International Trading System Research Articles

Modern Industrial Policy and the World Trade Organization

This article surveys the economics of industrial policy as it relates to the World Trade Organization (WTO). Motivated by concern that the modern use of industrial policy is emerging in ways that threaten cooperation in the international trading system, the article begins with the basic historical economic framework for tying industrial policy to underlying market failures. It then introduces the dominant economic understanding of the role played by the WTO, examining the WTO's rules on subsidies (and thus industrial policy), the unease with the evolution of the trading system's subsidy rules, gaps in knowledge, and important data and measurement shortcomings. The main part of the article examines four areas in which modern industrial policy operates differently and has become especially important for the trading system: China, supply chain resilience, supply chain responsiveness, and climate change. The article identifies the evidence to date, open questions, and potential paths forward for economic research to help inform policymakers’ efforts to restore international economic cooperation in trade and industrial policy.

Multi-Scale Higher-Order Dependencies (MSHOD): Higher-Order Interactions Mining and Key Nodes Identification for Global Liner Shipping Network

Liner shipping accounts for over 80% of the global transportation volume, making substantial contributions to world trade and economic development. To advance global economic integration further, it is essential to link the flows of global liner shipping routes with the complex system of international trade, thereby supporting liner shipping as an effective framework for analyzing international trade and geopolitical trends. Traditional methods based on first-order global liner shipping networks, operating at a single scale, lack sufficient descriptive power for multi-variable sequential interactions and data representation accuracy among nodes. This paper proposes an effective methodology termed “Multi-Scale Higher-Order Dependencies (MSHOD)” that adeptly reveals the complexity of higher-order interactions among multi-scale nodes within the global liner shipping network. The key step of this method is to construct high-order dependency networks through multi-scale attributes. Based on the critical role of high-order interactions, a method for key node identification has been proposed. Experiments demonstrate that, compared to other methods, MSHOD can more effectively identify multi-scale nodes with regional dependencies. These nodes and their generated higher-order interactions could have transformative impacts on the network’s flow and stability. Therefore, by integrating multi-scale analysis methods to mine high-order interactions and identify key nodes with regional dependencies, this approach provides robust insights for assessing policy implementation effects, preventing unforeseen incidents, and revealing regional dual-circulation economic models, thereby contributing to strategies for global, stable development.

Mapping the cobalt and lithium supply chains for e-mobility transition: Significance of overseas investments and vertical integration in evaluating mineral supply risks

The potential shortages of critical materials such as cobalt and lithium induced by the global e-mobility transition have recently raised enormous concerns. Here, we map the global cobalt and lithium material flows and discuss their supply risks at both country and company levels. We demonstrate highly concentrated supply chains for cobalt and lithium, especially in the production (69 % of cobalt in DRC and 80 % of lithium in Australia and Chile), refining (over half in China), and for cathode materials and cell production (by Eastern Asian countries). The top 10 companies control around 80 % of global mining and refining production. Overseas investments, particularly by multinational companies, may potentially decrease supply chain concentration. Many upstream companies engage in vertical integration to enhance business value, whereas downstream companies invest in mining or refining operations for a reliable supply. Achieving supply chain security for cobalt and lithium requires transparent international trading systems, responsible sourcing practices, and enhanced recycling.

The effect of output level, exchange rate and interest rate on inflation in BRIC-T countries

PurposeIn this study, it is analyzed the validity of the exchange rate pass-through (ERPT) effect and the effect of interest rate and output level on the inflation rate (IR) in Brazil, Russia, India, China and Turkey (BRIC-T) between the years 1995Q1 and 2022Q4.Design/methodology/approachThe methods such as the panel unit root test developed by Westerlund (2012), the LM bootstrap panel cointegration test developed by Westerlund and Edgerton (2007), the common correlated effects (CCE) estimator developed by Pesaran (2006) and the augmented mean group (AMG) estimator developed by Eberhardt and Bond (2009) that take into account the cross-section dependency are applied for analysis.FindingsAs a result of the findings, it is determined that the ERPT effect is valid in Turkey, Brazil, Russia, India and China and the cost channel is valid only in China. Finally, it is found out that output level positively affects inflation in Turkey, Brazil, Russia, India and China.Practical implicationsAll these results indicate that the economies of Turkey, Russia, Brazil and India have a fragile structure, especially in terms of inflation. Therefore, the central bank of these countries should maintain exchange-rate stability to implement the inflation-targeting strategy successfully. In this context, central bank independence should be increased in these countries in achieving this objective. Also the results indicate that it is still early to consider whether BRIC-T countries and accordingly the Belt and Road Initiative will be an alternative against the domination of the USA and European Union (EU) on international trade system or it will substitute them.Originality/valueIn this study, it is tested that the impact of interest-rate (NIR), exchange-rate (FER) and output level (IPI) on general level of prices. Besides, it is analyzed that whether production level affects the IR. Also, the study investigates the economic issues such as ERPT effect and cost channel. The study analyzes whether China's Belt and Road Initiative is successful or not. In this study, we used the panel data methods that allow for structural breaks and cross-section dependency. For these reasons, this study differs from other studies in the literature both in terms of scope and methods used.

Understanding the Guanxi Culture in Chinese Art Market: Okada Kosho and Shanghai Art World in the Late-nineteenth Century

Shanghai art market had developed a strong international trade system since China was forced to have her gate ajar in the late-nineteenth century. In 1873, a Nagasaki doctor Okada Kosho (1821-1903) travelled to Shanghai and Suzhou. Thanks to the development of stochastic models for the analysis of social networks in contemporary statistics, the structure of Okada’s guanxi (social connections) in Shanghai and Suzhou in the late nineteenth century can be represented by the model, which illustrated that Okada was connected with a few “bridges”, including the Japanese artist Yasuda Rozan, Japanese Consulate Shinagawa Tadamichi, an official dispatched at the end of 1860s to Shanghai, Kumashiro Encho, and the prominent art collector of the Guoyun Chamber, and Gu Cheng, all of whom helped Okada Kosho to explore the Shanghai and Suzhou art world. Through the bridging ties spanned by these individuals, Okada interacted closely with a particular cluster of Chinese artists, art collectors and art dealers. This proved that the Chinese art community heavily relied on social connections of the “bridges” in advertising itself and spreading its reputation. This paper first outlines the Shanghai art market in the late nineteenth century based on Okada Kosho’ s Diaries of Shanghai and Suzhou (1890). It then argues for the opportunity and limitation of building guanxi in the context of the Chinese art market. Finally, it suggests research approaches based on viewing the late-nineteenth-century Shanghai art market in this new way.

Closing the Legal-Technical Gap in Digital Trade

Abstract As digital trade continues to reshape the global economic landscape, the key objective of this study is to bridge a significant Legal-Technical gap characterised by the discord between rapid technological advancements and slower-evolving legal frameworks. This paper delves into the complexities of this gap and emphasises the need for a holistic approach to understand and address the multifaceted challenges it presents to businesses, policymakers, and the broader international trading system. This research offers a novel theoretical foundation for exploring and bridging the Legal-Technical gap in digital trade. Initially, it discusses the integration of legal and technical knowledge systems, which leads to the emergence of specific transdisciplinary knowledge as described by Andrew Sage's Theory of Systems. Subsequently, it explores the acquisition of universal knowledge about these systems through Herman Dooyeweerd's multi-aspectual philosophy. Furthermore, it proposes the development of a transdisciplinary knowledge representation using Fritz Zwicky's Morphological Method. Our analysis reveals that focusing on lingual, social, economic, and aesthetic aspects enables the prioritisation of critical factors essential for enhancing legal-technical functionality.

Understanding the evolution of China’s approach to digital trade: interests, ideas, and institutions

Amid economic globalisation and the rapid development of advanced technologies in recent years, the world economy has shown an increasing trend of digitalisation, whilst digital trade has become the primary pattern of international trade. Based on differences rooted in socio-political systems, as well as the current precarious geopolitical realities, governments adopt different ideas in accordance with their respective interests in the institutionalisation of digital trade. As the world’s second-largest economy and a major digital power, China’s behaviours and ideological stances attract scholarly attention and states’ concern. Whilst Western countries and scholars have criticised China’s ideas of “government intervention in data regulation” and “cyber sovereignty” applied in its existing approach to digital trade, warning that China’s approach poses a threat to Western powers’ adherence to liberalism in the international digital trade system and the idea of “free data flow” in their approaches to digital trade, there has been insufficient research into how China’s approach to digital trade has evolved over time and which ideas and interests have influenced it. To bridge this gap in the literature, this paper divides the evolution of China’s approach to digital trade over the past three decades (1993–2023) into three phases using a longitudinal approach. This research conducts qualitative content analysis using official documents, white papers, and declarations from official Chinese websites, then adopts the 3I analytical framework to analyse which ideas and interests have influenced China’s approach in each phase and how its approach to digital trade has evolved over time.

The Impact of Digital Finance Development on Urban Carbon Emissions under the Dual Carbon Goal

Digital finance is an important tool for promoting the transition to a "low-carbon economy" in cities, and the application of digital finance can reduce carbon emissions in cities and provide a basis for the early realization of the "dual-carbon" goal. Under the background of "30-60" carbon peak and carbon neutral, the construction of international carbon trading system and system is accelerating. This project is based on the implementation of China's "30-60" dual-carbon strategy, focusing on some of the current problems faced by China, considering the impact of digital finance on urban carbon emissions, and focusing on the three aspects of technological innovation, industrial structure, and innovation effects, to conduct some attempts to explore the roles and opportunities of China's digital finance in support of carbon peaking and carbon neutrality. The role and opportunities of China's digital finance to support carbon peak and carbon neutralization are discussed.

Феномен долларового парадокса и его роль в трансформации современной мировой валютно-финансовой системы

Currently, fundamental transformations are occurring within the global monetary-financial system. Contrary to the prevalent belief in the decline of the dollar, this article seeks to demonstrate that the American currency exhibits adaptive properties, which solidify its position in the international financial system, albeit possibly at a lower level. The experiences of other countries in promoting their national currencies in the international exchange, trade, and investment systems indicate that all such attempts yield varying degrees of success. Regarding the life cycle of foreign currencies, they initially establish themselves rapidly, increasing their share in operations, but then quickly encounter a natural limit and retract within their respective countries. Conclusion dwells upon the fact that the dollar primarily serves as the currency of developing countries, as they predominantly accumulate it. However, the sheer number of these states renders the probability of diversifying risks through potential alliances in the monetary-financial sphere against the dollar practically negligible, with rare exceptions such as the BRICS countries.

The Situation of Freight Transport and Other Logistics Tasks in Laos

This study aims to analyse the obstacles and constraints in the shipping and logistics in Laos, a landlocked nation in Southeast Asia. Transportation and logistics play a pivotal role in Laos' national economy, acting as the lifeblood for the movement of goods and materials within the country and linking it to the international trade system. This case study highlights the significance of a robust logistics structure for Laos and its essential role in fostering economic development, agricultural growth, and connectivity. It also underscores the challenges faced by the country's logistics sector, such as limited-service frequency and road safety concerns. The study examines Laos transportation infrastructure, encompassing road, rail, and air networks, and sheds light on the obstacles and disparities that hinder value chain development in the country. These issues include disconnected stakeholder participation, the aging vehicle fleet, and financial limitations. Furthermore, the essay emphasizes the need for improved interconnectivity and inter-mobility to enhance the national, regional, and international connectivity of Laos and similar landlocked developing countries in Asia.

The Effect of the Fed Interest Rate Hikes on the Financial Crisis Evidence from Emerging Market Economices

The purpose of this paper is to systematically study the economic consequences of this policy adjustment by analysing in depth the five interest rate hike actions of the Federal Reserve and their chain reactions in emerging market economies, applying economic principles and methods. In particular, the central question of concern is whether the Fed's interest rate hiking policy constitutes an important trigger of the financial crisis in emerging markets. In order to shed light on this complex phenomenon in a comprehensive manner, this paper not only analyses in depth the macroeconomic logic behind the Fed's interest rate hike, but also explores its transmission mechanism in emerging market economies, as well as the economic vulnerability of these countries in the face of external shocks. The results of the study show that the collapse of emerging countries as a result of the Fed's interest rate hikes seems to be inevitable, but we can draw insights from it: actively promoting the reform of the international monetary system and supporting the inclusion of more types of currencies in the international trade and investment settlement system has become a common choice, including for some Western countries, as well as the need to continue to optimise the economic structure of the domestic economy and to strengthen the ability to manage and control the comprehensive risks.

Technologization of Legal Solutions in the field of International Trade Compliance

Modern technologies, and above all — information technologies, do play a significant role in navigating the complex regulatory and organizational landscape of compliance with international trade rules and management in the international trade system. The technologization of international trade compliance programs, internal compliance programs, the processes of systematization and automation of work with databases should be developed and implemented in all organizations engaged in international trade as an integral part of doing business and systematization of international trade operations. Taking into account the nature of international trade operations and their even minimal connection with specific States, in addition to clearly developing programs for compliance with international standards of trade and customs operations, the author substantiates a differentiated approach to international trade compliance, involving consideration of regulatory requirements of individual States and separate monitoring of compliance with the requirements of the State with which the relationship is associated. The author also dwells on a differentiated substantive approach to compliance procedures in trade using various software tools for monitoring and ensuring compliance in the absence, in most cases, of detailed international legal regulation (based on international treaties) of export-import operations.

Trade Protectionism and International Trade Policy Study

In the context of globalization and the close interconnection of economies, international trade has become a key driver of economic growth and global cooperation. However, the resurgence of trade protectionism has posed a series of challenges to international trade. The trade war between the United States and China stands as one of the most prominent cases of international trade friction, providing a valuable empirical scenario for the study of trade protectionism and international trade policies. This paper begins with an overview of the US-China trade war, including the development of trade relations, the scale and structure of trade between the two nations, and the causes and key issues of the trade war. Subsequently, the article reviews the theoretical underpinnings of trade protectionism, focusing on the concepts and forms of protectionism, as well as the motivations behind it. Through the analysis of the US-China trade war case, the paper examines the direct and indirect impacts of this trade conflict on the economies of both countries and the international trade order at large. The research finds that while trade protection measures may benefit certain countries or industries in the short term, such practices are likely to harm the overall interests of the global economy in the long run, increasing uncertainty and instability within the international community. Finally, based on the current state of international trade, this paper proposes a series of strategies to address trade protectionism and offers insights into the future development trends of a new international trading system and international trade policies. The article emphasizes that in the face of the challenges posed by trade protectionism, the international community must work together through dialogue and cooperation to find long-term solutions to global trade imbalances, thereby promoting the shared prosperity and development of the world economy.

Перспективы трансформации системы международных расчетов в Российской Федерации на базе цифровых валют центральных банков

Fragmentation of the global financial and economic space and difficulties in the organization of international settlements cause the restructuring of the international settlement system of the Russian Federation. Russia’s need for a reliable system of international settlements is due to its rapid involvement in the system of international trade, the need for high-tech imports, sales of raw materials and high-grade goods. One of the most promising options for a new design of payment infrastructure protected from sanctions pressure is the creation of an international payment system based on the peer-to-peer model using central bank digital currencies (CBDC). The Committee on Payment Infrastructures is actively theorizing this model. To date, the Russian Federation (digital ruble) and the People's Republic of China (digital yuan) demonstrate a high level of readiness to make settlements in the CBDC. The creation of a payment system based on CBDC fundamentally changes the entire landscape of international settlements, not only reducing the cost of transactions, but also ensuring their reliability, transparency and protection from the negative influence of other countries. Of particular interest is the model of clearing using CBDC in BRICS countries, which will allow for centralized netting of mutual positions of the countries in national currencies and gradual displacement of currencies of developed countries from mutual settlements.

US trade and industrial policy as a challenge to the modern system of international trade relations

The current stage of development of international trade relations is followed by a growing protectionism. At the same time, the ideas of free trade and fair competition are still declared as key principles for the development of the world economy. One of the authors of these principles, as well as the entire modern system of international trade relations, is the USA. In this context, the possible refusal of the USA to comply with these principles is a serious challenge for the existing system of international trade. The author tries to answer the question if some measures of the US trade and industrial policy correspond to the basic principles of the international trade system. As an empirical basis there were used the works of Russian and foreign economists specializing in trade policy, international economic relations and the US economy. To answer the stated question about the compliance of the US trade and industrial policy with the principles of free trade and fair competition, the author uses methods of analysis and generalization to assess the nature of certain measures and mechanisms implemented in the US trade and industry. The author comes to conclusion about the protectionist nature of several legal acts and mechanisms of the US trade and industrial policy. Considering that not only certain legal acts, but also industrial programs are protectionist in nature, it should be assumed that retreat from the principles of free trade and fair competition is an element of the US position on the development of the national economy as well as international trade. The USA takes advantage of the imperfections of the existing system of international economic relations, demonstrating the use of protectionist measures contrary to the principles of free trade and fair competition.

Article: Friendshoring and Reshoring Semiconductor Supply Chains: US CHIPS Act and the Multilateral Trading System

TheUnited States’ CreatingHelpful incentives to Produce Semiconductors and Sciences Act (CHIPS) Act, introduced in 2022, is a part of the package of new legislations aimed at reindustrialization of the United States (US) and maintaining its position as a hegemon across advanced technology verticals including semiconductors. The Act provides multiple fiscal incentives to entities that wish to set up, modernize or expand facilities engaged in semiconductor production related activities in the US. The Act intends to curb any nexus of beneficiaries with ‘a country of concern’ such as China and it blocks benefits for an entity dealing with such countries. Apart from reshoring capacities the Act also frontlines US strategy to friendshoring semiconductor supply chains.Measures like the CHIPS Act may clash with the international rules-based trading system. Parallelly, the innovative ways to bypass the trade rules may come with their own consequences. They highlight the weakness of the rules-based trading system in providing effective remedies for supply chain issues. In this regard, the article briefly discusses the semiconductor supply chain and traces its sophisticated nature in the context of localization/ally-shoring/onshoring policies. CHIPS Act, Semiconductors, Supply Chains, Friendshoring, Nearshoring, Reshoring, Industrial Policy, International Trade Law, WTO, Supply chain disruption, United States

Innovation’s, and civil servants’ behavioral models’ influence on the formation of customs authorities’ and financial intelligence units' cooperation and document exchange institutional conditions

The article examines the influence of innovation on the development of institutional conditions for cooperation and document exchange between customs authorities and financial intelligence units, considering the civil servants' behavior patterns as innovative approaches implementers. Cooperation between customs authorities and financial intelligence units provides a critical foundation for ensuring the integrity of international trade and financial systems. In a time of rapid technological advancement, innovation plays a key role in shaping the dynamics of this collaboration. Individual and organizational factors in the behavioral models' formation in the field of relevant cooperation and ways to increase the efficiency of interdepartmental cooperation are substantiated. Particular attention is paid to the procedure for the exchange of documents between customs authorities and financial intelligence units, considering commodity and financial flows in the global economy, and the inconsistency of national and international law in the international trade field certain provisions. The opportunities and challenges of such cooperation, incentives, and the ability to exchange information between customs authorities and financial intelligence units are identified. The need to introduce innovative tools and information exchange mechanisms specifically designed to identify suspicious signals in trade and financial transactions that may indicate crimes in international trade or sanctions evasion is argued. Instead of viewing innovation as a potential threat, customs authorities should actively engage with innovative enterprises to create mechanisms that consider technological advances. Such collaboration can lead to the development of systems and processes that not only ensure compliance with regulatory requirements, but also facilitate more convenient and efficient cross-border trade. The development of digital ecosystems opens promising opportunities for cooperation between customs and financial intelligence units. Such systems not only improve the efficiency of risk assessment, but also ensure financial crimes timely detection. This innovative approach creates a dynamic system that adapts to the changing nature of threats in global trade and finance. Keywords: innovations, behavior patterns of civil servants, customs authorities, financial intelligence units, cooperation, document exchange.

Is South Asia the missing bloc in world trade? An analysis of South Asian FTAs’ compatibility with WTO rules

PurposeSouth Asia is a region urgently seeking development, although it has failed in regional integration. It is the second least integrated region regarding the number of Free Trade Agreements (FTAs) and can thus be recognised as a missing bloc in the global multilateral system. This study aims to focus on South Asian FTAs and explores the problems of the inter-relations and compatibility between the systemic and regional trade systems.Design/methodology/approachThe study proposes a framework to benchmark the compatibility of South Asian FTAs with WTO rules. Primary data from 2000 to 2020, including descriptive analyses of reports, legal text of the FTAs, official documents and factual presentations, have been collected and analysed through thematic analysis using the proposed framework.FindingsThe study finds that, although South Asian FTAs meet most of the WTO requirements, they are not progressing toward facilitating and promoting trade. Data from 2000 to 2020 show us that South Asian FTAs have not significantly impacted trade between themselves. The study argues that, although South Asian FTAs fulfil some benchmarks, they show only a lukewarm interest in contributing to the international trading system as building blocs. It is therefore recommended that the case of South Asian trade liberalisation must be understood contextually and be given careful and exclusive attention by the WTO.Originality/valueAs such, this study is the first to claim that South Asian FTAs are not fully compatible with the WTO rules. They remain a missing regional bloc in the multilateral system, rather than a building bloc or a stumbling bloc, delaying the region’s opportunity to develop as a region and within the larger system.

Impact of the Business Environment on the High-Quality Development of International Trade Based on Data from 30 Provinces in China

Superior growth in international trade is an important part of economic development. A good business environment is a necessary condition for economic development as well. This paper picks data from 2013 to 2021 and uses 30 Chinese provinces as research goals, excluding Tibet. Based on the new development concepts of innovation, coordination, green, openness, and sharing, this paper establishes the measurement system of international trade. The business environment is evaluated from four aspects: the public supply level, human resource level, market environment level, and government services level. The connection between the business atmosphere and the superior growth of international trade is empirically studied through the fixed effect model. The entropy weight method is used to assign weights to the indicators. The robust test of the regression model was carried out by the TOPSIS method. This paper also does the fractal regression and heterogeneity analysis. The research finds that: (1) Improving the business environment plays a big part in encouraging the high-quality development of international trade. However, the size of its impact varies from region to region and from level to level of economic development; (2) The business environment mainly affects international trade through human resources, market capability, and government services. The impact of public supply is significant but relatively weak; (3) The business environment has a gravely detrimental effect on the openness relative index of international trade, which includes the index of international commerce dependence. According to the research conclusion, three suggestions are put forward: improve the level of government affairs, pay attention to the introduction of talents, and optimize the market structure.

Is the WTO terminally ill? Threats to the international trading system

The international trading system is under threat. Many observers have already expressed serious concerns about the impact of Covid, the war in Ukraine, tensions over Taiwan and other natural and man-made disasters and their effects on the international trading system. Some even doubt its viability and chances of survival. The purpose of this paper is to assess the weight of those arguments. It is argued that the turmoil in global markets is, of course, a factor endangering the system, but the system is threatened even more by its own weaknesses. These are various imperfections in the international trade agreements in the WTO which are dividing the international community into separate groups. It is also shown that economic theory does not help us much to show the directions for policy makers to reach optimal trade agreements. It is argued that the splitting of countries into different negotiating and trading blocs is the optimal step under present conditions.