US–Japan Trade Frictions: The Past,the Present,and Implications for the US–China Trade War

The United States and Japan have been involved in trade frictions over a number of products including textiles, steel, automobiles, semi‐conductors, and agricultural products over the last 50 years. US–Japan trade frictions have taken basically two forms: (i) the United States attempting to restrict Japan's exports to the United States; and (ii) the United States attempting to increase its exports to Japan by “opening” the Japanese market. By putting pressure on Japan to adopt necessary measures, the United States sought to achieve two main objectives: (i) to reduce its trade deficit vis‐à‐vis Japan; and (ii) to protect and/or promote US industries. The United States failed to achieve the first objective, while some success was achieved for the second objective. The United States triggered a trade war against China with the objectives of: (i) reducing the bilateral trade deficit; and (ii) stopping unfair trade practices by Chinese firms such as violations of intellectual property rights and forced technology transfer. Based on the experiences from the US–Japan trade frictions, the United States may achieve some success for the second objective, but not for the first. The chances of achieving the second objective would increase if the United States cooperates with countries such as Japan and the European Union, which are faced with similar problems.     

Transnational corporations' strategies and foreign trade patterns in MERCOSUR countries in the 1990s

Market-seeking strategies predominate in the recent FDI boomin MERCOSUR countries. In the trade performance of transnationalcorporation affiliates a sort of ‘asymmetric integration’is clearly visible: they produce for the internal market and,to some extent, for the regional one, while import inputs andfinal goods from developed countries (and a significant partof these trade flows is intra-firm). Thus, even if affiliatesobtained productivity gains in the 1990s, they have not yetbeen reflected in a significant increase in exports, and evenless in extra-regional exports. Hence, the foreign direct investmentboom seemingly has not yet contributed to a better insertionof MERCOSUR countries into the world economy.     

On the North-South trade in the Americas and its ecological asymmetries

There has been a long and intensive debate within the scientific community about the role of international trade in the development of countries. During the last decades, the focus of attention has moved from the pure economic level to the environmental aspects of international trade. Establishing a simplified system of North-South trade for one reference period (2003), this paper attempts to test empirically the extent of potential asymmetries with regard to extracted material flows, and contrasts the results with the economic benefits from trade (in terms of value-added). The South is thereby represented by a selection of Latin American countries (Brazil, Chile, Colombia, Ecuador and Mexico), the North comprises one of their main commercial partners, the United States. At the methodological level, a multi-regional input-output analysis is used as the tool of investigation. Results generally support the hypothesis that the South was feeding the North's societal metabolism. South-North material exports were 1.6 times larger than North-South material exports, resulting in a net deficit for the South of 324 million tons. Moreover, material intensity of exported commodities from the South was twice as high as that from the North. It is worth highlighting, however, that part of the North-South hypothesis fails for the sample of countries since the larger part of the economic surplus has remained in the South, contrarily to what would have been expected.     

The trade destruction effect and trade diversion effect of RMB appreciation

This paper examines how Chinese RMB appreciation affects China and its competitor’s exports to the third market at industry level. We develop a two-country competition model to analyze the trade destruction effect and trade diversion effect of RMB appreciation. The theoretical analysis shows that the appreciation of RMB has negative impacts on China’s exports and positive impacts on its competitor’s exports. We then empirically test how the appreciation of RMB to the US dollar affects China’s and India’s textiles and apparel exports to the US from 1995Q1 to 2008Q4. The empirical results show that an 1% appreciation of RMB to US dollar will reduce China’s exports of textiles & apparel to the U.S. by 2.63% and raise the India’s exports of textiles & apparel to the U.S. by 2.71%.     

Understanding the recent Sino-U.S. trade conflict

ABSTRACT

To understand Sino-U.S. trade relations, this article interprets the trade imbalance between China and the United States from the Trump administration’s perspective. The Trump administration claims that the Chinese government’s subsidies and high import tariffs cause the Sino-U.S. trade deficit, resulting in job losses in the U.S. The Trump administration therefore argues that imposing high tariffs on Chinese exports can resolve the deficit. The article finds that U.S. statistical accounting overestimates the deficit. Reducing China’s imports cannot increase U.S. employment, and China provides the United States with low-price and high-quality products. Chinese investors tend to invest the surplus by purchasing U.S. Treasury bonds. In addition, the United States limits Chinese investments due to ‘national security’ concerns. China’s upgrading to the high end of the global value chain is a consequence of economic development. Therefore, the two countries should rebalance Sino-U.S. trade by seeking economic and trade cooperation via trade negotiations.     

Poisoned grapes,mad cows and protectionism

This paper studies two episodes where a ban on imports was imposed to safeguard people's health. The first case is the poisoned grapes crisis involving Chile and the United States in 1989. The second is the “mad cows” dispute, which broke out in 1996, between the United Kingdom and the European Union. These case studies motivate a new definition of “protectionist measure” which is applied to argue that the European Union's ban on British beef exports was not protectionist, while the US ban on Chilean fruit possibly classifies as such a measure.     

Global trade flows and economic policy uncertainty

ABSTRACT

This article investigates the impacts of economic policy uncertainty (EPU) on global trade flows in gauging international trade developments. We employ a global vector autoregressive (GVAR) trade model, augmented with value-added bilateral trade linkages, that allows for quantifying the effects of economy-specific uncertainty shocks on exports and imports of individual economies. We find substantial spatial propagation in the temporal dynamics of international transmission of shocks amidst the manifestations of cross-border global value chains (GVCs) with China’s accession into the WTO. We provide evidence for the significance of EPU of China and the United States, particularly the latter, in influencing global trade flows. Our results show that while the US impacts can largely be attributed to its indirect trade linkages with other economies, the impacts of China can be relegated more to its direct GVC linkages. The findings have implications on trade protectionist inclinations of the current-term US government and the ongoing efforts of China’s policymakers in steering macroeconomic rebalancing for sustainable growth.     

The economic and trade effects of the UK–Korea free trade agreement on the United Kingdom,Korea, Japan,China, and the European Union

We explored a comparative static computable general equilibrium model with six regions and 12 sectors to estimate the impacts of the recent UK–Korea free trade agreement (FTA) along with the European Union (EU)–Korea FTA. The empirical results provide quantitative evidence of the impact on national GDP, national exports and imports by sector, and the changes in exports or imports among the United Kingdom, Korea, Japan, China, and the EU. The UK–Korea FTA, along with the EU–Korea FTA, increases GDP and welfare for the United Kingdom and Korea; moreover, there is a large increase in automobiles, transport equipment, and machinery exports between Korea and the United Kingdom. The GDP and welfare level of non-member countries such as Japan and China will slightly decline. Exports from the United Kingdom and Korea to non-member countries are also expected to decrease in most manufacturing sectors. The UK–Korea FTA will lead to increases in imports between the United Kingdom and Korea due to mutual trade creation effects and trade diversion effects. However, non-member countries such as Japan's exports are expected to experience a large decline in automobiles to the United Kingdom and in most manufacturing products to Korea due to the negative impact of the UK–Korea FTA.     

Used automobile protection and trade: Gravity and ordered probit analysis

There is a great deal of protection against used automobile imports in many countries of the world that has gone largely unnoticed in the trade policy literature. Indeed, there has been no recent attempt to systematically analyze the determinants of used automobile trade and the role of protection in this trade. This paper makes a preliminary attempt, introducing an ordered measure of protection levels in 132 countries. A gravity model of used automobile exports from the United States shows that protection measures against used automobile import have a statistically-significant, suppressive effect on trade flows. An ordered probit analysis of the protection measures themselves points to new automobile production interests as a key factor behind used automobile protection. Other relevant explanatory factors of protection are income levels, democratic regime, transitional status, WTO membership, and income distribution.First version received: December 2002/Final version received: August 2003The authors would like to thank Ken Button, Michael Ferrantino, Kingsley Haynes, the late Don Lavois, Keith Maskus, Arvind Panagariya, Baldev Raj, Thomas Strattman, Roger Stough, Wendy Takacs, Michael Walsh, and two anonymous referees for helpful comments and discussions.     

Effects of the Mexican Apple Tariff on the World Apple Market

In response to the USA blocking Mexican trucks from traveling to the inland part of the USA, Mexico imposed tariffs on US fresh apple exports. This study analyzes the impacts of the Mexican tariff on USA, Mexican and world apple markets by using theoretical analysis and developing a spatial equilibrium trade model. The results show that this tariff increases apple prices in Mexico, to the benefit of Mexican producers but harming Mexican consumers. Even though Mexico collects revenues from its tariff, the overall welfare impact is negative because consumers' loss outweighs producers' gain and tariff revenues. Since the USA exports less to Mexico, its prices and production decline, but consumption increases. To mitigate the export market loss to Mexico, the USA redirects its exports to other importing countries, displacing other apple exporting countries' trade with these importing countries.     

On the asymmetric effects of exchange-rate volatility on trade flows: Evidence from US–UK Commodity Trade

We consider the response of each of the 67 industries that trade between the United States and United Kingdom to the volatility of the real dollar–pound exchange rate. When we follow previous research and estimate a linear ARDL model for each industry, we find short-run effects of volatility in 22 US exporting industries to the United Kingdom that last into the long run only in nine industries. As for the UK exports to the United States, we find short-run effects in 18 industries that last into the long run in 15 industries. However, when we estimate a nonlinear model for each industry, we find short-run effects of volatility on 41 US exporting industries and on 43 UK exporting industries, all in an asymmetric manner. Short-run asymmetric effects lasted into long-run asymmetric effects in 24 US exporting industries to the United Kingdom and in 33 UK exporting industries to the United States. While total trade shares of industries from the linear models were negligible, those of the industries from the nonlinear models were significant in size, in the tune of one-third of the trade.     

Intra- and inter-firm US trade

Bivariate Tobit gravity regressions using 2000–2007 US trade data show that US-based firms take advantage of positive forces (e.g., economic freedom) operating in foreign markets more through affiliates than third parties. Likewise, transactions with affiliates are deterred a lot more by negative forces (e.g., distance). Additionally, trade flows are higher (lower) with non-OECD (OECD) countries that are more politically free. Decompositions of the Tobit effects and the predicted-to-actual trade ratios indicate a two-pronged strategy for policymakers: develop targeted policies to specific hurdles to intra-firm trade and work aggressively on increasing market access for US exports.     

The impact of FTAs on MENA trade in agricultural and industrial products

This article analyses the impact of Free Trade Agreements (FTAs) on Middle East and North African Countries (MENA) trade for the period 1994–2010. The analysis distinguishes between industrial and agricultural trade to take into account the different liberalization schedules. An augmented gravity model is estimated using up-to-date panel data techniques to control for all time-invariant bilateral factors that influence bilateral trade as well as for the so-called multilateral resistance factors. We also control for the endogeneity of the agreements and test for self-selection bias due to the presence of zero trade in our sample. The main findings indicate that North–South-FTAs and South–South-FTAs have a differential impact in terms of increasing trade in MENA countries, with the former being more beneficial in terms of exports for MENA countries, but both showing greater global market integration. We also find that FTAs that include agricultural products, in which MENA countries have a clear comparative advantage, have more favourable effects for these countries than those only including industrial products.     

The impact of cultural exceptions: audiovisual services trade and trade policy

Audiovisual services such as music and movies in digital formats have gained substantial importance over the last decade, while remaining one of the sectors with the lowest number of commitments by WTO members. Based on a novel data set, this article analyses the role of trade restrictions on audiovisual services in a gravity model. We find that countries with WTO commitments trade more audiovisual services, while both exports and imports are lower for countries which impose policies to curb inflows of foreign cultural services.     

China–US trade War: an Indonesian perspective

ABSTRACT

This paper takes a holistic approach to the effect of US-China trade war on Indonesia. The paper starts by laying out the context of the rise of protectionism and nationalism, comparing developed and developing country context, and its various causes such as unequal distribution of benefits and responses to the rise of China. The new US approach focusing on goods trade deficit, targeting mainly China but also other countries, including Indonesia and it should be seen as a tool to address the real concerns of the US regarding unfair trade, such as technology transfer, industrial subsidies and trade and investment distortions. It also reflects the US view of the inadequacy of the WTO. In terms of direct impact, the US-China trade war is creating uncertainities to global growth and in particular any decline in China’s growth is likely to hit Indonesia and other ASEAN countries given that China has become their number one trading partner. As for benefit from trade diversion and investment relocation to avoid the trade war, given the structure of its exports and lack of integration in the Global Value Chains, Indonesia is unlikely to benefit compared to several other Southeast Asian countries, such as Vietnam. However, any net benefit from this, will far outweigh the cost of the uncertainty in the rules based multilateral trading system (MTS) and the retreat of the US leadership to safeguard the MTS. The paper looks at how the current US unilateralism is framed in a carrot and stick approach, which does not benefit developing countries like Indonesia. To fill the leadership vacuum to maintain an open rules based order, other countries need to take the leadership position. This can be done by pursuing their own unilateral agenda of structural reforms, increasing regional economic integration and take collective leadership to conduct necessary reforms of the WTO especially on issues that are at the heart of the US-China trade war such as industrial subsidies, strengthening IPR, investment issues related to technology transfer, and competition policy and the level playing field.     

Foreign trade and early industrialisation in the Habsburg Monarchy and the United Kingdom — Two extremes in comparison

The concept of socio-ecological transitions is used to analyse the quantitative importance of physical imports and exports for the Habsburg Empire and the United Kingdom in the 19th and early 20th centuries. For the Habsburg Empire, a new dataset of foreign trade and social metabolism is presented. For the United Kingdom, the analysis relies on previously published data. Foreign trade volumes increased in both countries in the long run. Total trade volumes were much higher in the United Kingdom throughout the entire time period, on average by around a factor four. Physical factors explaining the disparities in structure and volume of foreign trade in the two countries are differences in (1) the temporal patterns of the socio-ecological transition and (2) domestic resource endowments. In both countries, energy carrying materials, i.e. fossil fuels and biomass, were the dominant resources in physical foreign trade. The analysis focuses on the physically most important material groups: coal, wood and cereals, and discusses the role of imports and exports in relation to domestic resource provision and environmental pressures. Physical foreign trade increased at a faster pace than domestic resource extraction and consumption. The socio-ecological transition was thus accompanied by rising international integration of resource supply.     

The effects of currency fluctuations and trade integration on industry trade between Canada and Mexico

Since studies of North American trade flows tend to focus on the United States as the main trading partner, trade between Canada and Mexico has received relatively little attention. Here, we examine bilateral trade flows for 62 Canadian export industries to Mexico and 45 import industries from Mexico to assess the effects of currency fluctuations and trade integration on these individual trade flows. We find that Mexico’s largest export industries respond to depreciation more than Canada’s largest export industries do. Both countries’ trade flows are influenced even more by trade integration. Since there is evidence of strong intra-industry trade between these two countries, we can attribute this effect to the exploitation of economies of scale.     

World Exports of New and Used Automobiles: A Gravity Model Comparison among the European Union,Japan and the United States

This paper considers new and used automobile exports of the European Union, Japan and the United States within a gravity model framework. This standard framework has similar explanatory power for the new and used automobile exports of the European Union and the United States, as well as for the new automobile exports of Japan, but not for Japan's used automobile exports, a finding the paper associates with the importance of left-hand driving in determining the markets for Japan's used (but not ‘made to order’ new) automobile exports. The paper concludes that, while used automobiles are somewhat more important to lower income markets, controlling for discrimination and other factors, used automobile trade clearly supplements new automobile trade from the prospective of the importing country.     

标准化对中国出口贸易的影响效应——基于局部均衡的分析

由于技术差距的存在,中国出口贸易产品的技术标准普遍低于美、日、欧等发达国家,因此,标准化对中国出口贸易的影响显著。从局部均衡的角度分析短期和长期的不同影响效应发现：在短期内,标准化对中国的出口贸易效应主要是负面的,表现为贸易限制效应、贸易转移效应和贸易条件效应;而在长期情况下,如果企业能够积极改进,不断创新,那么标准化对中国的贸易会产生积极的促进效应,贸易量会增加,同时贸易条件也会得到改善。     

The trade impact of European Union agricultural preferences

We assess the impact on agricultural trade of European Union (EU) trade policies, using a gravity model based on disaggregated trade flows from 161 developing countries (DCs) to 15 EU member countries. We use a sample selection framework to account for potential selection bias of positive trade flows and provide an explicit measure for relative preference margins. From a policy perspective, our results debunk some of the most widespread criticisms of preferential policies: EU preferences matter and have a positive impact on DCs agricultural exports at both the extensive and intensive margins, although with significant differences across sectors.