The 2018 US-China trade conflict after forty years of special protection

ABSTRACT

In 2018, the United States suddenly increased tariffs on nearly 50 percent of its imports from China. China immediately responded with tariff retaliation covering more than 70 percent of imports from the United States. This article assesses what happened in 2018 and attempts to explain why. It first constructs new measure of special tariff protection to put the sheer scope and coverage of the 2018 actions into historical context. It then uses the lens provided by the 2018 special tariffs to explain the key sources of economic and policy friction between the two countries. This includes whether China’s state-owned enterprises (SOEs) and industrial subsidies, as well as China’s development strategy and system of forcibly acquiring foreign technology, were imposing increasingly large costs on trading partners. Finally, it also examines whether the US strategy to provoke a crisis – which may result in a severely weakened World Trade Organization (WTO) – was deliberate and out of frustration with the institution itself.     

Optimal speed of transition with a shrinking labour force and under uncertainty*

In the 1990s – during the restructuring of large state enterprises – Central European economies experienced high unemployment. Social policy expenditures, particularly targeted to the non‐employed, grew faster than expected due to the need to finance the out‐of‐the‐labour categories. In 1992, after the Passive Labour Market Policies’ reforms, the pace of transition decelerated. Unemployment dynamics, speed of transition and non‐employment policies are modelled based on the assumption that the labour force is shrinking over time. Dismissed workers have the opportunity to choose an outside‐option alternative to labour force participation. Individual uncertainty is assumed in a first phase of transition, while aggregate uncertainty – generating opposition to restructuring – is modelled in a second phase. The model predicts a slowdown in the speed of transition.     

Wage posting: evidence from job ads

Abstract Recent studies of search theory examine how employers use a wage‐setting mechanism – either by bargaining or through the posting of a non‐negotiable wage offer in a job ad – to facilitate search. We contribute to this literature by examining wage posting in job ads in the US, the UK, and Slovenia. Despite considerable differences in the incidence of wage posting, employers in all three markets are less likely to post a wage offer when searching for skilled workers. The decision on whether or not to post a wage offer is only weakly related to the outcomes of employers’ search.     

Selection and incentives in contests: evidence from horse racing

The designer of internal labour market promotion contests must balance the need to select the best candidate with the need to provide incentives for all candidates. We use an extensive data set from horse racing – where there is abundant variation in contest design features – to analyse if there are particular features that help to achieve these two objectives. We find that contests with higher prize money and fewer participants are the most successful at achieving the dual remit of selection and incentives.     

加入WTO与我国法律制度的改革创新

中国加入WTO不仅是中国经济融入全球市场经济海洋的入海口,也是中国法律制度向国际化、现代化跨越的良机,因此,依照WTO规则及我国的具体承诺,由我国立法机关全面系统地进行“入世修法”已成一项重大历史任务且迫在眉睫。应持既积极又慎重的方针对我国现行法律体系进行大刀阔斧的立、改、废,实现我国国内法与世贸组织法的成功对接。这是维护我国利益和减少入世法律风险的上策。     

Trade policy under the GATT/WTO: empirical evidence of the equal treatment rule

Abstract. A fundamental difference between multilateral trade agreements like the GATT and WTO and a preferential agreement is the multilateral agreements’ inclusion of a most‐favoured‐nation principle. Though MFN requires that members implement policies that provide equal treatment to all GATT/WTO countries, how far do members actually follow the MFN principle when so required? We empirically investigate a sample of GATT/WTO trade disputes and the effect of successful dispute settlement negotiations on the disputed product trade of third country exporters to the defendant country. We document evidence of trade liberalization consistent with defendant countries successfully applying the equal treatment rule. JEL classification F13     

Outlay equivalence analysis of child gender bias in household expenditure data

This article reports the results of an empirical analysis of gender‐based discrimination among children based on household consumption data from Uzbekistan. We employ the outlay equivalence methodology to examine whether the entry of a new child leads to different effects in the decrease of adult good consumption for boys and for girls. We use a semi‐parametric estimation method to address the so‐called ‘zero consumption problem’, the statistical problem that arises because some households have zero consumption on a budget line in the period prior to the survey date. The results indicate that alcohol and tobacco reveal the incidence of discrimination against girls, while other groups of adult goods do not.     

Do trade flows respond to nudges? Evidence from the WTO’s Trade Policy Review Mechanism

Relatively little is known about the economic effects of WTO members’ communications outside of official negotiations and dispute proceedings. This paper considers whether interactions between members through the Trade Policy Review Mechanism, the WTO’s prime transparency institution, lead to subsequent changes in bilateral trade flows. Trade policy concern submissions are more likely to lead to positive trade responses when (i) the receiving country is less concerned about terms‐of‐trade losses, (ii) the submitter is more willing to engage in WTO disputes with the reviewed member to challenge controversial trade policies, and (iii) the submitting country challenges trade policies in the nonchemical manufacturing sector. Nudges through the TPR process are not successful in raising agricultural trade.     

对构建中国新型不良资产处置市场的思考

在国有商业银行改制上市与入世后过渡期临近的双重倒逼下,国有商业银行多年累积的巨额不良资产已成为阻碍其生存与发展的最大问题。虽然资产管理公司与国有商业银行在不良资产处置过程中发挥了重要作用。但由于处置市场的不完善,影响了处置的进程与效率。处置进程的内在加速需求已深刻反映了处置过程中存在的问题与矛盾,并进一步映射出处置市场主体单一化等不良现状,因此必须加快构建新型的不良资产处置市场。     

Implications of reform and WTO accession for China’ agricultural policies

While China’s trade policies in most areas have been transformed in the reform era, trade in many agricultural goods remains under relatively non‐transparent state trading arrangements. Accession to the WTO will be a critical turning point, increasing transparency and introducing disciplines on protection even for the commodities remaining under state trading. While China’s tariff bindings for the most sensitive products seem unlikely to require substantial short‐term reductions in protection, they rule out substantial increases in the future, provide the opportunity to develop an efficient agricultural sector, and highlight the need for effective policies to reduce rural poverty. WTO membership provides an opportunity for China to improve market access opportunities for its agricultural exports, which face much higher barriers than its exports of industrial products. JEL classification: D58, F13, O13, O56, P33, Q17.     

New Protagonists in Global Economic Governance: Brazilian Agribusiness at the WTO

The existing international economic order has been heavily shaped by US power and the US has been a key driver of globalisation and neoliberal economic restructuring, prompting speculation about whether the rise of new developing country powers could rupture the current trajectory of neoliberal globalisation. This paper analyses the case of Brazil at the World Trade Organization (WTO), a core institution in global economic governance. In the last decade, Brazil successfully waged two landmark trade disputes against the US and EU and created a coalition of developing countries – the G20 – which brought an end to the dominance of the US and EU at the WTO and made their trade policies a central target of the Doha Round. Brazil's activism has been widely hailed as a major victory for developing countries. However, I argue that rather than challenging the neoliberal agenda of the WTO, Brazil has emerged as one of the most vocal advocates of free market globalisation and the push to expand and liberalise global markets. I show that Brazil's stance has been driven by the rise of its export-oriented agribusiness sector. This case demonstrates that business actors from the Global South are becoming significant new protagonists in global economic governance; they are taking the tools created by the states and corporations of the Global North – in this case, the WTO and its neoliberal discourse – and turning them against their originators. At the same time, their interests are being wrapped in and advanced through a discourse of development and social justice and a strategic mobilisation of the politics of the North-South divide.     

政府支持政策对高新技术企业种子期产出效益的影响:企业关键要素的中介作用

近年来,政府出台多项政策支持和帮助种子期高新技术企业更好地发展。财政支持、税收优惠等手段有助于种子期企业实现平稳发展并获得较好收益,但企业能否存活并取得成功是由其技术、财务、管理等要素决定的。通过构建政府支持政策-企业关键要素-高新技术企业种子期产出效益理论模型,以大连市高新技术企业为对象进行问卷调查,使用结构方程模型对三者作用机制进行验证,并根据分析结果提出相应建议。     

Pitfalls in Restructuring the Electricity Industry

Abstract. This paper models some reductions in output that may follow the opening of electricity markets to competition. Specifically, we show that vertical separation of electricity generation, transmission and distribution could reduce welfare compared to the previous system of vertically integrated monopoly, if grid owners can act as monopolistic retailers or, alternatively, set access prices that maximize merchandizing surplus. Moreover, we show that a rule of non‐discriminatory pricing would not remedy any of these problems. Hence, to secure the efficiency gains of deregulation, the re‐regulation of the remaining monopolistic core – the electric grid – cannot rely on simple rules like cost‐based non‐discriminatory pricing.     

Relative Effectiveness of Bilateral and Multilateral Aid on Development Outcomes

Aid donors are interested in understanding whether allocating aid via bilateral or multilateral channels might be more effective for achieving development goals. We review 45 papers that empirically test the associations between bilateral and multilateral aid flows and various development outcomes including gross domestic product growth, governance indicators, human development indicators and levels of non‐aid investment flows. Findings suggest that differences between countries and regions, time periods, aid objectives, and individual donor organizations all may influence the effectiveness of aid delivered bilaterally and multilaterally. We find, however, no consistent evidence that either bilateral or multilateral aid is more effective overall.     

The Trans-Political Nature of Southwest China’s Energy Conduit,Yunnan Province

Transboundary flows of energy across Yunnan Province in China and to Southeast Asian states provide insight into the changing nature of borders and border areas. Rather than monolithic symbols of state sovereignty, China’s southwest borders in Yunnan can be more accurately characterised as zones of connectivity and exchange, serving a range of local, national and regional objectives. Energy production and distribution in and across Yunnan can be understood as functioning in a set of dynamic transnational processes that serve as economic and political bridges – increasing interaction and deepening regional integration – while also working to mitigate risk to China’s energy demands. In this article, energy projects in Yunnan and Southeast Asia demonstrate the ways border regions can respond to increasing globalisation, simultaneously strengthening national energy security while promoting regional interconnection and diplomacy. Thus, connections to and through a once peripheral region present an apparent contradiction: once rigid territorial borders are increasingly characterised by transboundary infrastructure development and exchanges of energy, capital and diplomacy, while promoting broader, diversified national energy security objectives – essentially strengthening national security through transnational energy projects. This article investigates how energy development works to shape Yunnan’s role as an “energy conduit,” while advancing both transnational and national geopolitical objectives, and thus, suggesting that these projects can be understood as trans-political in nature.     

REACHING THE RURAL POOR THROUGH AGRICULTURAL COOPERATIVES IN MONGOLIA

This paper focuses on the cooperative sector in central Mongolia. Its aim is to provide new insights into the role and importance of cooperatives among poor rural populations. We analyse cooperatives’ inclusiveness of smaller herders and farmers and cooperatives’ governance structures. The research is based on data collected in selected provinces of the central Töv region. The data were collected for three distinctive target groups – cooperative board members, cooperative members and non‐members. We found that the cooperative sector in Mongolia is strongly affected by the governmental policy regarding wool subsidies, which provides subsidies only to cooperative members and has consequently caused rapid growth in the number of new, free‐riding cooperative members and led to very low levels of members’ self‐identification with their cooperatives. This policy also affects the inner organizational structures of cooperatives. Further, we found indications that poorer farmers tend not to be members of cooperatives and that the overall benefits for non‐members and the general community arising from local cooperatives are rather low.     

Conditions for Sustainable Optimal Economic Development

This paper shows that, for dynamic optimizing economies with different types of natural resource, environmental, and human‐made capital stocks, a necessary and sufficient condition for permanently sustaining an optimal utility/consumption level is the stationarity of the current‐value Hamiltonian. For economies whose development is not exogenously and directly affected by time (i.e., time‐autonomous economies), this stationarity condition generalizes Dixit et al.’s (1980 ) “zero‐net‐aggregate‐investment” rule of sustain‐ability, which in turn generalizes Solow‐Hartwick’s sustainability rule. For non‐autonomous economies, the stationarity condition is not generally fulfilled, and the current‐value Hamiltonian under (over) estimates the true welfare level by an amount equal to the discounted value of the net “pure time effect.” For the non‐autonomous case of a time‐dependent utility discount rate, a general condition on the discount rate function (of which the hyperbolic discount rate function is a special case) upholds the results obtained for autonomous cases. The paper concludes with a discussion of policies that promote both optimality and sustainability objectives.     

A large scale OLG model for the analysis of the redistributive effects of policy reforms

The paper presents a large scale overlapping generation model with heterogeneous agents, where the household is the decision unit. We calibrate the model for three European countries – France, Italy and Sweden – which show marked differences in the design of some public programmes. We examine the properties in terms of annual and life cycle redistribution of a number of tax-benefit programmes, by studying the impact of removing from our model economies some or all of them. We find that whether one considers a life cycle or an annual horizon, and whether behavioural responses are accounted for or not, has a large impact on the results. The model may provide useful insights for policy makers on which kind of reforms are more likely to achieve specific equity objectives.     

IMPACT OF COOPERATIVES MEMBERSHIP ON ECONOMY IN EASTERN OROMIA: THE CASE OF HARAMAYA AGRICULTURAL FARMERS’ COOPERATIVE UNION (HAFCU)

This study attempts to analyse the impact of cooperatives on the smallholders’ income, productivity, marketed surplus and saving in East Hararghe Zone of Haramaya District. The study is based on primary cross‐sectional data collected from cooperative member and non‐cooperative member household heads. The propensity score matching (PSM) estimates complemented by a bias correction matching (BCM) and Lewbel instrumental variable (IV) regression estimation shows that cooperatives have a positive impact on smallholders’ income and productivity. The findings have strong policy implications. The rural development of the country should work toward strengthening and expanding the existing rural organizations through training and capacity building programmes. It is important particularly establishing new rural‐based organizations that enable rural households to engage in business activities. Doing that may help reduce poverty and increase smallholders’ income, productivity, and capital accumulation.     

Quality and Welfare in a Mixed Duopoly with Regulated Prices: The Case of a Public and a Private Hospital

Abstract. Hospital markets are often characterized by price regulation and the existence of different ownership types. Using a Hotelling framework, this paper analyses the effect of heterogeneous objectives of hospitals on quality differentiation, profits and overall welfare in a price‐regulated duopoly with exogenous symmetric locations. In contrast to other studies on mixed duopolies, this paper shows that, in this framework, privatization of the public hospital may increase overall welfare. This holds if the public hospital is similar to the private hospital or less efficient and competition is low. The main driving force is the single‐regulated price which induces under‐provision (over‐provision) of quality of the more (less) efficient hospital compared with the first best. However, if the public hospital is sufficiently more efficient and competition is fierce, a mixed duopoly outperforms both a private and a public duopoly due to an equilibrium price below (above) the price of the private (public) duopoly. This medium price discourages over‐provision of quality of the less efficient hospital and – together with the non‐profit objective – encourages an increase in quality of the more efficient public hospital.