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.     

EU Trade Regulation for Baby Food: Protecting Health or Trade?

This paper explores the effect of European Union (EU) food safety regulations on EU imports of baby food. Pesticides and contaminants contribute to various health problems. Children are more vulnerable to the dangers of pesticides and contaminants because as soon as they start eating solids, they consume a limited number of food items, most of which are fruits and vegetables. To protect the health of the most vulnerable part of the population, the EU regulations stipulate that no more than 0.01 mg/kg of any single pesticide residue is permitted in baby food. In this respect, the EU differs from most of its trading partners, the majority of which do not differentiate food safety regulations according to the age of the consumer. The purpose of this paper is to compare the EU regulations on maximum residue limits of pesticides to those of its major competitors through a severity index. This index is then introduced into a gravity equation to assess the impact on EU imports of baby food. We find that the EU regulation had a negative impact on the volume of trade but a positive one on the probability of setting up new trade relationships.     

Does the WTO Increase Trade and Cause Convergence?

We study whether proximity to the nearest tax haven affects FDI and the number of American affiliates in a tax haven. Our results show that distance to the nearest tax haven is positively related to FDI inflows and the number of American affiliates in tax havens. These findings suggest that there is harmful competition between tax havens. We also find evidence of positive spillovers: the number of American affiliates in a tax haven is positively related to the number of affiliates in its closest neighboring tax haven. This suggests the presence of agglomeration benefits given there is an affiliate in a nearby tax haven.     

International Labour and Environmental Standards Agreements: Is This Fair Trade?

Labour and environmental standards agreements are two contentious proposals that have contributed to the failure of the WTO to launch a new round of trade liberalisation discussions and have prevented the US President from obtaining fast‐track negotiating authority. Proponents of the agreements have been able to win substantial political support by arguing that standardised rules on labour practices and environmental regulations is the only way to assure that international trade remains fair. Although there are widespread demands for ‘fair trade,’ there remains a lack of understanding as to what fairness means exactly. Recently, a comprehensive catalogue of fairness principles was presented by Suranovic (2000). This paper will analyse the proposals for labour and environmental standards with respect to these fairness principles in order to characterise how fairness is used by supporters of these policies. The paper will also show that by using different fairness principles, opponents of these policies can argue that these same policies are unfair. The fact that reasonable notions of fairness can be applied by both opponents and proponents of these agreements highlights difficulties with fairness, per se, as a useful guide to policy. The paper uses this contentious issue to highlight the conceptual difficulties of proposals for fair trade.     

Comprehensive Trade Agreements: Conditioning Globalisation or Eroding the European Model?

Trade dynamics within the EU are presently pushing it towards deepening globalisation through bilateral comprehensive trade agreements which establish far-reaching rules that govern the bilateral trade relationship. The European Commission has defended these agreements as a vehicle through which to promote world trade in accordance with European values and norms. However, the theory of fiscal federalism and the principle of subsidiarity tell us that one should not centralise decisions at the supranational level which are better taken at the national or regional level when there are different preferences among countries or regions. Consequently, member state and regional competences ought not to be perceived as a mere obstacle to swift trade deals. Rather, they can provide an important checks and balances function with regard to whether EU trade policy is truly working to condition globalisation according to European values and preferences.     

Province-Level Impacts of Canada’s Trade Agreements

Given Canada’s extended geography and regional economic diversity, individual provinces have differing exposures to particular international trade agreements. We demonstrate this by estimating the impacts of the Canada-Korea free trade agreement on the province of Ontario, using a dynamic general equilibrium model to generate Canada-level impacts, which are then decomposed on the basis of partial equilibrium model simulations on a trade dataset in which Ontario is represented as a separate international trading entity. We show that geography and sectoral specialization matter and that general equilibrium effects must be taken into account in partial equilibrium assessments of sectoral impacts of major trade agreements.     

Do Environmental Regulations Influence Trade Patterns? Testing Old and New Trade Theories

The relationship between trade liberalisation and the environment has been the subject of a growing body of literature in recent years. One particular focus of attention has been whether environmental regulations are influencing patterns of international trade. This paper aims to examine this issue in the context of the Heckscher‐Ohlin‐Vanek (HOV) model of trade, but also in a ‘new’ trade model characterised by monopolistic competition and differentiated products. Our use of the HOV model improves upon a well cited study by Tobey (1990) in many ways, not least by allowing for the possible endogeneity of environmental regulations. We find no significant relationship between such regulations and ‘dirty’ net exports. The ‘new’ trade model explains the presence of both intra‐ and inter‐industry trade and we again allow for the possible endogeneity of regulations. We believe this to be the first study to assess the role of environmental regulations within a ‘new’ trade model, but also the first to allow for the endogeneity of regulations in a cross‐country model of trade. We find environmental regulations to be a statistically significant determinant of the share of inter‐industry trade (net trade) and we find this significance to increase when endogeneity is controlled for.     

Why Do Some Consumers Make Unhealthy Food Choices?

This research examines the impact of gender, age, and education on food choices and addresses issues of causality in these observed relationships; a logit model was used to test the mediation effects and hypotheses. The results from a self-administered online survey indicate that gender and education are two key predictors of consumers’ food choices for their children. These findings are further explained by attitudes toward obesity. Specifically, female consumers and parents with lower levels of formal education tend to select food products that are nutritionally inferior because they are not necessarily concerned about their child’s weight and do not usually restrict their child’s food and diet. This research advances a causal mechanism that explains unexpected consumers’ food choices; it essentially proposes and tests two mediators—restrictions of a child’s weight and concerns about a child’s weight—of the relationship between key demographic variables and consumers’ food choices.     

Why Do Some Consumers Prefer Organic Food? A Discourse Analytical Perspective

In an attempt to better understand the main motives behind organic food consumption, this study explores the consumer discourses of organic food. In all, 35 in-depth interviews were conducted, from which three major discourses were identified. These discourses were named primitivist, retro, and racialist. The data suggest that these Romantic discourses play on images of a supposedly glorious and innocent past. Consequently, consumers using these three discourses were more likely to prefer organic food, as they had a tendency to construct this type of food as more natural, authentic, and real. In this sense, Romantic discourses seem to offer more resonant themes for consumers than contemporary modern science can ever provide.     

Do the Poor Pay More for Food? An Analysis of Grocery Store Availability and Food Price Disparities

Do the poor pay more for food? To answer this question, this study was conducted to provide an empirical analysis of grocery store access and prices across inner city and suburban communities within the Minneapolis and St. Paul metropolitan area. The comparison among different types of grocers and geographic areas is drawn from a survey of approximately fifty grocery items for fifty-five stores. Results indicate that the poor pay only slightly more in the Twin Cities grocery market. More significantly, those who shop in non-chain stores pay a significant premium, and the poor have less access to chain stores. This study reveals that the biggest factor contributing to higher grocery costs in poor neighborhoods is that large chain stores, where prices tend to be lower, are not located in these neighborhoods.     

Do High‐Skill Immigrants trigger High‐Quality Trade?

This paper investigates the links between product quality and the pro‐trade effect of ethnic networks using a large panel on bilateral stocks of immigrants with information for 19 OECD destination countries and 177 origin countries. In line with the approach of Rauch and Trindade, we classify traded goods according to their quality level and separately estimate pro‐trade elasticity of ethnic networks for each subgroup. We allow for heterogeneity of immigrants according to both the level of per capita income of their country of origin and their education level. Our findings suggest that the trend of the pro‐trade effect of immigrants over quality seems to be driven by the North–South specialisation across varieties for both supply and demand. Indeed, ethnic networks mostly facilitate imports of those varieties for which their countries of origin have a comparative advantage; as for exports, ethnic networks are more effective in promoting exports to their homeland of those varieties for which there is relatively higher demand. We show that the same trend applies to products characterised by the same degree of differentiation according to the classification proposed by Rauch and – given their lower liquidity constraints and advantages in human capital – we find a greater impact of high‐skilled migrants consistent across all quality levels.     

Training Agreements: Resolving Under-Investment in Training?

Here the authors examine UK employers’ use of training agreements and their impact on training and development practice. In particular, they review the literature on training agreements and find this to be underdeveloped and based upon little empirical data. Drawing on postal survey and focus group evidence from management trainees and an interview survey of employers, they show that training agreements are relatively widespread, and that employers mainly use agreements as a filter mechanism to assess an employee’s commitment to the training requested. The evidence suggests that training agreements do little to improve, and may negatively effect, a trainee’s commitment to the employer.     

Do Consumers Care about Ethics? Willingness to Pay for Fair‐Trade Coffee

Consumers’ buying behavior is not consistent with their positive attitude toward ethical products. In a survey of 808 Belgian respondents, the actual willingness to pay for fair‐trade coffee was measured. It was found that the average price premium that the consumers were willing to pay for a fair‐trade label was 10%. Ten percent of the sample was prepared to pay the current price premium of 27% in Belgium. Fair‐trade lovers (11%) were more idealistic, aged between 31 and 44 years and less “conventional.” Fair‐trade likers (40%) were more idealistic but sociodemographically not significantly different from the average consumer.     

Who Benefits from Trade Wars?

Even though economists keep on emphasising the benefits of international trade, protectionism is on the rise in many industrialised countries. The authors argue that a potential explanation for this phenomenon can be found in the short-run distributional effects of import tariffs: while protectionism hurts the economy from an aggregate perspective (i.e. GDP goes down), unskilled workers in import-competing sectors benefit in the short run and do not lose in the long run. They might therefore lend political support to protectionism.     

What about China's Trade Deficit?

With its rapid economic growth over recent years,China has become an important force to be reckoned in the world.The ever-rising trade surplus makes a good example.But does Chinese enjoy a trade surplus with every foreign country? The answer is"No". Official statistics show that China has a trade defi- cit with partners in East Asia including Japan,North Korea and ASEAN(Association of Southeast Asian Na- tions)countries.In terms of trade structure,China also suf-     

Are Apparel Trade Restrictions Regressive?

Consumer welfare losses from apparel trade restrictions are estimated across different household income levels using Hicksian Equivalent Variations. The 1980–1992 Consumer Expenditure Survey, the 1980–1992 Consumer Price Index, and the 1990 ACCRA Cost of Living Index were used. For price differences under 45 percent, consumer welfare loss from higher apparel prices due to trade restrictions is greater as a percent of total expenditures for wealthy households than for poor households. Apparel trade restrictions, therefore, have a progressive effect.