The breadth of preferential trade agreements and the margins of exports

Review of World Economics - The paper uses recently available data on the core economic provisions of PTAs to identify which (types of) provisions seem to promote bilateral exports and the...     

Towards new agreements on international trade liberalization

Zusammenfassung Zu neuen Abkommen über Liberalisierung des internationalen Handels. — Die Vielfalt der nichttarif?ren Handelshemmnisse steht ihrem allgemeinen und linearen Abbau—analog den Zollverhandlungen der Kennedy-Runde — bislang entgegen. In der vorliegenden Studie wird daher vorgeschlagen, für jedes Land einen ?Zolltarif der nichttarif?ren Handelshemmnisse? zu berechnen, indem auβertarif?re Maβnahmen in Form von Zoll?quivalenten quantifiziert werden. Dabei ist die zentrale Hypothese, daβ jedes Handelshemmnis die Differenz zwischen heimischen Erzeugerpreisen und Importpreisen vergr?βert; diese Differenz—gemessen in vom Hundert des Importpreises—ist das Zoll?quivalent. Die Methode der Quantifizierung sollte je nach Art der statistischen Daten gew?hlt werden. Drei M?glichkeiten werden vorgeführt, und zwar für homogene Produkte ein direkter Preisvergleich am Beispiel des Steinkohlebergbaus, für heterogene Produkte ein Elastizit?tsansatz am Beispiel der feinkeramischen Industrie und ein Vergleich von Warenk?rben am Beispiel der Textilindustrie. Abschlieβend werden m?gliche Divergenzen zwischen Protektionswirkungen und Protektionsabsichten untersucht.

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Resumen Hacia un nuevo acuerdo sobre la liberalizatión del comercio international. —La diversidad de barreras no arancelarias existente se ha mostrado como obstáculo a una desarme general y lineal análogo a las reducciones arancelarias en la ronda Kennedy. En el presente trabajo los autores proponen el establecimiento, en cada pais, de un ?arancel aduanero de las trabas no arancelarias? que se obtiene mediante la calculación de equivalentes arancelarios de aquellas trabas. La premisa central es que cualquier barrera a la importatión aumenta la diferencia entre los precios industriales domésticos y los de importación; esta diferencia, expresada como porcentaje del precio de importación, corresponde al equivalente arancelario. El método de cuantificación a aplicar deberá regirse por los datos estadfsticos disponibles. Los autores presentan très posibilidades, a saber: para productos homogéneos una comparación de precios directa, tomándose como ejemplo la industria extractiva del carbón, para productos heterogéneos un concepto de elasticidad, sirviendo de ejemplo la industria de la cerámica, y una comparación de la cesta de productos, utilizándose como ejemplo la industria textil. Finalmente los autores analizan posibles divergencias entre los efectos y las intenciones de medidas proteccionistas.

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Résumé Vers de nouveaux accords sur la libéralisation du commerce international. —La diversité des barrières non-tarifaires au commerce a jusqu’ à présent empêché leur réduction universelle et linéaire—conformément aux réductions tarifaires du ?Kennedy Round?. Dans l’article que voici on propose donc de calculer pour chaque pays un tarif douanier des barrières non-tarifaires en quantifiant les mesures non-tarifaires sous forme d’équivalents de tarifs. L’hypothèse qui en sert de base soutient que chaque barrière au commerce international augmente la différence entre les prix du marché national et ceux du marché mondial; cette différence — exprimée en pourcentages des prix d’importation—représente l’équivalent du tarif douanier. La méthode de quantification doit être adaptée aux données statistiques qu’on possède. Trois possibilités sont discutées en détail: pour les produits homogènes, la comparaison directe démontrée à l’exemple de l’industrie minière du charbon; pour les produits hétérogènes, un calcul d’élasticité demontre à l’exemple de l’industrie de poterie, et la comparaison de paniers de marchandises démontrée à l’exemple de l’industrie textile. Finalement, sont examinées les divergences possibles entre les effets du protectiónnisme et l’intention protectionniste.

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Riassunto Di nuovi accordi sulla liberalizzazione del commercio internazionale. —La molteplicit à degli ostacoli commerciali non tariffari sta finora in opposizione —analogamente aile trattative doganali del Kennedy-Runde—alla sua generale e lineare demolizione. Nel presente studio viene perció proposto di calcolare per ogni Paese una ?tariffa doganale degli ostacoli commerciali non tariffari?, mentre provvedimenti extratariffari sono quantificati in forma di equivalenze doganali. Inoltre l’ipotesi centrale è che ogni ostacolo commerciale ingrandisce la differenza tra prezzi di prodotti nazionali e prezzi d’importazione; questa differenza—misurata in per cento del prezzo d’importazione—è l’equivalenza doganale. Il metodo delia quantificazione dovrebbe essere scelto a seconda del genère dei dati statistici. Tre possibilit à sono presentate, e cioè per prodotti omogenei un diretto confronto dei prezzi sull’esempio dell’industria mineraria del carbone, per prodotti eterogenei un’impiego di elasticit à sull’esempio dell’industria di cerámica fine e un confronto di canestri di merci sull’esempio dell’industria tessile. In ultimo sono analizzate possibili divergenze tra effetti di protezione e intenzioni di protezione.

     

Vertical trade and free trade agreements

We investigate the effects of free trade agreements (FTAs) on tariffs and welfare in vertical trade. We consider a three-country model, where an FTA is formed between a country exporting a final good and a country exporting an intermediate good. The FTA unambiguously leads to a reduction in the member country’s tariff, but may cause the non-member country’s tariff level to increase. In the case, where FTA raises the non-member country’s tariff level, the FTA increases that country’s welfare. In contrast, the FTA may render its member countries better off. This result implies that the formation of an FTA may not always be Pareto-improving.     

Economic integration agreements,immigrants and trade costs

Review of World Economics - Using data on the levels of economic integration agreements (EIAs) among 172 countries (35 OECD members and 137 non-members) that span the years 1995–2009, we...     

Domestic product standards,harmonization, and free trade agreements

Review of World Economics - This study considers endogenous domestic standards on products to control negative consumption externalities using a three-country model of international oligopoly with...     

Preferential trade agreements and the structure of international trade

In this paper we examine the impact of membership in preferential trade agreements (PTAs) on trade between PTA members. Rather than considering the impact of PTA membership on the volume of trade we consider the impact of membership on the structure of trade. For a large sample of countries over the period 1962–2000 we find that membership in a PTA is associated with an increase in the extent of intra-industry trade. Our results indicate that this is especially the case for PTAs formed between richer countries, with the effects of PTAs between poorer countries found to be smaller.     

Free trade agreements and world obesity

We study the causal link between trade openness via free trade agreements (FTAs) and obesity rates. When applying a difference-in-differences approach by exploiting the year a country entered a free trade agreement with the United States during the period 1990–2016. We find a positive and causal impact of FTAs on obesity rates, which are statistically and economically significant. We show that our findings are robust to placebo tests, the use of synthetic control methods, and a maximized sample. Furthermore, we show that when using an event studies approach the equal trends assumption holds.     

Preferential trade agreements and their role in world trade

This paper investigates the effects of preferential trade agreements (PTAs) on bilateral trade using a comprehensive data base of PTAs in force and a detailed matrix of world trade. Total trade between PTA partners is a poor proxy for preferential trade (trade in tariff lines where preferences are likely to matter): while the former was one-third of global trade in 2000–2002, the latter was between one-sixth and one-tenth. Gravity model estimates indicate that using total trade to assess the impacts of PTAs leads to a significant downward bias in the PTA coefficient: the semi-elasticity of trade with respect to PTA membership rises from 87% for total trade to 119% for preferential trade. Product exclusions and long phase-in periods significantly limit preferential trade; the marginal impact of South-South agreements on preferential trade is much higher than North-South PTAs, while the effect of North-North agreements is insignificantly different from zero.     

Tracking wage inequality trends with prices and different trade models: evidence from Mexico

Mexican wage inequality rose following Mexico’s accession to the General Agreement on Tariffs and Trade/World Trade Organization in 1986. Since the mid-1990s, however, wage inequality has been falling. Since most trade models suggest that output prices can affect factor prices, this paper explores the relationship between output prices and wage inequality. A Salter–Swan trade model with firm heterogeneity driven by variations in the relative price of tradable relative to non-tradable goods can explain the decline in wage inequality. The paper compares this model’s predictions with Mexican inequality statistics using data on output prices, census data, and quarterly household survey data. In spite of the model’s simplicity, the model’s predictions match Mexican variables reasonably well during the years when wage inequality fell.     

Non-tariff and overall protection: evidence across countries and over time

This paper analyzes the evolution of the incidence and intensity of non-tariff measures (NTMs). It extends earlier work by measuring protection from NTMs over time from a newly available database and provides evidence on the evolution of NTMs. In particular, building on Kee et al. (Econ J 119(534):172–199, 2009), this paper estimates the ad valorem equivalents of NTMs for 97 countries at the product level over the period 1997–2015. We show that the incidence and the intensity of NTMs were both increasing over this period, with NTMs becoming an even more dominant source of trade protection. We are also able to investigate the evolution of overall protection derived jointly from tariffs and NTMs. The results show that the overall protection level, for most countries and products, has not decreased despite the fall in tariffs associated with multilateral, regional and bilateral trade agreements in recent decades. We also document an increase in overall trade protection during the recent 2008 financial crisis. Overall, this study sheds light on an under-researched aspect of trade liberalization: the proliferation and increase of NTMs.     

Firm size-specific trade effects of regional trade agreements: Estimating extensive and intensive margins of trade

We estimate the impacts of Korean firms’ participation in regional trade agreements (RTAs) on the extensive and intensive export margins by identifying exporting firms based on their firm size—small and medium-sized enterprises (SMEs) and large enterprises (LEs) at the 5 399 HS six-digit commodity level—and specifying characteristics of RTAs from 2004 to 2015. We apply the EK Tobit estimation technique to control zero trade and the OLS estimation with importer-product and time fixed effects to alleviate the endogeneity problem. We find that firm size, product type, and depth of RTA significantly matter. Specifically, we find that deeper RTAs with larger, developing, and closer members significantly enhance the export creation effects of SMEs and LEs. Regarding the firm size-specific effects, we find that SMEs are less sensitive to exploiting RTA participation but more sensitive to the import market size, bilateral and relative trade costs, and the RTA characteristics. LEs’ export creation is mainly driven by the intensive margin, while SMEs’ export creation is driven by extensive and intensive margins (slightly more by the extensive margin). For the product-specific effects, we find that Korea's major exportable products such as chemicals, basic metals, motor vehicles, and transport equipment generate significantly strong export creation effects for both LEs and SMEs through their participation in RTAs.     

Liberalization,export incentives,and trade intensity: new evidence from Nepalese manufacturing industries

This paper presents an empirical analysis of the consequences of liberalization and export incentives on trade intensity in Nepal, a “least developed” country with weak institutions and severe infrastructure bottlenecks. Industry level evidence provides no support for any link between protection and export performance, or that export intensity is determined primarily by relative factor abundance. Results suggest that lower protection and public sector dominance lead to higher import penetration, and that foreign investment increases import penetration when the policy regime is restrictive. Although some of these phenomena are due to specifically Nepalese factors, such as its open border with India, some general policy lessons for other least developed economies emerge.     

Measuring trade creation effects of free trade agreements: Evidence from wine trade in East Asia

East Asia has experienced an unprecedented expansion in its wine market over the past two decades. This paper examines the extent to which import tariff reductions through bilateral free trade agreements (FTAs) have contributed to an increase in wine imports to Japan, China, and South Korea. Our empirical method involves estimating an augmented version of the gravity equation by the Poisson pseudo-maximum likelihood (PPML) technique. Analyzing a panel dataset for 1990–2016 covering 27 exporters, we find that overall a 1 percentage point reduction in tariff among FTA member countries is associated with an increase in the wine import volumes by 0.042%, which is seven times higher than a similar reduction in tariff on an MFN basis. The strongest trade creation effects are founded for bottle wine. The results are robust to various specifications.     

Genetic distance,cultural differences,and the formation of regional trade agreements

Review of World Economics - Genetic distance between countries’ populations has been shown to proxy cross-country differences in cultures and preferences. In an unbalanced panel of 133...     

Strategic export subsidies and reciprocal trade agreements: The natural monopoly case

Why do governments seek restrictions on the use of export subsidies through reciprocal trade agreements such as GATT? In this paper, we emphasize that subsidy competition between governments can serve to coordinate the entry decisions of firms, finding that consumers in the importing countries may suffer if the coordination afforded exporters by government subsidy programs does more to prevent entry than to promote it. In such circumstances, we show that the existence of export subsidy programs can lead to inefficiencies, and importing countries and the world as a whole can be better off when such programs are banned.     

Exchange rates,stock prices,and money markets: evidence from Singapore

This paper uses a monetary approach to analyze the asymmetric asset-price movements (exchange rates and stock prices) in Singapore, a small open economy with managed exchange rate targeting. The Singapore dollar exchange rates vis-à-vis the developed countries’ currencies are negatively related to stock prices whereas the relationship between the Singapore dollar-Malaysian ringgit exchange rate and stock prices is positive instead. The pattern of asymmetry is explained by the relative exchange-rate elasticity of real money demand and real money supply and evidenced by the distributed-lag regression and VAR analysis. Furthermore, the distributed-lag regression of monthly data suggests that fiscal revenues as well as fiscal expenditures exert positive influences on stock prices.     

Privatisation and trade performance: evidence from China

Many studies have shown that privatisation has the potential to apply the forces of competition and high‐powered incentives to reduce costs and innovate. However, few studies investigate whether privatisation can enhance export performance through higher levels of efficiency. Using China's National Bureau of Statistics surveys and customs trade data, we explore the causal effect of privatisation on trade. The wave of 2002 Chinese state‐owned enterprise reforms provided a natural experiment that enables us to use the difference‐in‐differences approach to examine this question. Consistent with the theoretical predications, the empirical results show positive and significant effects of privatisation on all the examined indicators of export performance, including total export value, the intensive margin, and the extensive margin.