Convergence in the Americas: Some Lessons from the DR‐CAFTA Process

The proliferation of trade agreements in the Americas is a major cause for concern as it might fragment or inhibit the emergence of a hemispheric trading system. In addition to establishing a free trade area between the US and six countries in Latin America, the DR‐CAFTA consolidates a set of trade arrangements among those six Latin American countries. The approaches and techniques employed to achieve this consolidation should be studied by policy analysts and negotiators of broader hemispheric‐wide negotiations since the DR‐CAFTA is in fact a microcosm of the spaghetti bowl of trade agreements now existing in the Americas. This paper points out the potential consequences of the proliferation of trade agreements in the Americas and provides an analysis of the convergence techniques and approaches used in the DR‐CAFTA, in particular in the areas of market access and rules of origin.     

中国对外贸易隐含的碳排放与利益：测算与比较

文章运用环境MRIO模型测算和比较了中国与36个国家（或地区）之间的贸易隐含碳排放余额和增加值贸易余额,全面揭示了贸易所带来的利益与碳排放的关系。主要结论包括：首先,总体来看中国历年贸易隐含碳排放和增加值贸易都为顺差,且呈同步递增趋势,表明中国是碳排放净移入国的同时也是净贸易利益的获得者。其次,中国对26个国家（或地区）的贸易隐含碳排放和增加值贸易呈现双顺差,其中对台湾地区和印尼呈现双逆差,与上述国家（或地区）双边贸易引致的碳排放净流入（或流出）与贸易净利益（或损失）之间呈现互补关系;中国对俄罗斯和印度的增加值贸易顺差而贸易隐含碳排放逆差,使中国获得贸易利益和环境改善的双重收益;对德国等6国的增加值贸易逆差而贸易隐含碳排放顺差,使中国获得贸易损失和环境恶化的双重损失。最后,中国各国（或地区）贸易隐含碳排放余额折算金额后占增加值贸易余额的比重差异较大,总体上中国与发展中国家（或地区）的贸易具有更高的碳排放效率。     

Computational Analysis of the Menu of US‐Japan Trade Policies

We have used the Michigan Computable General Equilibrium (CGE) Model of World Production and Trade to calculate the aggregate welfare and sectoral employment effects of the menu of US‐Japan trade policies. The menu of policies encompasses the various preferential US and Japan bilateral and regional free trade agreements (FTAs) negotiated and in process, unilateral removal of existing trade barriers and global (multilateral) free trade. The welfare impacts of the FTAs on the United States and Japan are shown to be rather small in absolute and relative terms. The sectoral employment effects are also generally small but vary across the individual sectors depending on the patterns of the bilateral liberalisation. The welfare effects on the FTA partner countries are mostly positive though generally small, but there are some indications of potentially disruptive employment shifts in some partner countries. There are indications of trade diversion and detrimental welfare effects on non‐member countries for some of the FTAs analysed. In comparison to the welfare gains from the US and Japan bilateral FTAs, the gains from both unilateral trade liberalisation by the United States, Japan and the FTA partners, and from global (multilateral) free trade are shown to be rather substantial and more uniformly positive for all countries in the global trading system. The US and Japan FTAs are based on ‘hub’ and ‘spoke’ arrangements. We show that the spokes emanate out in different and often overlapping directions, suggesting that the complex of bilateral FTAs may create distortions of the global trading system.     

中国航空业应对欧盟“碳贸易壁垒”的对策建议

2011年3月8日,欧盟正式通过将航空产业纳入其碳排放交易体系的决议。从2012年1月1日开始,欧盟将实行超过排放限额的各国航空公司需要缴纳碳排放边境调节税的规定。由此,发达国家的碳贸易壁垒已经渗透到国际服务贸易领域。文章从欧盟对各国航空业征收碳费问题入手,研究边境碳税调节措施的运行机制和政策效果,分析了欧盟的碳交易体系与世界贸易组织相关规则的一致性,提出中国航空业应对欧盟碳贸易壁垒的对策建议。     

Third‐country Effects of Regional Trade Agreements

Does regionalism negatively impact non‐members? To answer this question, we examine the effect of regional trade agreements (RTAs) on imports from non‐members and the tariffs that they face. Using data from six RTAs in Latin America and Europe, we do not find evidence that implementation of the regional agreements is associated with trade diversion from third countries to regional members. Using detailed industry data on preference margins and most‐favoured nation (MFN) tariffs for three trade agreements in Latin America over 12 years, we find that greater preference margins do not significantly reduce imports from third countries. We also look at the effect of preferences on external tariffs. We find evidence that preferential tariff reduction tends to precede the reduction of external MFN tariffs in a given sector, offering evidence of tariff complementarity. Overall, the results suggest that regionalism does not significantly harm non‐members.     

The Most and the Least Favoured Nations: Norway's Trade Policy in Perspective

This article reviews some recent developments in Norway's trade policy, in the light of the WTO's Trade Policy Review of Norway, 2004. A main focus is on the relationship between MFN trade policy and Norway's numerous preferential trade arrangements. In spite of a growing number of free trade agreements the paper suggests that Norway's trade regime has not become more discriminatory. The reason is that cuts in MFN tariffs as well as improvements in GSP have eroded preference margins in manufacturing faster than the coverage of free trade agreements has expanded. As a result of liberalisation, the trade regime for manufacturing has become less discriminatory, not more. While Norway is on the whole a liberal‐minded supporter of the world trade system, it has twice in recent history reacted with protectionism. Around 1980, a restrictive quota regime for clothing was implemented. This has later been dismantled, contributing to sharply increased imports from developing countries. For agriculture, Norway has currently high protection, and tariff preferences are limited. It is likely that agricultural protection will be gradually reduced due to the WTO, as well as through free trade agreements and improvements in GSP.     

Multilateral,Regional and Bilateral Trade‐Policy Options for the United States and Japan

We have used the Michigan Model of World Production and Trade to simulate the economic effects on the United States, Japan, and other major trading countries/regions of the Doha Round of WTO multilateral trade negotiations and a variety of regional/bilateral free trade agreements (FTAs) involving the United States and Japan. We estimate that an assumed reduction of post‐Uruguay Round tariffs and other barriers on agricultural and industrial products and services by 33 per cent in the Doha Round would increase world welfare by $686.4 billion, with gains of $164.0 billion for the United States, $132.6 billion for Japan, and significant gains for all other industrialised and developing countries/regions. If there were global free trade with all post‐Uruguay Round trade barriers completely removed, world welfare would increase by $2.1 trillion, with gains of $497.0 billion (5.5 per cent of GNP) for the United States and $401.9 billion (6.2 per cent of GNP) for Japan. Regional agreements such as an APEC FTA, an ASEAN Plus 3 FTA, and a Western Hemisphere FTA would increase global and member country welfare but much less so than the Doha multilateral trade round would. Separate bilateral FTAs involving Japan with Singapore, Mexico, Chile and Korea, and the United States with Chile, Singapore and Korea would have positive, though generally small, welfare effects on the partner countries, but potentially disruptive sectoral employment shifts in some countries. There would be trade diversion and detrimental welfare effects on some non‐member countries for both the regional and bilateral FTAs analysed. The welfare gains from multilateral trade liberalisation are therefore considerably greater than the gains from preferential trading arrangements and more uniformly positive for all countries.     

An Interim Assessment of the US Trade Policy of ‘Competitive Liberalization’

Since 2001, the Administration of George W. Bush has pursued a trade policy known as Competitive Liberalization. This policy envisages a series of mutually‐reinforcing and sequential steps to open markets abroad to US companies, to strengthen market‐oriented laws and regulations overseas, and to place the United States at the centre of the world trading system. Foreign and security policy considerations have influenced US trade policy making, perhaps more so than in the 1990s. To date the principal outcome of this policy has been the negotiation by the United States of numerous free trade agreements, mainly with developing countries, individually or in sub‐regional groupings. In addition to characterising this policy in detail, the principal purpose of this paper is to assess the logic underlying this approach to trade policy making and whether Competitive Liberalization has begun to fulfil the promise spelled out for it at the beginning of this decade.     

Free Trade Agreements and Governance of the Global Trading System

This article explores how far free trade agreements (FTAs) have strengthened or weakened global governance of the trading system. We open with an analysis of the altered political and economic context within which countries have come, in recent years, to assign a new importance to regional and bilateral trade agreements in their trade policies. We then consider each of the main provisions included in FTAs and comment on how these may separately affect the management of trade relations. We conclude with some observations of the broader trends affecting global governance that are associated with the spread of trade agreements as a whole.     

Global Market Integration and National Sovereignty

In this paper, we first trace the evolution of the global trading system from the nineteenth century to the present‐day GATT/WTO arrangements, calling attention to the key roles of reciprocity and non‐discrimination, and we note how the system is now challenged by the new paradigm of global market integration. We then consider the recent plethora of free trade agreements (FTAs), including those between industrial and developing countries, and their uneasy relationship with a multilateral system based on non‐discrimination. Thereafter, we seek to identify the boundaries of the WTO and examine how the potential expansion of these boundaries may result in the over‐extension and weakening of the effectiveness and influence of the WTO.     

Preferential trading arrangements as strategic positioning

We analyze a three-country model of trade negotiations in which countries can form bilateral free trade areas, bilateral customs unions or a trilateral preferential trading arrangement, and can continue negotiating after reaching an agreement. In contrast to the literature on multilateral bargaining, the set of agreements can form a (nonpartitional) network, while in contrast to the network literature, players can reach multilateral agreements. Patient enough countries only reach bilateral agreements if insiders gain more than outsiders, which allows them to manipulate the status quo in subsequent negotiations. However, a hub and spoke pattern may then emerge, and insiders then dissipate the advantages of strategic positioning. We also use variants on the model to explain why a US commitment not to bargain bilaterally sustained progress at GATT negotiations, and the rarity of open access preferential trading arrangements.     

基于碳排放权价值的中美贸易利益评估

本文采用投入产出分析方法,利用中国2007年投入产出表,测算了2006-2008年中国与美国货物贸易隐含的二氧化碳排放量,并根据欧盟排放交易体系(ETS)碳排放权价格,评估了中美贸易利益。结果表明,2006-2008年中美贸易的结果是中国无偿为美国排放了二氧化碳。考虑到碳排放权价值后,中方贸易利益减小。中国以牺牲环境为代价的低价格出口模式不可持续,中国有必要调整外贸政策。     

Green lobbies and transboundary pollution in large open economies

We employ a common agency model of policy making to examine how green lobbies affect the determination of trade and environmental policies in two large countries that are linked by trade flows and transboundary pollution. We show that the impact of green lobbying on environmental policy outcomes depends crucially on the prevailing trade regime—cooperative or non-cooperative—on whether environmental agencies act in a unilateral or coordinated manner, and on the size of the emission leakages and transboundary spillovers. Under free trade, a unilateral increase in pollution taxes reduces domestic emissions at the cost of increased foreign emissions; in this case, if the emission leakages and the associated transboundary spillovers are large enough, green lobbying can create a bias towards lower pollution taxes.     

Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements

In a seminal article, Rose (2004) found that the assumed positive impact of the WTO on international trade was questionable. This finding has been scrutinised and modified in subsequent research, using different data sets, econometric methods and separating the WTO from other forms of trade agreements. A key characteristic of the subsequent literature is the rather simplistic way in which trade agreements are treated whereby all trade agreements are lumped together. Trade agreements come, however, in many different forms and shapes. This study addresses these differences in trade agreements. Using a unique database of 296 trade agreements, we distinguish 17 trade‐related policy domains and indicate whether the agreements contain legally enforceable commitments. This extensive and novel taxonomy of trade agreements enables us to allow for the possible heterogeneity of the impact of trade agreements on international trade. Using a gravity model, we find that trade agreement heterogeneity indeed matters for international trade and that countries experience significant trade increases due to comprehensive trade agreements even if not all participants are in the WTO.     

Trade Creation and Diversion Effects of Regional Trade Agreements: A Product‐level Analysis

This paper examines the impacts of regional trade agreements (RTAs) on trade flows at product level, with a particular focus on trade creation and diversion. Based on estimation of the gravity equation, dealing with the zero trade flows and endogeneity bias problems, we analyse the impacts of various types of RTAs involving 67 countries for 20 products during the 1980–2006 period. We find that RTAs among developing countries tend to cause trade diversion compared with RTAs among developed countries. Taking the higher external tariff rates of developing countries compared with developed countries into consideration, our results suggest trade diversion is likely to be caused by remaining high tariffs on imports from non‐members. In addition, we find the trade creation effect for many products in the cases of Customs Unions and plurilateral RTAs. These results imply that trade creation would be caused by various factors besides the reduction in tariff rates. Based on these results, we draw a policy implication that external tariff rate reduction is an important factor in avoiding trade diversion in the formation of RTAs, in particular for RTAs among developing countries, while a large number of members and the common external tariff appear to be important for generating the trade creation effect.     

国际碳排放贸易的市场格局及其准入条件研究

碳排放贸易作为治污减排的有效措施之一,已被多方采用并形成了多元化的国际碳市场。基于碳市场格局总结各级市场的准入条件,并运用灰色系统分析准入条件与环境效益的相关性,得出了市场的进入成本越高、环境效益越大的结论,但现有的较高准入条件则限制了包括中国在内的非附件一国家参与碳贸易的途径。     

India's Informal Trade with Bangladesh: A Qualitative Assessment

The large and vibrant informal trade between India, and Bangladesh continues to thrive despite unilateral/regional/multilateral trade liberalisation in these two countries. This calls for an in-depth analysis of India's informal trade with Bangladesh. Using insights from the New Institutional Economics informal and formal institutions engaged in cross-border trade are contrasted to examine whether informal trading arrangements provide better institutional solutions. The analysis, carried out on the basis of an extensive survey conducted in India and Bangladesh reveals that informal traders in India and Bangladesh have developed efficient mechanisms for contract enforcement, information flows, risk sharing and risk mitigation. Further, informal traders prefer to trade through the informal channel because the transaction costs of trading in the informal channel are significantly lower than the formal channel implying that informal trade takes place due to the inefficient institutional set up in the formal channel. The principal policy implication from the study is that unless the transacting environment of formal traders improves, informal trade will continue to coexist with formal trade, even if free trade is established in the SAARC region.     

Failure of the WTO Ministerial Conference at Cancun: Reasons and Remedies

This paper first discusses four general developments in the world trading system that have made it increasingly difficult in recent years for nations to reach multilateral agreements aimed at further liberalising international trade, namely: (1) the increased technical complexity and disruptive domestic economic effects of the issues being negotiated; (2) the shift in relative bargaining power among the negotiating participants in favour of the developing countries; (3) the proliferation of bilateral and regional free trade agreements in contrast to multilateral agreements, and (4) the increased emphasis on achieving ‘fairness’ rather than reciprocity in trade liberalisation. Differences in negotiating positions of the participants on the major specific negotiating subjects of the Doha Round, such as new rules covering investment, competition policy, government procurement policy, and trade facilitation, agricultural liberalisation, changes in anti‐dumping and countervailing duty rules, the tariff‐cutting rule to increase access to non‐agricultural markets, and further liberalisation in the services sector, are then considered as well as the likelihood of reaching compromises on these matters. Finally, the possibilities of reaching acceptable balances of concessions and gains are considered for such key participants as the Group of 20 developing countries, the European Union, the United States and other industrial countries.     

Rules of Origin and the EU‐Med Partnership: The Case of Textiles

This paper analyses the impact of rules of origin on patterns of trade in the context of the pan‐European system of diagonal cumulation. The paper first highlights the importance of rules of origin in all preferential trading arrangements while arguing that those rules can easily lead to trade suppression and/or trade diversion. We then focus on the introduction of the pan‐European system in 1997 and show evidence to suggest that the introduction of the system materially impacted on trade between the EU, and its CEFTA, EFTA and Baltic states partner countries. The main body of the paper then empirically explores the impact of the lack of cumulation in the textile industry on the countries of the Southern Mediterranean. The results suggest that rules of origin may indeed substantially constrain trade between non‐cumulating countries, possibly by as much as 70–80 per cent in aggregate. While preferential trading agreements thus serve to increase intra‐PTA trade through the liberalisation of trade barriers, they may also be doing so by effectively raising external barriers to trade through the use of constraining rules of origin. To the extent that they do so increases the likelihood of trade diversion and trade suppresion.