Services Provision and Temporary Mobility: Freedoms and Regulation in the EU

International posting of workers and mobility of self‐employed service suppliers lie between outright migration and trade in goods: their regulation, for both distributional and market‐correcting purposes, is not as difficult to harmonise as that of labour markets, but personal mobility is more visible and socially intrusive than product market interactions. This paper analyses economic and legal tensions between national regulatory frameworks and international competition in these areas, in both the intra‐EU and global contexts, highlighting how interactions between the external and internal roles of the European Commission may foster efficient integration of markets and policies in this and other fields.     

EU Enlargement and the Portuguese Economy

The main focus of the present paper is on the emerging and likely future trade effects of enlargement. Though our particular concern is with Portugal, we set the scene by comparing the trade structures of the 10 countries of Central and Eastern Europe (i.e. the eight CEE accession states plus Bulgaria and Romania) – including an analysis of the individual cases of the Czech Republic, Hungary and Poland – with those of the EU15 as a whole, and with those of the 4 EU cohesion countries. The elimination of trade barriers between incumbents and accession states will have two trade‐related effects on EU incumbents: an increase in bilateral flows with the CEEC and a shift effect as the CEEC displace some incumbent exports to EU markets. The first effect is likely to be strongest for those incumbents for which there is a strong overlap between their export structure and the import structure of the CEEC. Portugal emerges as one of the economies with the least overlap. The displacement effect, we conclude, is likely to be particularly strong in the case of Portugal, given the high degree of similarity between Portuguese exports and those of the CEEC. Portugal appears to be ‘being squeezed from below’ in that, for the majority of its traditional export sectors, the CEEC became progressively more competitive during the second half of the 1990's. Portuguese specialisation was increasingly confined to low‐technology, low‐added‐value sectors with declining demand, as strong FDI inflows to the CEEC led to an increasing preponderance of more dynamic sectors in their export structures. Thus, Portugal is also being squeezed from above. This suggests that there may be substantial industrial disruption, in response to which labour‐market flexibility and dynamic entrepreneurial response is crucial. Intersectoral mobility is generally easier the more highly educated the workforce – an indicator on which Portugal scores poorly. The Portuguese labour market, however, displays a high degree of flexibility, consistent with its long lasting low rate of unemployment. Continued flexibility will help minimise these likely adjustment costs. Besides the trade and industry effects, other topics considered in the paper include the implications of enlargement for Portugal's ability to attract FDI, the likely consequences for Portugal of inward migration from the CEEC to the EU, and the implications of enlargement for Portugal's budgetary relations with the rest of the EU.     

Composition of trade flows and the effectiveness of fiscal devaluation

We empirically explore whether the magnitude of the effects of fiscal devaluation, which consists of reducing the employers’ social security contribution rate and increasing the value‐added tax rate, depends on the composition of trade flows. Our sample comprises data on bilateral balances of trade between 28 European Union (EU) Member States and their main EU trade partners over the 2000–14 period. We use robust ordinary least squares regressions, controlling for the country‐pair and time fixed effects, to test whether there are differences in the sizes of relationships between these taxation forms and bilateral trade balances for different types of goods, by distinguishing between: (i) consumer, intermediate and capital goods; and (ii) labour and capital‐intensive goods. Our results show that the overall effectiveness of fiscal devaluation depends on the composition of trade flows. Value‐added tax is more strongly (positively) associated with (bilateral) balances of trade in consumer goods, compared to balances of trade in capital and intermediate goods. The employers’ contribution rate, in contrast, is more tightly (negatively) related to balances of trade in capital goods. The latter finding also holds true for trade balances of labour‐intensive goods compared to balances of capital‐intensive goods.     

Brexit and Trade: Between Facts and Irrelevance

This paper examines four claims made by Brexit supporters regarding the United Kingdom’s post-exit arrangement on trade with the EU. It reviews the nature and importance of UK-EU trade links and the possible impact on the UK of leaving the EU customs union. It argues that all four of the claims are based on incongruous arguments which are either logically inconsistent or ignore the extent of the commitment required by trade agreements that tackle regulatory barriers, not just tariffs and border restrictions. We demonstrate that the attractiveness of the UK market will progressively decline as the UK enters into additional bilateral agreements. We conclude by analysing the implications for the UK of “taking back control” of its trade policy.     

欧盟商品市场一体化的影响因素研究:基于边界效应的视角

本文选用2000-2005年欧盟成员国之间以及欧盟成员国与外部主要贸易伙伴国之间的双边出口贸易额等数据,使用面板数据方法,基于边界效应的视角,分别探讨了欧盟25国和欧盟15国的商品市场一体化影响因素。结果表明:欧盟这样的区域贸易协定对其成员国具有正面影响。地理临近性和文化联系鼓励紧密的贸易伙伴,距离、税率和人口对双边贸易存在负面影响,这与以往的研究结果相同。非关税壁垒成为重要边界可部分解释欧盟25国的内部边界效应高于欧盟15国的研究结果。     

Prospects for the Greek Economy in the Post‐enlargement Era

This paper examines the consequences for Greece of the EU enlargement eastwards. The analysis is based on an evaluation of the Greek economy competitiveness relative to the economies of the acceding and candidate countries during the last decade. Using data disaggregated up to the third digit, the magnitude of Greek inter‐ and intra‐industry trade with the above countries is determined and contrasted to the corresponding trade with the EU. Other issues examined are the effects from factor movements such as the FDI flows and migration, and the macroeconomic effects from the reallocation of EU funds. Enlargement is expected to exert positive trade and FDI effects on the Greek economy, a negative effect on future economic growth as a result of budgetary reductions and an uncertain effect on labour markets from migration. A non‐exploited trade potential of Greece with the Balkan countries creates further opportunities for regional development.     

Migration and trade: Theory with an application to the Eastern-Western European integration

The remarkable increase in trade flows and in migratory flows of highly educated people are two important features of globalization of the last decades. This paper extends a two-country model of inter- and intra-industry trade to a rich environment featuring technological differences, skill differences and the possibility of international labor mobility. The model is used to explain the patterns of trade and migration as countries remove barriers to trade and to labor mobility. We parameterize the model to match the features of the Western and Eastern European members of the EU and analyze first the effects of the trade liberalization which occurred between 1989 and 2004, and then the gains and losses from migration which are expected to occur if legal barriers to labor mobility are substantially reduced. The lower barriers to migration would result in significant migration of skilled workers from Eastern European countries. Interestingly, this would not only benefit the migrants and most Western European workers but, via trade, it would also benefit the workers remaining in Eastern Europe.     

Trade and migration flows between some CEE countries and the UK

The recent enlargement of the European Union (EU) has enhanced interest in the causes and also the consequences of migration between Central and Eastern European (CEE) and Western European countries. This paper considers the possibility that some of these consequences make themselves felt in the trade flows between migrants' countries of origin and destination. Using a panel of data covering a number of CEE countries between 1996 and 2003, we employ an augmented gravity model to examine the effects of immigration from these transition countries on their bilateral trade flows with the UK. We pay attention to a number of issues that have been raised within the literature on gravity models. We find evidence that migration positively enhances the bilateral exports of the migrants' home country; however, there is less (but some) evidence that the imports from their destination country are also enhanced.     

Globalization,labour market deregulation and trade unions in Singapore

This contribution examines recent trends in globalization and their effects on the labour market in Singapore. It discusses the responses of the government and the trade union movement to the challenges of globalization, and concludes by looking at the changing role of the trade union movement in Singapore. Citing government policies in dealing with the recent economic crisis, the article highlights the ‘managed flexibility’ approach of the government. We find that the trade union movement has gained considerably in stature and influence in providing training for the workers and helping them cope with retrenchment and the recession.     

Labour market characteristics and surviving import shocks

This paper investigates whether different labour market characteristics amplify or dampen the local labour market impacts from Chinese import competition exposure. I exploit state‐level variation in initial, pre‐shock labour market characteristics and regional variation across local labour markets in exposure to Chinese imports for identification. I find that local labour markets in states with higher union density experience more severe adverse consequences as a result of increased import exposure. Conversely, higher initial minimum wages help mute the negative impacts of the China shock. I also provide some evidence that exceptions to employment‐at‐will legislation can affect employment responses to increased Chinese imports. Finally, examining all policies together in an index, I show that higher levels of policies intended to benefit and protect workers can actually magnify the extent of the damage inflicted by import competition. My results suggest that initial labour market characteristics and policies can play an important role in understanding why local labour markets react differently to trade shocks.     

EU enlargement and labour demand in the new member states

Research to date on labour market responses to EU integration has tended to concentrate on the labour markets of the “old” EU members. But what effect has the integration of trade had on wages in the new member states? The following article attempts to answer this question using an empirical model of conditional sectoral labour demand.     

欧盟原材料贸易战略述评

欧盟推出原材料贸易战略的背景是,欧盟原材料需求对外依存度高,国际范围内原材料获取竞争加剧,原材料贸易限制措施日益盛行。主要目标是确保欧盟在世界市场可持续地、可预见地获取原材料。实施途径包括:借力双边和多边协定,确立贸易规则;利用争端解决机制,应对贸易限制措施;开展对话协商,与相关利益方建立良好关系,推动形成原材料自由贸易的氛围。欧盟原材料战略体现综合应对的特点。欧盟原材料战略对中国有重大影响,需认真研究。     

Free movement of labour in the single European market

Improving the mobility of labour is a major component of Project 92. What are the reasons for migration under conditions of freedom of movement and what are the repercussions for the labour market?     

Understanding the international mobility of Chinese temporary workers

Using unique panel data on the temporary movement of Chinese workers to 191 economies during 1992–2015, I investigate the patterns and determinants of labour mobility in the services trade. I estimate a gravity model of labour mobility in two categories, namely overseas labour services and overseas contracted projects. I find that distance (proxy for migration costs) and income are not the most important determinants of the latter. For overseas contracted projects, the dispatch of workers is not driven by their pure economic aims but by the Chinese government's policies and strategies such as its overseas project promotion policy. Furthermore, I employ the difference‐in‐differences estimation method to investigate the impact of this policy upon labour mobility. The results show that the policy of promoting overseas contracted projects has causal and positive effects on labour mobility in construction‐related sectors.     

Productivity Versus Employment: Quantifying the Economic Effects of an EU–Japan Free Trade Agreement

The European Union and Japan recently entered into negotiations over a bilateral free trade agreement intended to stimulate growth and create wealth. Since customs duties are already low, the success of the liberalisation process hinges on the elimination of non‐tariff barriers. The purpose of this paper is to shed light on two possible liberalisation scenarios: a less ambitious liberalisation and a comprehensive liberalisation. In contrast to classic studies, our paper builds on the modern trade literature, accounting for the dominance of intra‐industry trade in both economies and the existence of heterogeneous firms. Furthermore, we model a search‐and‐matching labour market, allowing us to quantify employment effects of trade liberalisation. We find that a comprehensive liberalisation increases Japanese GDP by 0.86 per cent, whereas the EU experiences only an additional 0.21 per cent of real GDP growth. Most of the growth in real GDP is due to firms' efficiency gains, whereas unemployment is reduced by only a small amount. Other world regions experience small reductions of GDP due to trade diversion effects.     

Territorial disparities in Europe

Traditionally, EU policies have been focused on economic and social cohesion. Recently, the territorial dimension of regional disparities as an aspect of EU policy has gained importance. The European Spatial Development Perspective (ESDP), adopted in 1999, is meant to support a balanced development of the EU territory. Moreover, the European Commission addressed issues of territorial cohesion in its latest cohesion report. The present paper deals with territorial disparities and their current development in the EU. It analyses which kinds of region develop dynamically and offer favourable labour market conditions. The differences between rural and urban areas are a fundamental feature of territorial disparities in the EU and are of essential significance for the ESDP. The analysis deals with the question whether disparities between poor and rich regions as well as different growth trends and labour market conditions are still marked by the dualism between city and countryside. The authors would like to thank Elena Tcharykova for her excellent research assistance.     

Is the EU's labour market threatened by a wave of immigration?

As the accession negotiations continue between the European Union and the Central and Eastern European Countries, Germany in particular fears that granting free movement of labour to these countries might generate a wave of new entrants that could overwhelm its labour market. The following article uses migration determinants and draws on previous experience of integrating countries into the EU in an attempt to reach conclusions about migration patterns that may result from the forthcoming eastward enlargement.     

International Trade Agreements and International Migration

Despite large potential economic gains, bilateral and multilateral negotiations focusing on liberalisation of migration have not shared the high profile of international trade negotiations and agreements. Migration and trade have been traditionally viewed rather separately and the relevance of the many, and complex, interdependencies has been given remarkably little attention in the literature to date. In this article, we focus on the two‐way interaction between international migration and agreements designed to enhance cross‐border trade and investment. Liberalisation of international trade in services and in the movement of people potentially offers much greater economic gains than liberalisation of remaining barriers to goods trade. However, progress within multilateral frameworks is fraught with difficulty. The World Trade Organization’s General Agreement on Trade in Services (GATS) has yielded little real progress so far and negotiations within more flexible unilateral and bilateral frameworks are likely to be more successful in liberalising the movement of labour. We discuss a range of specific examples, focusing particularly on the interesting case of New Zealand. We find that trade agreements are increasingly including agreements on migration, though typically favouring temporary migration and involving numerically modest quotas. We conclude that migration regulatory frameworks are likely to be further and more strongly linked to trade and investment agreements in the future, particularly given changing economic and demographic forces. The primary focus of migration policies may nonetheless remain different from that of trade policies. While further migration liberalisation is likely to be through bilateral and regional agreements, it will be important to try to lock in the gains of such agreements, while simultaneously working to consolidating these in a way that will help to facilitate future multilateral agreement.     

Ethical Pitfalls of Temporary Labour Migration: A Critical Review of Issues

The article discusses a particularly contentious aspect of labour mobility—state sanctioned and controlled temporary labour migration. In contrast to forced migration, which always has had a recognizable ethical dimension in terms of the universal right to asylum, temporary labour migration has tended to be viewed as an exclusively economic and thus ethically neutral phenomenon. This article presents a diametrically opposite approach to temporary labour migration: it is argued that this form of labour mobility creates a plethora of ethical challenges to the body which regulates it—the state. Furthermore, attention is drawn to employers’ rationalizations in relation to temporary migrant workers and trade unions’ responses to it. The article examines how these industrial relations actors deal with the moral hazards characteristic to temporary labour migration. It concludes with the exploration of the emergent issues in migration ethics and points out to a tentative research agenda.     

中欧贸易互补性研究——基于比较优势理论和产业内贸易理论的实证分析

自中欧建交以来,双边贸易取得了快速进展。经过2004年东扩的欧盟已经成为我国最大的贸易伙伴,同时我国也成为了欧盟的第二大贸易伙伴,不断扩大的双边贸易从一个侧面反映了中欧贸易的互补性。本文利用近十几年的贸易统计数据,分别以比较优势理论和产业内贸易理论为依据对中欧贸易的互补性进行了实证分析,从而得出了以下结论:中欧双边贸易存在较强的互补关系,中欧之间的国际分工主要以产业间的垂直分工为主,同时随着我国工业制成品国际竞争力的迅速提高,产业内贸易在中欧双边贸易中的重要性正在不断增强,中欧之间的国际分工正逐步向水平方向发展。