Trade Policy Regime Research Articles

Weather shocks affect trade policy: Evidence from preferential trade agreements

AbstractWe show that weather shocks affect government trade policy decisions. We exploit variation in rainfall during the growing season within and across countries to show that weather shocks impact agricultural output and trade. Using information on tariff cuts by commodity from preferential trade agreements signed between 1995 and 2014, we then show that weather shocks that happen during the negotiation period correlate strongly with the size of tariff cuts. When weather shocks increase (decrease) a country's capacity to produce a given crop, its government negotiates a smaller (larger) tariff cut. These results are consistent with a political economy trade model with sector‐specific inputs in which the government places more weight on producers relative to consumers in its objective function. They also reveal that governments update their beliefs about domestic agricultural production capacity in response to weather shocks.

How do we make trade policy in Britain? How should we?

AbstractSince Brexit, the UK has been responsible for its own trade policymaking rather than inputting into the collective policy of the European Union. This paper starts by sketching how that policy has been developed and implemented and how it is turning out. Overall, it is not very complimentary about the UK Government's efforts and so it then moves on to consider how we might do better. One dimension of this is how trade policy could be made more inclusive in formulation. I propose three (sets of) institutional reforms: increasing Parliamentary (and other) scrutiny of the government's trade policy plans; after examining how the UK public thinks about trade policy, it asks whether (how) one should take into account public attitudes to trade policy issues; finally, it argues for creating an independent source of advice and analysis on trade policy. It concludes by noting that while recent history has been disappointing, trade policy by any government would be improved by the reforms recommended.

US international trade policy: Scenarios of protectionism and trade wars

US international trade policy under both the Trump and Biden administrations has been increasingly protectionist. This paper considers two policy scenarios under active discussion: (1) an across-the-board increase in all US tariffs by 10 percentage points, and (2) a severe escalation of the US trade war with China. The scenarios are analyzed using a multi-country computable general equilibrium (CGE) simulation model of the global economy. Trade wars or policy regimes of widespread protection will increase tariffs in many sectors simultaneously and include both final goods and intermediate inputs. The impacts are complex, with a web of direct and indirect forces coming into play across domestic and international markets. The global CGE model captures these mechanisms, including both short and long-run effects, with and without retaliation by partner countries. In a world economy where the US accounts for only 10 % of global trade and potentially rival trade bloc have emerged in Europe and E&SE Asia, the US is no longer hegemonic in global markets. We find that across-the-board tariffs do not protect manufacturing jobs because the cost of imported intermediate goods increases, raising costs in manufacturing production. The US trade war with China leads to a dramatic fall in bilateral trade. Other countries expand their trade to China and the US with the exception of closely linked partners (e.g. Canada and Mexico and all countries in E&SE Asia). We find that the world economy can adjust to US trade wars, diverting trade around the US.

STUDY OF DWELLING TIME AT TANJUNG PERAK HARBOR SURABAYA INDONESIA

The research aims to determine the factors that influence dwelling time at Indonesian ports so that the government can make policies for releasing imported goods at ports more quickly and efficiently. This study uses secondary data obtained from KPPBC TMP Tanjung Perak quantitative data in the form of monthly pre-clearance, customs clearance, post-clearance, and dwelling time processing times from January 2020 to December 2022. Statistical analysis using the linear regression method uses the application SPSS. Based on the results of the analysis of the factors that influence dwelling time, it is concluded that the pre-clearance, customs clearance, and post-clearance processes simultaneously have an influence on dwelling time at the port of Tanjung Perak. Meanwhile, partially, the pre-clearance and post-clearance processes have a positive and significant effect on dwelling time, while the customs clearance process does not affect dwelling time. Currently, the customs clearance process is faster due to new policies and improved facilities. This research only discusses the management of imported goods, so other research using export variables is needed to increase the accuracy and efficiency of government trade policies.

Digital Trans-Pacific Silk Road and Phases of China-Latin American Connectivity: From Silver to AI

In this paper, we aim to document and analyze the long arc of connectivity between China and Latin America. First, using analytical international trade and economic tools, we provide a new economic perspective of the First Globalization–-the Ming and early Qing China’s economic and business links with Latin America and Europe. Second, due to U.S. government trade policies toward China in the 1990s, the Second China’s Globalization was ushered in with its entry to the World Trade Organization (WTO). During this second phase, China exchanged manufactured goods with minerals and resources from Latin America. Finally, the tough technology and trade stance by the Trump and Biden Administrations prompted China to intensify the third phase of China interaction with Latin America. For the 2020s and beyond, one important pillar of the Third China-Latin America-Europe Globalization is heightened efforts for China to increase its digital-AI, telecommunication and platform business presence and access into the Latin American markets. To enrich our analysis, we will provide Chinese-style digital-AI business and economic models to help illustrate our discussions. Throughout our paper, we want to point out that government policies were instrumental in bringing forth these Three Globalizations that involve China-Latin America-Europe.

Export Performance, Foreign Ownership, and Trade Policy Regime: Evidence from Thai Manufacturing

Export Performance, Foreign Ownership, and Trade Policy Regime: Evidence from Thai Manufacturing

The U.S.-China Trade War and Policy Resilience

Abstract One can attribute the Trump administration’s pursuit of a trade war against the People’s Republic of China (prc) to a range of variables, including its re-election hopes, commitment to protectionism as an economic weapon, fears about Beijing’s pursuit of artificial intelligence, and broader strategic concerns about the global balance of power. This article argues that another explanation for President Donald J. Trump’s ability to change trade policy towards China was the structural weaknesses of the trade policy regime that emerged at the end of the 1990s when Congress adopted Permanent Normal Trade Relations as a designation for free trade in July 1998 and the prc joined the World Trade Organization in December 2001. Those weaknesses owed much to the ways in which the United States initially framed the new trade regime with the prc and the limited, only partially conclusive, character of the debate that took place at the time. Despite the growth and embedding of supply chains between China and the United States, these inbuilt weaknesses contributed to the progressive erosion of the trade policy regime during the years that followed. Within this context, few constituencies were ready to lobby for the prc after January 2017 and the Trump administration faced little opposition to its change of trade policy.

Export- and import-based economic models for predicting global trade using deep learning

Forecasting global foreign trade is essential for developing government trade policies and management strategies for multinational corporations. However, achieving an accurate trade forecast is challenging because of the complex structural relationships between exports, imports and other economic variables. Many traditional forecasting models, such as time series, econometric, and machine learning, provide less accurate forecasts for trade data. This paper proposes an ensemble learning approach to improve forecasting performance by hybridizing the structural relationships between trade and deep learning models to predict foreign trade for ten major countries. The proposed method first establishes a cointegration relationship between exports and imports and their structural variables. The cointegrated models are then used to predict the future of trade, which is used as a benchmark model for comparison. A hybrid deep learning algorithm uses the cointegrated variables as input variables to predict trade data, and then are compared with time-series forecasts and economic structural models. The experimental results reveal that the ensemble learning method can achieve excellent forecasting performance for the tested periods of trade data. In most cases, the root means square error and mean absolute percentage error values are smaller than the time series and economic structural models.

Do Women Make More Protectionist Trade Policy?

Women have more protectionist trade preferences than men do. We assess whether this well-documented relationship between gender and protectionism in the mass public carries over into a relationship between women’s political representation and (a) party platforms, and (b) governments’ trade policy choices. Looking across countries and over time, we demonstrate that with an increase in women’s representation, political party trade policy positions become more protectionist. For government trade policy choices, we identify more nuanced results. The protectionist effect of women’s representation is limited to the most visible products: consumption goods. Women’s representation has no effect on intermediate inputs, where firm demands for trade liberalization are more pronounced and policy makers are thus constrained in implementing a protectionist agenda. These findings contribute to scholarship on the descriptive–substantive representation link, add a new dimension to our understanding of trade politics, and demonstrate the importance of applying a gendered lens to international political economy research.

Determinants of trade flow of some selected non-traditional agricultural export commodities in Nigeria

This study analysed the determinants of trade flow of some selected non-traditional agricultural export commodities in Nigeria, for the period 2007 to 2017. The objective of the study was to analyse the factors that determine the export of these commodities. The study used trade data of thirty-six importing countries of these commodities around the world. The secondary data used was sourced from various institutions’ databases. A balanced panel data from 36 countries for the years 2007-2017 were used with one dependent variable and ten explanatory variables (a total of n=396, N=36, and T=11); all variables were expressed in natural logarithm. The gravity estimation model was used in data analysis. The Hausman test was used in model selection and the test rejected the null hypothesis (random effects were efficient). Therefore, the fixed effects model was used in the gravity model results’ interpretation. The gravity model results indicate that Nigeria’s export of non-traditional commodities (classified as HS12 in the United Nations International Trade Statistics) follows the basic gravity model apriori expectations, implying that bilateral trade flows will increase in proportion to the trading partner’s Gross Domestic Product (GDP) and decrease in proportion to the distance involved.The level of openness of Nigeria’s economy and that of the importing countries were major determinants of trade flow of Nigeria’s HS12 commodity exports. This variable carried the expected positive sign for both Nigeria and its trading Partners and was also statistically significant at the 5% level. However, the real exchange rate variable was not a major determinant of HS12 commodity trade. The distance variable was statistically significant indicating the need for regional trade expansion. The dummy variable of the trading partner being an African country was positive and a significant factor in the determinants of the HS12 commodities. However, colonial or official language ties were negatively signed and significant, implying that this was not a major contributor to trade in these commodities. The study recommends that favorable import and export promotion policies and trade openness to boost growth in the quantity of non-traditional exports should form part of government trade policies; and Nigeria should also take advantage of the proposed African Free Trade Area considering the gains she stands to make through proximity in distance.

Impacts of supply-side climate change mitigation practices and trade policy regimes under dietary transition: the case of European agriculture

The European Union’s Green Deal proposal and Farm to Fork strategy call for both demand and supply measures to reduce emissions from the food system. While research clearly illustrates the importance of dietary transitions, impacts of potential supply-side measures are not well understood in relation to competitiveness concerns and leakage effects. This study assesses trade and GHG emission impacts of two supply-side mitigation strategies (intensification vs. extensification) in the EU, UK and Switzerland (EU + 2), against a 2050 baseline featuring healthy/sustainable diets adopted by European consumers. To capture potential leakage effects arising from changing external trade flows, the two supply-side strategies are assessed against three trade policy regimes (i.e. status quo, regional trade liberalization with and without border carbon adjustment), resulting in six scenarios formulated with detailed inputs from the EUCalc model and other literature and simulated with a purported-designed CGE model. Results show that intensification, while improving the EU + 2’s external trade balance, does not reduce emissions in the EU + 2, compared to the baseline. In contrast, extensification leads to a substantial emission abatement that augments reductions from the assumed dietary transition in the baseline, resulting in a combined 31% agricultural emission reduction in EU + 2 during 2014–2050. However, this is at the expense of reduced net agrifood exports by US$25 billion compared to the baseline and significant carbon leakage at a rate of 48% (i.e. nearly half of agricultural emission reduction in the EU + 2 ‘leaked’ to elsewhere). Furthermore, implementing the EU + 2’s prospective regional trade agreements results in increased territorial emissions. Although a border carbon adjustment by the EU + 2 can improve its trade balance and partially shift mitigation burdens to other countries, the associated reductions in global emissions (and carbon leakage) would be marginal. Finally, different trade and emission effects are identified between the crop and livestock sectors, pointing to the desirability of a mixed agriculture system with intensified livestock sector and extensified crop agriculture in the EU + 2 that balances emission reduction goals and competitiveness concerns.

Unveiling the asymmetric impact of exports, oil prices, technological innovations, and income inequality on carbon emissions in India

In the case of a developing country like India, foreign trade can play a vital role because it may help in generating employment opportunities by channelizing the finished goods and natural resources. However, the excessive production of tradable goods and imports of carbon-intense resources may have a harmful impact on biodiversity in the long run. The current situation of India appears to fall in the same category because India's exports of manufactured goods and imports of crude oil have witnessed a sharp rise. Besides, the country's carbon emissions have increased persistently, especially after liberal trade policy regime (i.e. after 1991). To validate this argument, in the present study, we examined the temporal impact of exports and oil prices on carbon emissions in India from 1980 to 2018. Technological innovation and income inequality are considered as the controlled variables. The empirical results calculated using the nonlinear autoregressive distributed lag (NARDL) approach reveal that the upward-tick in exports and technological innovation led to an increase in carbon emissions. On other hand, downside movements in exports, increased oil prices, and increased income inequality helped reduce the level of carbon emissions in the long run. The study confirmed a nonlinear association between carbon emissions and its considered determinants. By taking a cue from the computed results, we proposed an SDG-based policy framework, which may help policymakers achieve economic and environmental targets in the coming years.

National Defence Under Alternative Trade Policy Regimes: Theory and Evidence from Developing Countries

Defence mechanism for any nation is the way through which internal as well as external geo-political condition can be stabilised. Moreover, defence sector can also be treated as one of the most potential sectors regarding financial transactions and the relevance of it is valid both in autarky and in the regime of international trade. Using Granger Causality for a panel of 27 developing countries across Asian and South American continents, we have found that different trade measures are playing major role in the way of functioning of national defence. For further analytical purpose and also to select the most effective trade policy regime among the alternatives, we have adopted a trade theoretic framework. In this regard, we have used a four-sector general equilibrium trade model with special emphasis on defence as well as R&D to defence to illustrate the impact of trade liberalisation on defence system. From such setup and by using bootstrap policy simulation we have found that trade liberalisation in the form foreign direct investment (specific to the R&D to defence) as the most effective trade regime to claim gains from trade in the presence of defence dualism for any small open developing economy. Such comparative statics is critical from the policy perspective. Policymakers should be cautious before defence industry liberalisation. JEL Codes: H56, C33, F11, F14, F21, D58

How US and Chinese Media Cover the US–China Trade Conflict: A Case Study of War and Peace Journalism Practice and the Foreign Policy Equilibrium Hypothesis

AbstractThis article examines the news coverage of a nonmilitary conflict: The US–China trade conflict by major news media outlets in the USA and China using the war and peace journalism framework. Role in the conflict as initiator/responder, medium difference, the press role in each press system, and partisanship of news media were hypothesized to affect the war and peace journalism practice. Moreover, the trade conflict was divided into three stages to test the applicability of the “foreign policy market equilibrium hypothesis” by analyzing the changes in the uses of sources and presence of competing frames over time. US news media were found to employ more war journalism and less peace journalism than their Chinese counterpart. They also had much lower coverage of the conflict than their Chinese counterpart. Newspapers were more likely to use war journalism than television. US partisan liberal media selectively supported and opposed the US government trade policy.

A Comparative Study on the Impact of the Capabilities of Manufacturing and Service Firms on Export Performance: Focusing on the Interaction Effect of R&D

This paper empirically examined the impact of firm capabilities and the interaction effect of R&D on the export performance of service firms in comparison with manufacturing firms. To this end, a total of 1,968 Korean firms were analyzed: 243 from service and 1,725 from manufacturing, and two-stage analysis was performed using multiple regression and hierarchical regression analysis. This research confirmed that network and customer capabilities played critical roles in the internationalization of service firms and R&D positively interacted with entrepreneurship and customer capabilities for export performance. These findings suggest valuable policy considerations for government trade policy and academic motivation for further research on the capabilities and R&D of service firms.

Anti-Dumping Policy and Its Effect on Indian Pharmaceutical Sector

Trade policy regimes are changing and growing towards a protectionist attitude. Liberal trade policies might harm the trade and commerce of a country. Therefore GATT contains some measures for the member countries to impose higher protection against imports. One of these measures is known as Antidumping. When a country sends its products to another country and sells it at less than the normal value it is known as dumping. Dumping results into harm to the established market practices and anti-competitive activities. Significance Statement: The paper aims at studying anti-dumping policies prevalent in our country and how dumping is effecting the pharmaceutical sector of the country.

The trilemma of trade, monetary and immigration policies in the United States: Accounting for environmental sustainability

The United States like every other country across the globe, especially the developed nations, have consistently battled one of man's greatest challenge of the 21st century-saving and sustaining the dire environment. Being the largest emitter of carbon dioxide (CO2) after China, the United States is increasingly faced with an urgent policy drive toward environmental sustainability. Against the backdrop, this study employed the dynamic ARDL-bound testing approach to observing the tripartite impact of the trade policy, monetary policy, and migration index on carbon emissions over the period 1990:Q1–2018: Q2. The incorporated renewable energy consumption and the real GDP which controls for other unobserved factors are observed to have similar and significant impacts as in previous studies. The current study found that the trade policy, monetary policy, and migration index exerts positive and significant impacts on carbon dioxide emissions in the long-run. It implies that in the near future, the environmental sustainability of the United States is at the risk of the government policies on trade, monetary, and migration. However, such impact of the migration index on the carbon dioxide emissions is barely significant in the long-run and at the immediate time. Although the impact of the government's trade policy on carbon dioxide emissions is significant in the long-run, it immediate impact is negative and not significant. Hence, policy frameworks of the government should be designed such that it meets the Sustainable Development Goals 2030.

Future Implications of the Buy American-Hire American Executive Order and Domestic Preferences on U.S. Government Procurement and Trade Policies

This policy paper discusses the Buy American-Hire American Executive Order (Buy American EO) issued by U.S. President Donald Trump, and the predicted immediate and long-term effects of imposing and enforcing greater price preferences with respect to the Federal Government's procurement of goods of domestic origin over those of foreign origin. Global economic ramifications of expanding applicability of the Buy American laws is examined, as is the role of price preferences for domestic sourced goods as a back-door mechanism to restrict stateside competition from foreign manufacturers of goods' manufacturers. Imposition of such restrictions on the ability of foreign firms to compete with U.S. firms for U.S. Government contracts is expected to result in reciprocal trade restrictions imposed on U.S. manufacturers in foreign procurement markets. In addition, this paper examines the comparative impact of increased enforcement of domestic preference requirements prescribed by the Buy American laws. as compared to the increased implementation of anti-dumping and countervailing duties on foreign producers seeking to import goods into the U.S. Is there a benefit to the U.S. increasing its reliance on such tools of trade restraint notwithstanding the position under the GPA,to support and abide by free trade and open competition? Is there an inherent conflict between the U.S.’s stated commitment to free trade and the executive's decision to ramp up enforcement of trade barriers such as, inter alia, greater enforcement of anti-dumpling regulations? This policy paper also examines, in detail, several trade reform options that the Trump Administration could implement to advance U.S. interests in the area of procurement reform.. As of the date of this writing, the Trump Administration has already implemented some of these reforms. Therefore, both the immediate and prospective, future impacts of these implementations are ripe for analysis. Whether President Trump will implement other trade reform options remains to be seen. In addition to the Buy American EO, also addressed herein are the additional implications of the President’s subsequent Executive Order, issued in March 2017 and appropriately titled, Establishing Enhanced Collection of Anti-dumping and Countervailing Duties and Violations of Trade and Customs Laws. Arguments advanced by supporters of the President’s subsequent Executive Order mandating more rigorous enforcement of existing anti-dumping regulations are discussed as well as counter-arguments advanced by opposing stakeholders, some of whom characterize the March 2017 Executive Order as a tool contrived to create more trade barriers for foreign firms aiming to penetrate the government procurement market of the United States.

India’s trade policy: Which way now?

This paper delineates the changes in India’s trade policy regime in the larger context of India’s changing development strategy. What started as protection during “planning for industrialization” in an economy with binding foreign exchange constraint in the 1950s evolved to a relatively open economy with lesser barriers to trade. The process of change in the trade sector has been sequential over a relatively long period of time, the process being complemented by wide-ranging policy shifts in other sectors of the economy. However, there is an evidence of rising market-driven entry barriers, which is often thought to impact the trade sector adversely. Along with this, the process of trade policy changes has been reversed with rise in tariff barriers across some sectors in the recent period, which is a cause for concern especially in the context of improving competitiveness of tradeables and growing integration of the domestic economy with the world economy.

A Comparative Study about the Influence of Trade Policy Regimes on Western Countries’ Welfare Policies before World War I

A Comparative Study about the Influence of Trade Policy Regimes on Western Countries’ Welfare Policies before World War I