and increase foreign trade flows of the countries of the world community. The use of review analysis made it possible to build a systematic classification of methods for overcoming the barrier impasse in the framework of international trade between countries of the international community.

The multilateral trade policy of the Arab league countries: An empirical investigation

AbstractOur paper examines the effects of various features of the Arab League's trade policy (different preferential trade agreements, presence of tariff water, and market power) on the multilateral tariffs applied by its member countries. To carry out our study, we collected product‐level data from 1998 to 2015 with information on applied most‐favoured nations (MFN) tariffs, preferential tariffs, bound tariffs, import trade values, and market power for eleven members of the Arab League countries. Overall, our results suggest that preferential agreements have a building block effect on multilateral tariffs because Arab League members tend to lower their applied MFN tariffs as they grant enhanced preferential access to their partners. Moreover, we find that forming a customs union (CU) among Arab League members led to a lower degree of external trade liberalisation than forming a free trade area (FTA). Importantly, we find that a high degree of importer market power strengthens the building block effect of forming preferential trade agreements.

Greedy Strategies with Multiobjective Optimization for Investment Portfolio Problem Modeling.

The ultimate purpose of portfolio investment is to reduce investment risk and improve total return on the premise of ensuring reasonable allocation of capital. In this paper, we build a quantitative model to advise on trading based on the price movement of Bitcoin and gold between 2016 and 2021; our goal is to maximize profit while minimizing risk. We mainly use greedy strategies with multiobjective optimization models. For the purpose of obtaining the correct price trend, some popular trend indicator strategies are referred to predict the future price trend in the medium and long term. In addition, we also consider people with different trading preferences and divided them into aggressive, advanced, balanced, and cautious and provided trading strategies for each of these four groups. This gives our model scalability. Finally, we analyze the sensitivity of the model and discuss the impact of trading commission costs on the model results. The model can be applicable to various investment situations.

Asymmetric trade liberalizations and current account dynamics

AbstractI propose asymmetric trade liberalizations as a new potential determinant of current account dynamics. I focus on South Korea, which experienced a rise and fall of its current account in the period from 2010 to 2018, when it signed preferential trade agreements (PTAs) with its main trading partners. First, I develop a model where the current account depends on the timing of present and future relative changes of trade costs. Second, I provide empirical evidence supporting the key predictions of the model using the Canada–Korea PTA. PTAs provide predictable, potentially asymmetric, future tariff paths on many products. I use information for over 2,500 HS‐6 products to build relative trade liberalization measures, and show that current (future) high relative trade liberalizations tend to decrease (increase) the trade balance, consistent with the model. Finally, I propose a quantitative investigation of the Korean surplus based on the asymmetric dynamics of trade costs between South Korea and its main trading partners. I develop a two‐country international real business cycle model augmented with trade costs. When fed with the actual asymmetric trends found in the data, the model generates a current account surplus of about 2.15% of GDP, roughly 66% of what was observed in the Korean data.

Nationalism, Populism, and Trade Agreements

Abstract The rise of nationalist and populist movements throughout the world has led to concerns about the future of the liberal international economic order. Central to these worries is the belief that nationalist and populist publics and their leaders will reject open trade, which has been a cornerstone of the global order. Yet despite these fears, very little empirical research has been conducted on the links between either nationalism or populism and trade policy. In this paper, we argue that nationalism and populism are likely to discourage trade liberalization in democratic states, but that these forces will have little influence on trade policy in non-democracies. To test this argument, we focus on state involvement in preferential trade agreements (PTAs). Based on a variety of tests, we find considerable support for our argument. Democracies with nationalist or populist governments are especially reluctant to join PTAs, but neither nationalism nor populism systematically influences whether non-democracies enter PTAs.

Pricing decisions in peer-to-peer and prosumer-centred electricity markets: Experimental analysis in Germany and the United Kingdom

Prosumer-centred electricity market models such as peer-to-peer communities can enable optimized supply and demand of locally generated electricity as well as an active participation of citizens in the energy transition. An important element of active participation is the improved ability of community members to identify and choose who they transact with in a much more granular way than is usual. Despite this key novelty and the social core of prosumer-centred markets, little is known about how citizens would trade with different actors involved in the system. This article reports a preregistered cross-national experiment investigating individual trading preferences in a peer-to-peer community with a variety of private and non-private trading actors. The data from the United Kingdom (n = 441) and Germany (n = 440) shows that set buying and selling prices strongly vary, pointing to three systematically different trading strategies that individuals apply as a function of involved trading actor. Findings moreover reveal that trading decisions are determined by individuals’ political orientation, place attachment, and climate change beliefs as well as individual differences in trust in the involved trading actor. Finally, the results illustrate high consistency in trading preferences across nations. However, nation-level differences emerged when decisions were made publicly visible, emphasising the need to consider context-effects in peer-to-peer system design. The findings have implications for the development of prosumer-centred energy models and the design of interventions to increase citizen participation across national contexts.

Does Difference in Environmental Standard Influence India’s Bilateral IIT Flows? Evidence from GMM Results

In the recent past, India has entered into several regional trading agreements (RTAs) with the objective of export promotion, on the one hand, and deepening participation in the global value chains, on the other. The consequent rise in Indian exports had been accompanied by a simultaneous import growth, given the trade preferences for partners through RTAs as well as ongoing unilateral tariff reforms. The rise in simultaneous exports and imports has enhanced the country’s intra-industry trade (IIT) level. Recently, India has engaged in RTA negotiations with several developed countries, which are characterized by more stringent environmental standards. The current analysis attempts to identify factors that influence India’s bilateral aggregate IIT index in a dynamic panel framework. In particular, it attempts to assess whether greater divergence in environmental standards adversely influence India’s IIT patterns. The empirical estimates reveal that India’s IIT is found to be relatively higher with countries that are technologically more advanced and have relatively stringent environmental standards. The observation indicates that India is possibly specializing in relatively low technology-intensive products vis-à-vis its developed trade partners. The analysis concludes that India would be better off by facilitating innovation and adhering to a higher level of environmental standard. JEL Codes: F13, F14, F15, F18

The importance of deep integration in preferential trade agreements: the case of a successfully implemented Ukraine–Turkey free trade agreement

The importance of deep integration in preferential trade agreements: the case of a successfully implemented Ukraine–Turkey free trade agreement

Transnational Corporate Power: From Lomé to the CARIFORUM-EU EPA

The post-Lomé era, from the turn of the twenty-first century, marks a shift from an epoch of non-reciprocal preferential trade under successive Lomé Conventions to one of reciprocal trade within a free trade area under a neoliberal international economic order. Post-Lomé thus constitutes a new age in the relationship between the European Union (EU) and African, Caribbean and Pacific (ACP) states. In this context, there are several factors that distinguish the Lomé period of preferences from twenty-first century agreements between the EU and ACP states, and which have influenced this development in the Europe-ACP relationship. This article focuses on the influence of one particular factor on the evolution of relations between Western Europe and ACP states that is often overlooked or undertheorized in the predominantly state-centric analyses of same. It therefore investigates and demonstrates the connection between transnational corporate interests and the dramatic shift to the post-Lomé framework for engagement between the EU and ACP states, as well as the progressive neoliberalization of Lomé era agreements even before the dramatic shift in this relationship. The study establishes that the agenda for and outcome of negotiations on the Cotonou Agreement of 2000 largely reflects transnational corporate interests, and that the CARIFORUM-EU EPA of 2008 is also consistent with the pattern of their neoliberal pursuits.