Reduction Of Non-tariff Barriers Research Articles

The Impact of Taiwan's TPP Accession on Canada

This paper analyzes the impact on Canada’s economy of Taiwan’s accession to the Trans-Pacific Partnership (TPP) Agreement. While the TPP is to be concluded by the twelve current negotiating parties, it will allow accession by other regional economies, consistent with APEC’s endorsement of the TPP as a “pathfinder” approach to an FTAAP, which contemplates APEC economies that are ready to do so proceeding faster than others in deepening trade relations. Taiwan has clearly signaled its interest in acceding to the agreement. The approach in this study includes descriptive analysis of the commercial relationship between Taiwan and Canada and an analysis of the impact of Taiwan’s accession using computable general equilibrium model simulations that take in to account tariff liberalization, preference under-utilization and utilization costs, liberalized rules of origin, reduction of non-tariff barriers (NTBs) on goods and on cross-border services, and liberalization of foreign direct investment in services and the resulting implications for services trade through foreign affiliates (“commercial presence” or “Mode 3” services trade in WTO terminology). The liberalization assumptions are based on “best guesses” as to what the TPP agreement and the terms of Taiwan’s accession would actually be. The study concludes that Taiwan’s accession would generate over $20 billion of economic welfare gains for the incumbent TPP12 parties while Taiwan would enjoy a 2.8% increase in real GDP and $29 billion in economic welfare gains. For Canada, Taiwan’s TPP accession has some small structural/sectoral effects but no significant net impact on GDP or economic welfare. The results reported here suggest that Taiwan may need a “Canada strategy” to support its accession bid.

Transatlantic Free Trade: An Agenda for Jobs, Growth and Global Trade Leadership

This paper takes stock of the key arguments against a transatlantic free trade agreement between the European Union and the United States. It concludes that these arguments are no longer convincing and that it is time to launch negotiations on a free trade agreement. There are two strong reasons for such an agreement. First, it would generate significant economic gains. An elimination of tariffs alone would generate gains sizeable enough to make the effort worthwhile. In combination with a reduction in non-tariff barriers and regulations that inhibit trade in services, the gains would be significantly higher than through any other trade agreement that could realistically be achieved in the medium-term future. Thus, those who argue that sclerotic growth in the West is a strong argument against launching transatlantic trade initiatives fail to understand the economic logic of trade agreements. The EU and the US remain the two largest economies in the world; freer trade between them would generate significant additional growth because they are already large economies. Second, a transatlantic free trade agreement would generate a new dynamic in the world trading system that would make many other countries change their current defensive attitudes towards multilateral liberalisation. It has been demonstrated in the past that significant preferential liberalisation has this effect on other countries. If other countries oppose significant liberalisation—or if they increase their own trade barriers—the best counter-strategy is to press ahead with other forms of liberalisation that increase the costs of the status quo. The Doha Round of trade negotiations has stalled for many years and no change in situation is in sight. In the event that there is liberalisation within the World Trade Organization in the near to medium-term future, it is likely

Quantitative Estimates of the Economic Impacts of a Korea–United States Free Trade Agreement

This paper investigates the bilateral trade pattern between South Korea and the United States and examines the economic impact of a Korea–United States (KORUS) free trade agreement (FTA). Three related general equilibrium approaches were used to investigate the effects of a KORUS FTA. The static general equilibrium model estimates the efficiency gains from resource allocation. The capital accumulation general equilibrium model includes the growth bonus from the increased incentives for savings and investment created by the static efficiency gains. The productivity enhancement general equilibrium model augments the capital accumulation model by taking into consideration the dynamic efficiency improvements from competitive effects in the economies over time. The last welfare gain turns out to be the biggest gain from the KORUS FTA, dwarfing the static efficiency gains. The results indicate that Korea could gain an estimated 0.32 to 5.97 percent in GDP from a KORUS FTA. Much of the gains that would accrue to Korea from the FTA with the United States would be productivity gains from increased competition between U.S. producers and domestic Korean producers. Another important area of gain for Korea would be increased efficiency from lower non-tariff barriers. This provides a strong argument for ensuring that an FTA between Korea and the United States is comprehensive and facilitates regulatory cooperation and the reduction of non-tariff barriers.

Location Choices of the Pharmaceutical Industry in Europe after 1992

Differences in regulations, technical standards and national medical cultures across EU member states created a highly segmented pharmaceutical market in Europe prior to the implementation of the Single Market Programme. The subsequent reduction in non-tariff barriers to trade would be expected to have an impact on where pharmaceutical multinationals locate production within the EU. Using discrete choice models, we study separately the determinants of multinational location choices in terms of expanded production at existing facilities and location of start-up firms. Our results support the findings of models which predict reduced rather than increased agglomeration in the face of trade-cost reductions.

An Analysis of Removal of Agricultural Trade Barriers between the United States and Canada with Emphasis on the Southeast

SUMMARYA four‐region, 23‐commodity small world agricultural trade liberalization model within the SWOPSIM framework is used to measure the impact of tariff removal between the United States and Canada. The tariffs are simply defined as negative import subsidy equivalents in the model and are then removed from the trade prices. The model recalculates domestic supply and demand levels in all regions, rebalancing world trade, production, consumption and prices.In summary, the impacts of the Canada‐U.S. Trade Agreement on selected commodity groups are significant. Canadian imports of beef and veal, poultry meat, soybean oil and fresh strawberries increase. Furthermore, the results indicate larger trade flows for selected products and declines in producer and consumer prices in Canada, U.S. and Southeast regions.Since the U.S. share of Canadian agricultural imports averaged 60% in the 1980s, the impact of trade liberalization will be greater in Canada in selected commodities than in the U. S. or the southeastern region, and Canadian dependence on the U.S. market will be increasing in the future. The tariff phaseout, together with a reduction in nontariff barriers and harmonizing of domestic agricultural policies, will create more export opportunities in selected commodities for both the United States and Canada, and will create the world's largest free trade market.

Economic Effects of the Tokyo Round

The conclusion of the Tokyo Round of Multilateral Trade Negotiations (MTN) in April 1979 was an important milestone in international commercial diplomacy. It marked the seventh round of multilateral reductions in international trade barriers negotiated under the General Agreement on Tariffs and Trade (GATT) since World War II. Tariffs on industrial products had last been reduced on a major scale in the Kennedy Round, which concluded in 1967 and was implemented over the following five years. Tariffs are being reduced even further by the Tokyo Round, the reductions being phased in over eight years beginning 1980. An even more noteworthy accomplishment of the Tokyo Round is the negotiation of a series of codes covering nontariff barriers (NTBs). Depending on how these codes are interpreted and adhered to they will mean some significant reductions in NTBs and will clarify and harmonize government policies involving international trade. This paper provides an economic analysis of the effects of the Tokyo Round. It is organized as follows. In Section II, we examine the Tokyo Round negotiations, including the initial tariffs by country and sector, the tariff-cutting procedure and tariff offers and the NTB codes. In Section III, we present the combined effects of the reductions in tariffs and NTBs calculated using the Michigan model of world production and trade that we have developed for this and related purposes. In Section IV, we consider the possible effects of NTB codes that we were unable to quantify and also look at trade policies that were excluded from the Tokyo Round. In Section V, we offer concluding comments.

The Continuing Debate about Freer Trade and Its Effects: A Comment

One of the three major contributions by Canadian economists to the discussion of international trade theory and applications during the postwar years has been the work on Canada-US free trade (by which the authors have meant reductions in non-tariff barriers as well as reductions in tariffs). A second major contribution has been the development of the concept of effective tariff rates. The concept of effective tariff rates has been widely adopted and estimated empirically for both industrialized and developing countries. A third major contribution has been the concept of intra-industry trade. The two latter contributions have received recognition internationally (effective tariff rates more quickly than intra-industry trade concepts), while the original theoretical and empirical work on the gains from Canada-US free trade does not appear to have been duplicated elsewhere. My own view is that all three contributions throw light on Canada's economic performance in international trade, industrial structure, and the internationally competitive positions of Canadian manufacturing.