Trade Liberalization Process Research Articles

Regional Trading Arrangements – Stumbling Blocks or Building Blocks in the Process of Global Trade Liberalization?

Over the last two decades of the world economy development, both the process of global/multilateral trade liberalization and the regional economic integration have intensified in parallel. Contemporary economists are unanimous in asserting a strong interdependence between the two processes. The voices are much less in accord as to the normative evaluation of this correlation. This paper will offer a detailed analysis of both the 'pessimist' and the 'optimist' arguments. The analysis will try to clarify whether the regional trading arrangements obstruct or facilitate the process of multilateral trade liberalization. The analysis takes heed to distinguish between earlier waves of regionalism in the world economy and the latest wave, which support the argument that new regionalism is relatively “benign” to outsiders and the multilateral trading system as the whole. Since the global trade liberalization is led primarily through the World Trade Organization (WTO), the analysis is particularly sensitive to the norms and principles of the General Agreement on Tariffs and Trade (GATT), i.e. the part played by the WTO as a key factor in establishing what influence the regional integration exerts upon the process of multilateral trade liberalization.

��Low-end Locking�� of China��s Industrial Clusters in Global Value Chain: Incentives and Breakthrough Measures

With the deepening of the process of economic globalization and trade liberalization, the different links of global value chain can be distributed in the space.. China’s local industrial clusters, as a carrier of regional economic development, are rapidly embedded in global value chain in all kinds of ways. But for various reasons, China’s industrial clusters have been “locked in” the part of global value chain for a long time, and have been plunged into the dilemma of “race to bottom” and “the poverty” growth. The paper analyzes the incentives of low-end locking of China's industrial clusters in global value chain and proposes breakthrough measures.

Oman's trade and opportunities of integration with the Asian economies

This paper investigates the determinants of trade between Oman and its major Asian trading partners in order to gauge the impact of the process of trade liberalisation. The empirical findings based on the gravity model indicate that Oman's imports from Asia are strongly determined by Asian population, Asian per capita gross domestic product (GDP), real exchange rates, distance and Oman's per capita GDP. The results also provide strong evidence that Oman's oil exports to Asia are strongly and equally determined by Asia's and Oman's population. Our findings reveal that while distance is not a friction to Oman's oil exports, it has a weak regressive effect on non-oil exports. Our results also indicate a negative but statistically insignificant effect of trade liberalisation on non-oil exports. These findings certainly have policy implications in terms of Oman–Asia trade relationship and in particular the need for more policy intervention to liberalise the non-oil exports sector so as to facilitate its wider integration within Asia.

The Ecomomic Impact of Agricultural Products in the Albanian Exports

Exports are considered as one of the priorities of government for the developing of the economy and facing the trade liberalization process of Albania in the international market. The increasement of exports is one of the most fundamental indicators for increasing the competitiveness in the economy, the increase of investors and one of the indicators for increasing the employment in Albania. The performance of the economy in these years has been characterized in quite large fluctuations in its stability, restructuring, growth rate and in this way of huge transformations. This kind of performance has accompanied also that part of export-oriented economy by turning the economy and the domestic market to a market economy that is relied mainly on imports. Based on the Intermediate Interim Agreement on the 1- December 2006, it is expected a significant impact on domestic economic structure. Due to this agreement the export tariffs will decrease faster than those of imports. This is expected to have a positive effect because in the EU countries perform about 60% of imports and 80% of exports . Because of the rapid expansion of exports and moderate growth in imports , there has been an improved trade deficit, helping to balance the demand and supply for foreign currency and to maintain the national currency . Exports during the first 8 months of the year increased 25 billion ALL compared with the year 2010. Domestic Exports includes the agricultural products (medicinal plants, tobacco), by metals (ferrochrome and aluminum), leather, from timber and mineral products (fuels). Exports of agricultural products include all countries in the region, but we are also exporting to Hungary, Germany and other countries of the European Union. DOI: 10.5901/ajis.2013.v2n1p263

World’s Agricultural Production and Trade: Food Security at Stake?

The extraordinary events of the last couple of years, like the surge and the topsy-turvy movement in oil, raw material and food prices, or the development of a so far unprecedented global financial and economic crisis, have been heavily testing the endurance of those earning their living from agriculture and related activities. All these troubles have not been beneficial to the ongoing trade liberalization process within the framework of WTO. Answers to the challenges at national level and the continuing proliferation of inter- and intraregional free trade agreements make the early global liberalization even less probable. The situation is further complicated by those really divergent changes of agricultural policy that are about to develop on the opposite sides of the Atlantic. In this paper, we describe the recent development of world’s agricultural production and trade; offer an insight into the evaluation problems of worldwide food insecurity; and briefly compare the upcoming agricultural policy reforms in Europe and the US.

Trade, wages and skill accumulation in the emerging giants

Concerns over rising inequality have threatened to slow the process of trade liberalization in emerging economies, such as China and India. But even if trade liberalization raises inequality, these effects may be short lived and associated with important dynamic effects such as capital and skill accumulation. Using a simple dynamic open economy model we show that trade liberalization can induce substantial human capital accumulation, and that the transition path for the skill premium can be non-monotonic. We then consider a higher dimensional version of the model which is calibrated to data for China and India. In both cases trade liberalization generates a jump in the skill premium on impact, and a fall in the long run. It also generates strong wage growth for both skilled and unskilled labor and substantial accumulation of skilled labor.

Does Trade Openness Make Countries Vulnerable?

This paper focuses on the welfare costs of exposure to shocks linked to trade openness, an issue that is of main interest for international economic policy. It addresses the question as to whether the current process of trade liberalisation has a net destabilising effect on partner countries, increasing their vulnerability. Starting from a broader definition of vulnerability than simply vulnerability to poverty because of trade openness, this paper highlights, presenting both probit and 3SLS estimates, a robust and significant long term relationship (1960-2007), in a large sample of countries, between the “extreme volatility” of consumption (crisis and boom) - induced by trade openness - and the deviation of consumption growth from its expected path. The novelty of this paper lies in its ability to match two strands of the literature (volatility and vulnerability). It improves the existing literature on aggregate volatility by adding a forward looking lens; a feasible notion of benchmark and a counterfactual, all essential elements of a vulnerability framework.

Towards Farm Management Strategies on Dominican Rice Farming under DR–CAFTA : A Case Study of Monte Cristi Province

Rice is the main staple food crop in the Dominican Republic (DR). Although 45% of the rice farmers hold less than 4 ha, rice plays a significant role in food security and provision of employments. However, the process of trade liberalisation given by the Dominican Republic, Central America and the United States of America free trade agreement (DR–CAFTA) questions the viability of Dominican rice farming. Besides, the US rice farmers have larger farms, better access to technology and credit and higher yield compared to those in the DR. This calls for sound management strategies and policies to overcome some of the forthcoming effects of the DR–CAFTA on the Dominican rice farming. Thus, this study identifies and evaluates the Dominican rice farmers’ agronomic and economic strategies on this FTA. The analysis used cross–sectional survey data collected from 93 rice farmers in Monte Cristi province. The results indicate that to reduce rice–production costs, self–financing, and expanding farmland size were the main agronomic strategies. While land levelling, buying certified seeds, and increasing yield were the main economic strategies. The evaluation of these strategies revealed that fertilizer, machinery service costs and paid interest on operating capital were key components to reduce rice–production costs. Further, results indicate increasing returns to scale for rice farmers. To undertake such strategies, the transformation of farmers’ association to a cooperative is a promising strategy from farmers’ side.

Financialization against Industrialization: a regulationnist approach of the Brazilian Paradox

The process of trade and financial liberalization has fundamental consequences on the development of Brazilian industry. The relatively rapid reconfiguration of the institutional form of insertion into the international regime, in a context of intensification of foreign competition and lack of consistent industrial policy has been the engine of significant changes in the structure of industry. At the end of the 1990s, a new mode of regulation emerged, based on a new accumulation regime as result of the structural changes observed. Several empirical studies have highlighted the occurrence of deindustrialization and Dutch disease caused by the strong appreciation and volatility of the exchange rate, while others, on the contrary, see the opportunity for modernization of plants from the lower prices of imported capital goods. This paper provides new empirical evidence on the chances of industrialization and Dutch disease, which marks the current debate on the effects of real exchange rate appreciation to the Brazilian economy. For its relevancy regarding the future of the industry in this country, our work also examines the recent evolution of the Brazilian growth in the context of the spread of the North-American crisis. This regime has been characterized by a strong dominance of financial accumulation ; it constraints on investment and consumption decisions, which would explains the sharp drop of the industrial production in late 2008, when the global financial markets were largely affected. Consequently, the prospects of Brazil’s macroeconomic performance depend crucially on the reactions of the current mode of regulation, and the regime of accumulation, to the challenges posed by the current stage of evolution of the global economy. By using the concept of financialization it is possible to achieve a better understanding of the relationship between industrial structure changes and financial liberalization.

Technology, trade and skills in Brazil: Evidence from micro data

Brazil was characterized by a rapid process of trade liberalization in the 1990s, resulting in a dramatic increase in the volumes of exports and imports since the year 2000. Over the same period, the relative demand for skilled labour has increased substantially. To investigate whether these two simultaneous phenomena are linked is the purpose of this paper. More particularly, this study focuses on the possible impact of domestic technology, capital complementarity and trade openness on the relative demand for skilled labour in Brazilian manufacturing firms, using a unique panel database of Brazilian manufacturing firms over the period from 1997 to 2005. The empirical evidence supports the hypothesis that technology played a role in determining the skill upgrading of Brazilian manufacturing firms. Indeed, the estimations show that domestic technology and capital formation are complements for skilled workers and that imported capital goods clearly act as a skill-enhancing component of trade.

The Relevance of CARICOM’s Existence to the Virgin Islands in the Context of Globalization

The purpose of this study was to consider the relevance of CARICOM’s existence to the Virgin Islands (BVI). Its relevance becomes more significant to the BVI and the Caribbean, by extension, when the globalization phenomenon is applied; a phenomenon that has been in existence for centuries. Overall, the study concluded that even though the BVI remains only an associate member of CARICOM and not of CSME, it still has an interest in the progress of the regional grouping and its trade initiatives. Over the years, CARICOM has been struggling with its identity as a unified grouping. Nonetheless, it was found that in an effort to combat the trade liberalization process, the grouping must find that inner connection to advance its agenda on the global stage. Accordingly, it has been suggested that CARICOM begin to focus on its strengths and opportunities in order for economic development across the region to occur. It has also been recommended that more serious considerations be taken towards the development of a comprehensive regional market for the trading of goods and services, that is, the Caribbean Single Market and Economy (CSME). To substantiate its findings, the paper used the qualitative research approach, combined with a situation (SWOT) analysis.

Impact of RTA and PTA on Bangladesh’s Export: Application of a Gravity Model

As part of its growth strategy, Bangladesh instituted a trade liberalization process in the early 1990s which gained momentum in later years. Trade grew from 24.4 to 45% of GDP between 1980–81 and 2007–08, an indicator of increased liberalization as well as the growing importance of the external sector in Bangladesh. Apart from its unilateral liberalization, Bangladesh participates in three different regional trade agreements (RTAs): the South Asian Free Trade Agreement (SAFTA), the Asia Pacific Trade Agreement (APTA) and the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation Free Trade Area (BIMSTEC FTA). In addition, Bangladesh signed preferential trade agreements (PTAs) with the member countries of the Developing 8 (D8). Because of the growing importance of RTAs, this study investigates their contribution to the export flows from Bangladesh using the gravity model that has become the primary tool for estimating the trade effects of regional integration. Regression results of bilateral exports for 40 countries from 1992–2009 indicate two crucial aspects. Firstly, all the RTAs consistently maintained statistically significant negative signs, except the BIMSTEC FTA and SAFTA, which showed insignificantly positive and insignificantly negative effects respectively. Secondly, the intensity of negative effects and the level of significance have shown a declining trend as the status of those blocs has changed from political or economic cooperation agreements to preferential agreements and from preferential agreements to free trade agreements. Thus, the intensity of tariff liberalization and the degree of sectoral coverage seem to be the important determinants of the RTAs’ performance. Therefore, experts expect that full-fledged implementation of FTA provisions and the elimination of all tariff and non-tariff barriers might result in a higher degree of integration.

Consumers’ Welfare and Trade Liberalization: Evidence from the Car Industry in Colombia

This paper examines the effects of tariff removal on consumers’ welfare focusing on the Colombian trade liberalization process and its automobile industry. Using product level data this paper calculates the post-reform gains in consumers’ welfare to be just below three thousand dollars per purchaser. Counterfactual simulations suggest that the gains achieved are due, for the most part, to increased variety rather than to price competition.

Comercio internacional libre y las consecuencias para las áreasrurales europeas

<span>General equilibrium models estimated by various authors and institutions show that, although trade liberalization leads to aggregate welfare gains, there are winners and losers. The aim of this article is to determine to what extent rural regions have won or lost in the trade opening process that has been underway since the 1990s. The economic literature on international trade and regional development suggests the presence of opposing forces, making the global impact of international trade liberalization on rural areas ambiguous. Using a series of empirical studies, the author assesses the impact of trade opening on the European regions, observing a significant proportion of losers in the trade liberalization process among the rural regions of Europe. The article concludes with an analysis of the negative effects of welfare losses on the environment and territorial ordering in many rural regions, and suggests the need to address the problem by modifying current EU policies.</span>

The Impact of Trade Policy Reform on Social Welfare, Inequality and Poverty: The case of Lao PDR

In 1997, Lao PRD became a full member of ASEAN and continued trade reform as per AFTA commitments in following year. International trade and economic growth were related during the reform periods. This paper examines the impact of trade policy reform on social welfare, inequality, and poverty in Lao PDR from 1997-2003. In addition, we investigated the effect of price changes under AFTA commitments by the pass-through approach between 2005 and 2007. We also analyzed the social welfare and inequality measurement indices which were based on the Atkinson-(1970) and Sen (1973) approaches by using Lao Expenditure Consumption Survey data. We found that during trade liberalization process could increase households’ social welfare by 196,529 LAK and inequality declined by 10 percent. Moreover, the import commodity prices change under AFTA commitments decreased significantly in 2007 especially consumption goods and investment capital goods. Those effects seem to benefit poor households and farmers who could then purchase lower imported commodity prices and higher quality investment capital goods.

El impacto de la industria petrolera en la economía mexicana

This paper presents an analysis of the development of the oil industry in Mexico and its importance for the economic development of this country. First, the development of said industry from its beginnings at the end of the last century to the 1970s is analyzed. Second, the relationship between the oil industry and the foreign policy followed by Mexico is analyzed, where Oil has been used by the governments of that country as an instrument of foreign policy through which it has sought to achieve national objectives in international politics. Finally, the last section analyzes the role of oil in the forging of the economic crisis that Mexico has suffered since 1980 and its role in the current process of trade liberalization and structural adjustment of the economy.

Bad Problem Getting Worse: Regional Trade Agreements and the Future of the Multilateral Framework on Competition Policy and Law

At present, Regional Trade Agreements (RTAs) have proliferated extraordinarily in the world trade landscape. Some trade diplomats are coming to recognize the greater significance of regional competition policy and law and are arguing that RTAs are likely to prevent to create anti-competitive cross border merger and acquisition business practices by firms. They advocate that competition-related provisions should be included in the framework of RTAs. Consequently, the adoption of these provisions in RTAs is expanding and becoming a trend in the regional trade landscape. On the contrary, trade scholars have long debated how regionalism may be able to contribute to the multilateral trading system. Due to the priority of market opening objectives in the trade liberalization process, they believe that lowering tariff barriers and removing a variety of non-tariff barriers are the principal issues to be addressed and that the implications of competition policy and law in enhancing trade welfare effects is not directly relevant to the objective pursued. Based on the relationship between regionalism and multilateralism in the contemporary trade discourse, this article discusses the prospects for the multilateral framework on competition policy and law and asks whether there is a link between these and at least the beginnings of a regulatory process at global level.

Trade liberalization, rent sharing and wage inequality in Tunisia, 1998–2002

This paper attempts to empirically explore the effects of trade liberalization process in Tunisia on average real wages and wage inequality, via industry rents. For this purpose, we adopt, following Revenga (1997), a flexible model of wage setting that can accommodate both the presence of rent-sharing behavior and competitive wage determination. Results suggest that the quasi-rent reduction is one of the adjustment mechanisms used by Tunisian manufacturing firms to face trade policy changes. Two more inter-related findings deserve interest: skilled labor was more able than unskilled labor to capture rents before trade reforms. Hence, the reduction of rents appears to have reduced wage inequality between skilled and unskilled labor, over the period 1998-2002.

Bad Problem Getting Worse: Regional Trade Agreements and the Future of the Multilateral Framework on Competition Policy and Law

At present, Regional Trade Agreements (RTAs) have proliferated extraordinarily in the world trade landscape. Some trade diplomats are coming to recognize the greater significance of regional competition policy and law and are arguing that RTAs are likely to prevent to create anti-competitive cross border merger and acquisition business practices by firms. They advocate that competition-related provisions should be included in the framework of RTAs. Consequently, the adoption of these provisions in RTAs is expanding and becoming a trend in the regional trade landscape. On the contrary, trade scholars have long debated how regionalism may be able to contribute to the multilateral trading system. Due to the priority of market opening objectives in the trade liberalization process, they believe that lowering tariff barriers and removing a variety of non-tariff barriers are the principal issues to be addressed and that the implications of competition policy and law in enhancing trade welfare effects is not directly relevant to the objective pursued. Based on the relationship between regionalism and multilateralism in the contemporary trade discourse, this article discusses the prospects for the multilateral framework on competition policy and law and asks whether there is a link between these and at least the beginnings of a regulatory process at global level.

Application of Safeguards and Anti-Dumping Duties in Colombia

Colombia's experience in the use of safeguards and antidumping duties differs from international trends. On the one hand, the number of investigations conducted is substantially lower than that recorded in most of the hemisphere's large and medium-size countries. On the other hand, while there is a growing international trend of more frequent use of antidumping as opposed to safeguards, in Colombia the safeguard process has been the more used policy instrument. Although several large and medium-size firms are familiar with the application of safeguards and antidumping duties, there is still a relative unfamiliarity regarding the instruments in most of the private sector. The institutional arrangements related to the investigations and the decisionmaking processes have proven to be stable and sound. The trade liberalization process in the country has created awareness of the importance of preserving the competitiveness of production chains to strengthen their insertion in international markets, which has restrained the authorities from restricting access to intermediate goods and raw materials. The evaluation of the Colombian experience also raises concerns about the potential discretional use of these instruments. The relatively intense use of safeguards and antidumping measures in some specific periods and sectors, especially in the agricultural sector, shows that the institutional framework is not always enough to guarantee a disciplined use of the instruments.