Multilateral Trade Research Articles

Is Trade in COVID-19 Products in ASEAN Economies a Building or Stumbling Block?

Stumbling blocks to regional integration continue to pose a serious threat to the World Trade Organization (WTO), particularly during the COVID-19 pandemic. This study aims to examine the effect of regional economic integration on trade in COVID-19 products for Association of Southeast Asian Nations (ASEAN) countries using quarterly data for 2010–2020. A panel data model is estimated using the Poisson pseudo-maximum likelihood approach to address zero trade values, cross-sectional dependence, and heterogeneity problems. The findings of a case study on bilateral trade in COVID-19 products reveal that the ASEAN regional trade agreement is a stumbling block to the WTO’s rules-based multilateral trading system. The results indicate that the home country’s productive capacity, the host country’s absorptive capacity, the countries’ similarity in size and per capita income, and the countries’ remoteness have positive and significant relationships with trade in COVID-19 products in ASEAN economies. This study provides several policy implications for Southeast Asian countries.

Deep trade agreements and harmonization of standards

AbstractThis study examines how free trade agreements (FTAs) and customs unions (CUs) affect multilateral trade agreements when countries endogenously determine the standards as well as tariffs. Raising standards reduces the negative consumption externalities of a traded good but increases firms' costs. We find that a deep FTA with the harmonization of standards may be a stumbling block for multilateral free trade with the international standard that maximizes world welfare, whereas a deep CU with standards is a building block. As extensions, we consider asymmetry in firms' production costs and in the awareness of negative externalities between countries as well as transboundary externalities.

The New DG of the WTO: Hopes and Expectations

On March 1, 2021, Dr. Okonjo-Iweala, Nigeria’s former finance minister and former vice-president of the World Bank, started her first day in office at the WTO as Director-General. There are a myriad of worries and challenges ahead of her. Notwithstanding its long-term importance, the “moribund WTO” is not regarded as a subject of urgent attention. In her inaugural statement, she laid out imminent challenges the global economy faces and urgent tasks that need to be addressed by the WTO. Under the circumstances, however, what the multilateral trading system needs most is the restoration of confidence and trust in trade and intergovernmental cooperation based upon this, not tackling the set-out agenda one by one. In the perspective of desperate urgency and long-term importance, the resumption of the Appellate Body at the Dispute Settlement Body (DSB) would be not only a great deliverable of the the 12th Ministerial Conference but the significant first step toward reviving the multilateral trade system as well. The Biden administration has constantly sent signals that the United States would come back to the multilateral table and cooperate with allies. Hopefully, the new Director-General will take actions to establish a common ground across members to move forward in this imperative matter as soon as possible.

Industry-level determinants of India's vertical and horizontal IIT.

This paper mitigates the gap in the Indian context about the non-consideration of vertical and horizontal intra-industry trade (IIT) distinctly in testing empirical hypotheses about industry-level determinants of IIT. Our study indicates that failure to segregate vertical and horizontal IIT from the total IIT possibly leads to potential bias in econometric results. Drawing on annual multilateral trade data encompassing two and half decades of the liberalization period, we find India’s IIT outpaced the growth of inter-industry trade over the years and its contribution mainly came from six manufacturing industry groups whose export baskets had been loaded with low vertically differentiated goods. However, horizontal and high vertical IIT have gained some momentum since the end of the last decade. Given the fractional nature of our dependent variable, we initially estimate a (random effects) Tobit model followed by the Exponential Regression of Fractional Response model. The robust econometric findings show that product differentiation has a positive impact only on total IIT. Whereas vertical and horizontal IIT are promoted in industries with concentrated and competitive market structures, respectively. The prevalence of concentrated market structure indicates that (large) Indian firms sustain import competition by specializing in low vertically differentiated goods, as they efficiently adjust to resource reallocation.

Economic Transformation and Sustainable Development through Multilateral Free Trade Agreements

For sustainable economic development, a continuous and successful economic transformation is critical, and supporting economic transformation requires a better understanding of the close interaction between technology and skill at the micro- and macro-levels. The technology-skill links should especially be important in today’s globalized world. This paper develops a large-scale global Computable General Equilibrium (CGE) model by incorporating recent theoretical advances in international trade: Heterogeneous workers endogenously sort into different technologies based on their comparative advantage, and aggregate productivity is determined by skill-technology assignment in equilibrium. We then calibrate our model to a real-world data set, and investigate how multilateral free trade agreements affect individual member states, as well as outside countries and regions in the case of the Regional Comprehensive Economic Partnership (RCEP). Overall, the results show considerable real productivity gains and economic transformation effects, due to technology-upgrading mechanisms.

Impact of Belt and Road Initiative on India-south Asia Regional Trade Integration

Belt and Road Initiative (BRI) is a standout amongst the latest and remarkable regional economic integration strategies of Chinese government. This initiative incorporates South Asia which is a piece of Asian territory. From past researches we came to know that regional trade intensity among south Asian nations is low. The majority of the analysts finished up by computing the general list at beneath 0.5. Notwithstanding various multilateral and reciprocal Free Trade Agreements (FTA) exchange coordination did not increment attractively. India has reciprocal FTAs with every south Asian nation. Also this sub region is among the significant exchange accomplices of India. There are double suppositions of India about Chinese BRI initiative. In this research we found an answer of an inquiry that, regardless of whether BRI has sway on trade coordination among India and south Asian nations. We utilized a blended gravity model equation from Hayakawa et.al (2015) and Weerehewa (2009) inquire about papers to assess the aftereffects of variables.

Challenged in Geneva: WTO Litigation Experience and the Design of Preferential Trade Agreements

AbstractWhat explains the design of international institutions? Existing research has largely neglected how experience in cooperation in one set of international institutions impacts on design choices made by states in other globally-oriented institutions. We contribute to this evolving debate by analyzing spillovers in experience in international trade. We argue that countries' track record of interaction in multilateral trade disputes affects the design of their preferential trade agreements (PTAs). If a country participates in a complaint against a prospective PTA partner at the World Trade Organization (WTO), the challenge in Geneva alerts the defendant's import-competing industries with respect to potential challenges under the planned PTA. As a result, these industries exert pressure on their government to preserve leeway under the future treaty, leading to increased flexibility and a lower level of enforcement in the PTA. We find support for our hypotheses in an empirical analysis of 347 PTAs concluded post 1990.

Exploring Barriers to International Trade Faced by Sri Lankan Exporters to the Indian Market

In recent decades, India has emerged as a major economy in the world. Although Sri Lanka is situated in close proximity to India and has entered into trade agreements with India to boost its international trade, it has still not been able to achieve the expected level of growth in exports to India. Based on the 2019 United Nations COMTRAD data, India is the third largest export destination of Sri Lanka, and the export revenue from trade with India amounted to US $ 759 million in 2019. However, the statistics in the past years indicate a drop in Sri Lankan export revenue to India from $ 767 million in 2018 to $ 759 million in 2019. In spite of different bilateral and multilateral trade agreements entered into between the two countries, Sri Lankan export performance still remains unsatisfactory. This indicates that apart from tariff reductions, certain other non-tariff barriers influence international trade performance between the two countries. Therefore, this study aims to explore barriers to Sri Lankan exporters which undermine their international trade performance in the Indian market. The study follows a qualitative research methodology and has collected data using face-to-face unstructured interviews with twenty (20) respondents representing different stakeholders engaged in the process of exporting from Sri Lanka to India. The collected data was coded and analyzed through template analysis. Findings revealed thirty-five (35) important factors which influence successful penetration into and performance in the Indian market. The results reveal that host market and home market characteristics have a greater impact on successful performance in the Indian market than product or firm characteristics.

China Perspective in Reforming of the World Trade Organization

In recent years, the World Trade Organization (WTO), the multilateral trading system, has faced many difficulties and challenges due to the great vows of anti-globalisation and trade protectionism. The appellate body, as a significant portion of the Dispute Settlement Mechanism (DSU) of the WTO, has been suffering from an unprecedented crisis of suspension because the United States continues to prevent the appointment of vacant members. Now to save the World Trade Organization from an unprecedented crisis of survival reform has become a consensus. However, each member has a different opinion concerning the basic principle and specific contents of WTO reforms. In general, it is proposed to increase the flexibility of the negotiation mechanism and break the deadlock in multilateral negotiations caused by "consensus" and advocate the system in terms of substantive rules. It is proposed to establish new trade regulations, strengthen trade fairness, and eliminate investment Obstacles; in terms of disciplinary constraints, it advocates better use of the WTO's review and supervision functions and strengthens the constraints on members' compliance with transparency and notification obligations. In dispute settlement, it proposes to amend the relevant agreements as soon as possible To break the deadlock in the selection of judges of the Appellate Body and ensure the regular operation of the World Trade Organization. China clarifies its primary position and fundamental concerns, based on the existing paper, and introducing specific reform programs to participate more effectively in the WTO reform process. Qualitative research methodology has been applied to the following article.

Trade and Infrastructure in the Belt and Road Initiative: A Gravity Analysis Based on Revealed Trade Preferences

This paper aims at investigating whether and how the intensity of trade between a pair of countries changes when they experience improvements in their infrastructural systems. We carry out our analysis considering countries participating in the Belt and Road Initiative (BRI), a project specifically designed to promote infrastructural connectivity and therefore boost trade among the countries involved. Our empirical strategy relies on a particular specification of the gravity model, in which the dependent variable consists in an index of revealed trade preferences, calculated by comparing the actual value of trade flows between two countries with their expected value, proportional to the two countries’ total trade. Such methodology allows us to estimate bilateral trade intensity without resorting to the traditional “size” variables of the gravity model, taking the entire network of multilateral trade into account. We then study the possible impact of an improvement in infrastructure on a ‘gravity-adjusted’ measure of trade preferences, given by the residuals of our first estimations. Our results indicate that bilateral preferences among BRI countries will intensify inasmuch as they succeed in coordinating their infrastructural projects.

What Explains Excess Trade Persistence? A Theory of Habits in the Supply Chains

International trade flows are volatile, imbalanced, and fragmented across off-shored supply chains. Yet, not much is known about the mechanism through which trade flows adjust in response to shocks over time. This paper derives a dynamic gravity equation from a theory of habits in the supply chains that generates autocorrelated bilateral trade flows that are heterogeneous across different country pairs. We estimate our version of the dynamic gravity equation for 39 countries over the period of 1950-2014 and find that the transmission of local and global trade shocks is fundamentally different. We show that the trade persistence coefficient falls from 0.91 to 0.35 when we depart from the existing empirical gravity models that draw inference from the pooled coefficient estimates without controlling for the variation in the unobservable global factors. Thus, our approach escapes the excess trade persistence puzzle and adds to the explanation of the sharp decline and the rapid recovery of the global trade flows during the “Great Trade Collapse” of 2008-09. In addition to the traditional variables in the gravity equation, we also show that a cross-country habit asymmetry creates bilateral and multilateral trade imbalances, which are an important determinant of bilateral trade flows both theoretically and empirically.

Critical Success Factors for Data Governance of Cross-border e-Trade Data Among ASEAN Member States

Global trading partners continue to adopt increasingly more multilateral and regional trade agreements amidst an overwhelmingly paperless and digital landscape. This can create useful trade alliances and increased efficiencies of digitization, but world trade is still plagued by the near absence of a uniform, harmonised customs and clearance protocol systems which trading partners accept and adhere to. Historically, customs forms and documentation requirements all differ from one nation to the next, and from one trading bloc to another. Un-uniformity in this area thwarts swift and cost-saving exchange of goods. The EU, North America and the northern Asian nations of Japan, China and South Korea have created various constructs to rectify digital trade dissonance. Southeast Asia famously began construction of the ASW (ASEAN Single Window), a single portal protocol intended to harmonise digital trading throughout the process from origin to destination, and its various successes and continuing challenges will be explored in this article. This research article focuses on and explores critical success factors for better governance of cross-border trade in the ASEAN region by conducting a systematic literature review of data governance related to electronic data exchanges by cross-border trading partners. This study uses a realistic approach while attempting to provide a clear view of the overarching picture of the trade world’s digital exchange challenges.

Factors Shaping Exports of Cultural Goods from Pakistan

In the era of economic globalization, cultural goods trade has assumed a vital role in overall bilateral trade. It has become an emerging and transformative force behind socio-cultural-economic development and an important source of inclusive growth. Once virtually unlocked, trade in cultural goods is now fast growing with world-wide market openings. Trade liberalisation in cultural goods thus needs to be treated as a priority policy issue in multilateral and regional trade negotiations. Despite large potential of exports in cultural goods, Pakistan has been unsuccessful in realizing it. This is mainly because of lack of due attention given to it by the policymakers. In this regard, this paper makes a beginning to investigate the determinants of cultural goods exports from Pakistan for the period 2003-2012 with its 157 trading partner countries. The Gravity model is used to identify factors that determine exports of cultural goods. Six major categories of cultural goods are used for the purpose of estimation. Results indicate that size of Pakistan and its trading partner countries’ markets as well as distance among them are important determinants of exports in cultural goods. Specifically, cultural goods exports are strongly and positively influenced by the growth of the GDP in Pakistan, while the trading partner countries’ GDP growth negatively influence cultural goods’ exports. Distance, representing transaction costs and trade barriers, negatively affect exports of cultural goods; while colonial ties, common language, common border and land area of the trading partners positively influence the export of cultural goods. Exports of cultural goods to landlocked countries are lower than other trading partner countries.

The Adaptation of Japanese Economic Statecraft: Trade, Aid, and Technology

AbstractThis article examines how Japan has adapted economic statecraft to serve changing strategic aims through case studies of trade arrangements, official development assistance, and dual-use technology. After World War II, Japan continuously adapted these economic tools to pursue shifting non-economic goals related to international reintegration, comprehensive security, human security, and traditional security. More recently, in response to escalating US–China strategic competition, Japan has employed economic statecraft to simultaneously reduce international instability and to counter China in targeted ways as part of a broader hedging approach. First, Japan has attempted to bolster multilateral trade arrangements amid a volatile policy environment, while also using them to both engage and counter China. Second, Japan has used official development assistance to stabilize and build defense capacity in Asian countries facing pressure from China. Third, Japan has increasingly militarized its dual-use technologies to enhance its ability to respond to Chinese activity in outer space.

Trump & Trade: The Crisis in the Multilateral Trading System

President Trump is widely seen as instigating a dramatic reversal of 70 years of US trade policy and abdicating the American hegemon’s traditional leadership role in the multilateral trading system. Trump has threatened to withdraw the US from the WTO, abandoned trade multilateralism for aggressive unilateral actions that are in blatant violation of WTO rules, and jeopardized the WTO’s dispute settlement mechanism by blocking appointments to its Appellate Body. Trump’s policies are commonly attributed to the surge of populist anti-trade sentiment under his presidency. As this article shows, however, both the crisis in the multilateral trading system and the American hegemon’s turn away from the WTO – including abandoning multilateral trade negotiations and blocking Appellate Body appointments – originated prior to Trump. This shift in the US orientation towards the multilateral trading system cannot, therefore, solely be attributed to the rise of populism under Trump. It is also a reaction to the decline of the US’s institutional power – its power over the core institution and rules governing trade. Amid the rise of China and other emerging powers, the US’s ability to dominate global trade governance and write the rules of global trade sharply diminished, leading to an erosion of American support for the multilateral trading system it once led. While realism has fallen out of favour in IPE, understanding recent dynamics in the trading system requires revisiting its core insights.

Korea's Choice for Asia

The article discusses the Republic of Korea’s role in multiple already working and being negotiated free trade agreements from the viewpoints of the influence of Korea’s domestic affairs on the role and of the political and economic change among its partners in the free trade agreements. It finds that Korea’s position on the free trade agreements remained stable despite the shift to the domination of right-wing parties in Korea’s domestic politics in 2008 and back to domination of left-wing parties in 2017. Both left- and right-wing parties in Korea supported the free trade agreements, despite their rationale was different: in 2000s left-wing parties perceived the free trade agreements to curb negative consequences of the 1990s Asia’s financial crisis, while in 2010s right-wing parties perceived them as a response to the failure of multilateral trade negotiations within the World Trade Organization. It also finds that Korea’s partners in the free trade agreements sometimes seek to re-negotiate the already existing free trade agreements in response to domestic political and economic changes in those countries. In most cases, Korea and its partners managed to find common grounds at re-negotiations and thus to conclude renewed bilateral and multilateral free trade agreements. At the same time, Korea, China, and Japan have so far failed to conclude a trilateral free trade agreement, thus leaving the ASEAN in the position of the exemplary group of countries in the core of the network of Asia’s free trade agreements.

Multiregionalizm: porażka czy sukces Światowej Organizacji Handlu?

Przedmiot badań: Od lat w dyskusji ekonomicznej trawa debata, czy gospodarki powinny być bardziej skłonne do liberalizacji handlu na preferencyjnych zasadach regionalizmu handlowego, czy w oparciu o klauzulę najwyższego uprzywilejowania, promowany przez Światową Organizację Handlu (WTO). Współcześnie wszystkie kraje członkowskie WTO mają zawarte przynajmniej jed­no regionalne porozumienie handlowe (RTA). Przedmiotem badań są RTA, które z jednej strony wy­dają się konkurować z WTO, to z drugiej – mogą wspierać wielostronny system handlowy WTO.1
 Cel badawczy: Celem artykułu jest ocena zmian obserwowanych w tworzeniu się regionalnych ugrupowań handlowych i ich wpływu na wielostronny system handlowy. Badania skupią się na analizie RTA i odpowiedzi na pytanie, czy RTA odgrywają wyłącznie pozytywną (teoria Haberle­ra), czy może także negatywną (teoria Vinera) rolę w wielostronnej liberalizacji handlu.
 Metoda badawcza: Zastosowane metody badawcze obejmują przegląd literatury na­ukowej i raportów na temat regionalnych umów handlowych, statystyczną analizę da­nych ze źródeł wtórnych. Dokonano analizy zmian zachodzących w RTA pod względem ilościowym (liczba, dynamika), jakościowym (umowy dotyczące liberalizacji towarów i usług) i strukturalnym (zakres) na przestrzeni ostatnich dekad. Dane o RTA uzyskano z bazy danych WTO oraz danych UNCTAD.
 Wyniki: Z przeprowadzonej analizy wynika, iż kraje należące do WTO są jednocześnie powią­zane odrębną preferencyjną umową z jednym, bądź kilkoma innymi krajami. Multilateralna za­sada KNU jest osłabiana poprzez głębsze preferencje w ramach RTA, przez co multilateralizm handlowy traci na znaczeniu. RTA rozwijają się w sposób, który wykracza poza istniejące zasady wielostronne.

The Belt and Road Initiative in ASEAN - Overview

Mainland Chinese foreign direct investment (FDI) and construction projects in countries in the Association of Southeast Asia Nations (ASEAN) have increased by 85% and 33%, respectively, since the start of the Belt and Road Initiative (BRI), with growth concentrated in Indonesia, Malaysia, the Philippines, and Vietnam.Although most countries have effectively controlled the spread of COVID-19, the pandemic has led to recessions in most countries, leading to delays but not cancellation of the Belt and Road Initiative(BRI) projects. Countries in Southeast Asia are part of a large and increasing number of multilateral and bilateral trade and investment agreements that enhance their attractiveness as global value chains are adjusted in response to the US-China trade war and the pandemic.The majority of mainland Chinese greenfield FDI in ASEAN is in the resource sector. In some countries, Chinese companies are increasing both greenfield and brownfield investments in renewable energy projects.In most countries in Southeast Asia, state-owned enterprises (SOEs) play a leading role in large mainland Chinese FDI projects. At the same time, the role of private enterprises is also significant and increasing faster than SOEs in most of the countries studied.Some mainland Chinese projects have been criticised for not complying with local regulations, treating local workers unfairly, or polluting the environment. Mainland Chinese firms can avoid such unwanted outcomes by doing due diligence in evaluating the economic, social and environmental impacts of proposed projects ahead of time, and by improving their engagement with affected groups.

ПОЛОЖЕНИЯ ОБ ОХРАНЕ ОКРУЖАЮЩЕЙ СРЕДЫ В ПРЕФЕРЕНЦИАЛЬНЫХ ТОРГОВЫХ СОГЛАШЕНИЯХ: ПРОБЛЕМЫ ЭКОНОМИЧЕСКОГО ЭФФЕКТА И ЭКОЛОГИЧЕСКОЙ ЭФФЕКТИВНОСТИ

The inclusion of provisions on various aspects of environmental protection into multilateral and bilateral preferential trade agreements has become a traditional practice for most developed and developing countries. The present paper provides an overview of a number of foreign studies on specific problems of economic effect and environmental efficiency of the respective provisions.

ОСОБЛИВОСТІ ФОРМУВАННЯ ТА МЕХАНІЗМИРЕАЛІЗАЦІЇ ІНТЕГРАЦІЙНОЇ ПОЛІТИКИ ЯПОНІЇ

Using a variety of theoretical and methodological tools, the article reveals the features of Japan's integration policy in the Asia-Pacific region in the first decades of the XXI century. The influence of internal and external factors on its formation and implementation is shown. In the context of the principles of regionalism and globalism, the origins and basic principles of the doctrine of "open regionalism" as a basis for the formation of a multilateral free trade area are analyzed. , but also the world economy. All this gives grounds to assert that regional and global liberalization go hand in hand, reinforcing each other. Japan. The difference between Tokyo's approaches to the issue of integration cooperation in the region and the classical European model is traced. The example of Japan's participation in the Association of Southeast Asian Nations (ASEAN) shows how the combination of economic feasibility in the foreign economic strategy with geopolitical processes in the region. Japan has contributed to expanding the range of participants (ASEAN + 3, ASEAN + 6). It is emphasized that strengthening the position of ASEAN is considered by Tokyo as one of the tools to strengthen the collective position of the participating countries in international relations. The role and motives of Japan’s participation in the TTP are clarified - to benefit from full-scale liberalization and to formulate common economic and political goals of the countries in the region, which will ensure unity of action in countering China’s trade and economic expansion. It is emphasized that in the conditions of international uncertainty and high conflict in the world, Japan demonstrates the ability to adjust its foreign policy. In this regard, the growth of its interest in strengthening the format of trilateral cooperation between Japan-China and South Korea to ensure stability and security in the region is significant.