US–Brazilian cotton policies

Brazil filed a lawsuit with the WTO against the United States for providing cotton production and export subsidies, and the WTO ruled in favour of Brazil. Brazil threatened to impose retaliatory tariffs if the United States does not comply with the WTO rulings. After a prolonged litigation stretching from 2002 to 2010, both countries agreed to a negotiated settlement wherein the United States paid Brazilian cotton producers to compensate for any adverse effects. This study develops a political economic model to theoretically analyse US cotton policies, Brazil's threat of retaliatory tariffs and the negotiated settlement between the two countries. The theoretical results show that the volume of cotton output, supply price response, politicians' apathy for the public welfare, elasticities of excess supply/demand and the magnitude of US transfers play a crucial role in determining US policies. This study contributes to the literature by being the first to model political economic aspects of the complex system of trade and domestic policies in the cotton industry using a three-country framework, tariff retaliation and transfers between the countries.     

Firm R&D,Processing Trade and Input Trade Liberalisation: Evidence from Chinese Firms

This paper examines the impact of input trade liberalisation on firm R&D activity by taking China's accession to the WTO as a quasi‐natural experiment. Different from ordinary imports, processing imports in China enjoy zero tariffs and are not affected by input trade liberalisation due to the WTO accession. The paper uses disaggregated firm‐level production data and transaction‐level trade data to perform difference‐in‐difference analysis by taking processing import firms as a control group. An intensive empirical search shows that after China's accession to the WTO, input trade liberalisation fostered firm R&D significantly. The findings are robust to different measures and various empirical specifications.     

贸易争端背景下特朗普政府农业贸易补贴政策研究

美国长期实行农业补贴政策,其中农作物保险、农业风险补贴和价格损失补贴是补贴的主要形式。特朗普政府上台以后,美国同中国等一些国家发生贸易争端,美国农业出口面临关税报复和贸易壁垒的困境。为保持农业稳定发展,特朗普政府在原有农业补贴形式的基础之上新增了农业贸易援助计划,该计划主要包括市场促进项目、食品采购和分配项目、农业贸易促进项目。这些援助计划在稳定农业生产的同时,也扭曲了市场。美国在2019年度的农业补贴可能会超过其对世贸组织承诺的"黄箱"补贴上限,从而导致违反世贸组织规则。如美国长期执行该政策,我国应采取对美施压措施。     

WTO Rules on Direct Taxation

The widely‐followed ruling by the WTO's Dispute Settlement Body against the United States concerning the latter's FSC/ETI scheme, which led to the largest retaliation award ever authorised in a dispute at the WTO, confirmed (if there were ever any doubt) that, generally speaking, direct taxes, like indirect taxes (including tariffs), are subject to the multilateral rules of the WTO, notwithstanding efforts by tax authorities to secure specific exemptions for certain direct tax measures in these agreements. This ruling reconfirmed the traditional distinction under international trade rules between direct and indirect taxes, particularly with respect to how such taxes should be treated under the subsidy and border tax adjustment rules of the WTO. It prompted the US Congress finally to pass legislation in late 2004 to repeal the FSC/ETI scheme as part of a larger overhaul of the US corporate tax system. The most recent disputes between the United States and the European Communities over assistance to large civil aircraft (allegedly amounting in each case to even more than the FSC/ETI) also encompass direct tax measures. It would not be surprising if other WTO‐inconsistent direct tax measures were identified in the future, leading to further disputes among WTO Members. Multilateral WTO rules, which are agreed by consensus, can therefore be expected to continue to be an important factor in determining how Members shape their tax policies, as they will undoubtedly want to avoid having their tax policies successfully challenged in the WTO.     

The World Trade Organisation's Doha Cotton Initiative: A Tale of Two Issues

Four West African nations have demanded that the WTO's Doha Development Agenda include a Cotton Initiative that involves two issues: cutting cotton subsidies and tariffs, and assisting farm productivity growth in Africa. This paper provides estimates of the potential economic impacts of (a) complete or partial removal of cotton subsidies and import tariffs globally and (b) cotton productivity growth through the adoption of genetically modified (GM) cotton varieties. Use is made of the GTAP database and global economic model to address both these issues. On Doha, our results confirm that for cotton – unlike for other agricultural subsidies and tariffs – it is subsidy reductions rather than tariff cuts that would make by far the largest impact. For Sub‐Saharan Africa the potential gains are huge relative to the effects on that region of reforming other merchandise trade policies. And they could be more than doubled if that reform provided the cash for farmers to take advantage of the biotechnology revolution and adopt GM cotton varieties. But those potential gains, and the affordability of switching to costly GM seed, depend crucially on the extent to which high‐income countries are willing to lower domestic support to their cotton farmers.     

China-Auto Parts Dispute——China's First Legal Censure from the WTO

WTO rules against China in auto parts case On July 18,a panel from the World Trade Organization(WTO)concluded that China violated trade rules with its auto part import tariffs.The ruling marks China's first legal censure from the WTO since joining the global trade body in 2001. In April 2005,China issued rules to levy a 28% tariff on imported auto parts—China considers auto parts as a complete vehicle if they account for 60% or more of     

Multilateral stability and efficiency of trade agreements: A network formation approach

We study the endogenous network formation of bilateral and multilateral trade agreements by means of hypergraphs and introduce the equilibrium concept of multilateral stability. We consider multicountry settings with a firm in each country that produces a homogeneous good and competes as a Cournot oligopolist in each market. Under endogenous tariffs, we find that a multilateral trade agreement governing the rules and norms of tariff setting, that is the WTO/GATT regime itself, together with a bilateral preferential trade agreement (PTA) is multilaterally stable. We also find that the existence of the WTO is necessary for the stability of the trading system. We further analyse the impact of PTAs on multilateral tariffs within the WTO. We find that the formation of PTAs increases countries' incentives for multilateral tariff reduction.     

Trade liberalisation and labour shares in China

We estimate the extent to which firms responded to tariff reductions associated with China's WTO entry by altering labour's share of value. Firm‐level regressions indicate that firms in industries subject to tariff cuts raised labour's share relative to economy‐wide trends, both through input choices and rent sharing. Our estimates suggest that, on average, an industry that experienced no reductions in output or input tariffs would have a 15.7% lower labour share of value in 2007 than it actually did, assuming the same economy‐wide trends. There is significant variation across firms: the impact attenuates with geographic remoteness and union presence and strengthens with foreign ownership.     

Trade liberalisation and domestic brands: Evidence from China's accession to the WTO

In this paper, we examine how trade liberalisation affects firms' branding behaviours. We investigate this question with China's accession to the WTO in late 2001. We find that firms in sectors with large import tariff reductions discontinue more trademarks. Meanwhile, these firms file more trademark applications and their total number of effective trademarks increases after trade liberalisation. This growth in trademarks is mainly driven by large firms, as measured by the number of employees. In fact, small firms' applications and effective trademarks decline during trade liberalisation. It is also found that trademark applications are mainly filed for the traditionally non-dominant products of industries. We provide a conceptual model that incorporates the channels through which both passive and active responses occur.     

Input trade liberalisation,institution and markup: Evidence from China's accession to the WTO

This paper investigates the effects of input trade liberalisation on firm markups and assesses how institutional environment affects such impacts by using Chinese firm‐level data. To identify the causal effects, we exploit the quasi‐natural experiment of China's WTO accession in 2001 and perform difference‐in‐differences estimation. The results show that input tariff liberalisation leads to a substantial increase in firm markups, and institutional environment significantly strengthens such an impact. We further uncover the underlying mechanisms through which input tariff liberalisation boosts firm markups, and show that both price and cost channels work for the input tariff cut effect on firm markups, of which the latter is much more important. In addition, we also demonstrate that input tariff cut significantly fosters aggregate markup growth, and the reallocation effect is found to be an important channel through which input tariff liberalisation boosts aggregate markup growth.     

An empirical study about the impacts of China's accession to the WTO on the telecommunications industry in China

Post‐China's accession to the World Trade Organization (WTO), China's telecommunication industry now needs to face a much stronger competition in a relatively open market that has a number of diverse rivalries. There are specific benefits and risks associated with both domestic telecommunication (telecom) companies and foreign investors in the telecommunication or information technology area. To meet with these new challenges and take advantage of the competitive, strategic advantages to penetrate the market, both China's telecom industry and foreign investors must understand the impacts of China's accession to the WTO on its telecommunication industry and hence make the necessary adjustments and/or implementation improvements. In specific, we carefully examine the impacts such as prices, quality, and local protectionism in this article. We draw the findings based on the data collected from a survey and the resulting statistic analysis.     

美日欧WTO补贴规则改革方案及其对中国的挑战

2017年以来,美日欧三方先后六次就WTO改革发表联合声明,补贴规则改革对中国的指向性极其明显,试图以重塑WTO规则的方式对中国施压。美日欧主张的WTO补贴规则改革方案呈现出补贴主体定义外延化、禁止性补贴范围扩大化、通报规则严格化等特点。改革方案针对国有企业的所有制歧视、中央与地方通报协调难题、部分产业产能过剩、研发补贴的效率与合规冲突等对中国构成严峻挑战。面对WTO补贴制度迫切改革的难题,中国应优化补贴制度并积极参与和引领多边补贴制度改革进程。在国内补贴制度改革方面,应坚持"合理性"优先于"合规性"的基本原则,严格履行成员补贴透明度与通报义务,加快研发和农业补贴方式创新。在谈判策略方面,坚持工业补贴和农业补贴一揽子的谈判策略,恢复不可诉补贴,严格界定国有企业的正常商业行为。     

BETWEEN PRAGMATISM AND PRINCIPLE: Legalization,Political Economy,and the WTO's Subsidy Agreement

How might the World Trade Organization's (WTO) subsidies regulations affect the development of national industrial policies? This question is investigated by examining two recent WTO cases involving small, open economies which emphasize state support for high value-added, export-oriented industries: Australia and Canada. The analysis centers on the degree to which the disputes panels in each case sought to balance the conflicting demands of enforcing common international rules on subsidy with the recognition that states continue to enjoy the right under WTO to subsidize firms. It finds that in both cases panels tried to avoid imposing broad rules and instead looked at the particular circumstances of each dispute. While this approach is more accommodating of state sovereignty concerns, the use of commercial referents for governments loans, coupled with the "purpose" standard, may yet impose constraints on small economies seeking to develop higher value added sectors.     

Privatisation and the unusual case of Belarusian accession to the WTO

The accession negotiations of Belarus to the WTO are unusual since, due to its obligations in the Eurasian Economic Union, WTO accession is not expected to impact its tariffs or formerly substantial trade‐distorting agricultural subsidies. Nonetheless, we estimate that WTO accession will increase welfare by 9.9% of consumption in Belarus. We show that inclusion of: (i) foreign direct investment; (ii) reduction in non‐discriminatory barriers against services providers; and (iii) our model with imperfect competition and endogenous productivity effects together produce estimated gains eleven times larger than a model of perfect competition with only cross‐border trade in services. Our analysis is enabled by our production of a data set on both discriminatory and non‐discriminatory barriers in services and their ad valorem equivalents. Based on a new data set on labour productivity by sector and type of ownership, in our central model, we estimate that privatisation will increase welfare by 35.8% of consumption. We find substantial variance in the estimated gains from privatisation depending on model assumptions, but all the estimates of the impacts of privatisation indicate substantial welfare gains.     

WTO背景下改革补贴政策研究

近年来,国际社会对我国政府补贴的质疑甚嚣尘上,政府补贴特别是对国有企业的补贴,在世界贸易组织(WTO)规则下面临变革。党的十九大明确提出,要清理废除妨碍统一市场和公平竞争的各种规定及做法。推进经济高质量发展对政府补贴提出了进一步规范的要求。本文通过梳理分析世界主要经济体的补贴情况,从理论和实践角度讨论补贴在国际范围内所具有的客观性和普遍性,得出补贴是政府支持产业发展,激发市场活力的重要政策工具。对我国政府补贴和对国有企业补贴的情况进行梳理研究,结合国际实践经验,探索符合WTO规则的,促进我国市场经济健康快速发展的补贴政策体系,并针对补贴中存在的问题提出深化改革的对策建议。     

Dispute Settlement at the WTO: Impacts of a No Deal in the US‐Brazil Cotton Dispute

On the day before Brazil was to start imposing retaliatory sanctions against the United States in the WTO dispute settlement case regarding unfair domestic and export upland cotton subsidies, the parties have reached a preliminary concession aimed at settling this eight‐year‐long trade dispute. In this paper, we explore the economywide impacts of a no deal with specific emphasis on intellectual property retaliation in a computable general equilibrium framework. As awarded by a WTO dispute settlement panel, Brazil would have been entitled to $591 million in retaliatory sanctions in goods sectors and $238 million in intellectual property sanctions. We find that retaliation by Brazil would have led to welfare gains for all countries except the United States. Most importantly, however, had Brazil not been allowed to retaliate in the form of suspension of intellectual property rights, the impact of trade retaliation alone would have been negative for both Brazil and the United States, a case of shooting oneself in the foot to shoot at the other person's foot.     

Friends like this: The impact of the US–China trade war on global value chains

This paper considers the indirect impact the recent tariff increases between the United States and China can have on third countries through links in global supply chains. We combine data from input–output relationships, imports and tariffs, to calculate the impact of the tariff increases by both the United States and China on cumulative tariffs paid by third countries. We show that the tariff hikes increase cumulative tariffs for other countries and thus hurt trade partners further downstream in global supply chains. We also show that this is particularly important for tariff increases on Chinese imports in the United States. These are likely to be used as intermediates in production in the United States, which are then re-exported to third countries. The most heavily hit third countries are the closest trade partners, namely the EU, Canada and Mexico. We estimate that the tariffs impose an additional burden of around 500 million to 1 billion US dollars on these countries. China's tariffs on US imports have less of an effect.     

Preferences,Welfare and Desirable Subsidies under Monopolistic Competition

A simple model of monopolistic competition with consumer preferences for diversity reconciles an empirical‐theoretical disconnect of the welfare properties of industrial subsidies. The optimal policy rules indicate that subsidies can be Pareto improving, but subject to society's preference for diversity. More counter‐intuitively, the welfare‐maximizing subsidy is always found to be strictly non‐negative, and the general qualitative nature of the results seem to contradict the optimum taxation literature. The subsidy incidence is also examined and we find that there exists a potential for an over‐shifting of the subsidy.     

The impact of China's WTO accession on Hong Kong textiles,clothing and its supporting industries

China's accession to the WTO and the ‘Agreement on Textiles and Clothing’ (ATC) which gradually ban the use of quota, will have profound impacts on the textile industry in China. This article attempts to examine such impacts on all textile firms of Hong Kong origin. It briefly examines the impact of WTO on the textile industries in general, the participation of Hong Kong based firms in China's textiles industry, and the competitors from foreign countries. It examines in detail the practice of obtaining Hong Kong quota for textile products that are made in the Mainland by Hong Kong firms. The article argues that there are positive and negative effects of China–s WTO accession for all textile firms of Hong Kong origin. It concludes that the shifting of the targeted market to high-end, high-value-added is the only way of survival for the textile firms of Hong Kong.     

Input tariff liberalisation and servitisation in manufacturing: Evidence from China's WTO accession

This paper links the sharp drop in China's manufacturing servitisation (MS) in early 21st century to China's accession to WTO featured by conspicuous input trade liberalisation (ITL). The results show that manufacturing industries exposed to higher degree of ITL suffer more MS declines after China's accession to the WTO. Heterogeneous analysis shows that industries with high import intensity, capital intensity or technology intensity suffer more MS declines following input trade liberalisation. Further analysis shows that input trade liberalisation increases the import of intermediate inputs while significantly reduces the proportion of service imports for manufacturing industries. The results are robust to a series of robustness checks.