Trade economists routinely evaluate changes in consumer welfare due to trade based on the assumption of a representative consumer. This column argues that this assumption often disguises much of the heterogeneity in gains across the income distribution, which leads to an overestimation of the gains for the poor and underestimation for the rich, especially for developing countries. This could help explain the lack of public consensus on the benefits of recent free trade agreements.
Sergey Nigai, 04 September 2016
Fabio Ghironi, 03 July 2016
Debate surrounding the Trans-Pacific Partnership (TPP) is raging. Economists on different sides of the debate have used different arguments and tools to support their positions. This column surveys several recent studies and the strategies they employ in modelling the potential effects of TPP. It argues that structural models need to start from micro foundations, and need to incorporate trade and macro dynamics. The general results of these studies lend support to those who think that TPP will be beneficial.
Swarnali Ahmed Hannan, 01 July 2016
The Trans-Pacific Partnership has renewed interest in understanding the impact of trade agreements. This column employs a new approach – synthetic controls– to understand the impact of past trade agreements. The results show that trade agreements can generate substantial gains: on average, an increase of exports by 80 percentage points over ten years. The export gains are higher when emerging markets have trade agreements with advanced markets. Interestingly, all the countries in NAFTA have gained substantially due to the agreement.
Emanuel Ornelas, 14 May 2016
For over half a century, one pillar of the world trading system has been the principle of ‘special and differential treatment’ (SDT) for developing countries. This column explores how SDT has impacted trade policy around the world. Although this strategy aims to help developing countries, in design and practice it seems to be biased against them. While there is no support for SDT as a growth-promoting strategy, there is a clear need for further research that explicitly tackles the empirical challenges that it presents.
Gabriel Felbermayr, Jasmin Gröschl, Thomas Steinwachs, 27 April 2016
The refugee crisis has placed Europe’s Schengen Agreement under stress, with some calling for the reintroduction of identity checks and other border controls. This column presents new estimates of the potential costs of such controls. On average, the removal of controls at one border acts like the removal of a 0.7% tariff. The controls currently notified to the EU Commission could lower EU GDP by around €12.5 billion. The full demise of Schengen would be about three times as costly.
Yasuyuki Todo, 24 December 2015
The Trans-Pacific Partnership (TPP) agreement was reached in October following seven years of negotiations. This column examines how Japan can maximise the TPP’s effect on its economy, identifying several additional policies that will be necessary. These include support for Japanese small and medium enterprises seeking to expand operations overseas, and policies that encourage and ease incoming foreign direct investment.
Jayant Menon, 29 November 2015
After more than five years, negotiations surrounding the Trans-Pacific Partnership (TPP) have finally been concluded. Yet, there is a lot that needs to be done before the agreement comes into force, and there is no certainty that it will. This column examines what TPP has achieved so far, what it has still not achieved, and the next steps involved, including the likely fate of the agreement itself.
Lionel Fontagné, Sébastien Jean, 16 November 2014
The TransAtlantic Trade and Investment Partnership (TTIP) has become a full-blown political issue as the two largest economic entities in the world are negotiating a deep integration agreement, going beyond what has been done previously in any agreement except the EU’s Single Market. This column estimates that a phasing-out of tariffs accompanied by a 25% cut in the trade restrictiveness of non-tariff measures would increase trade in goods and services between the two regions by 50%.
Jayant Menon, 01 July 2014
The Trans-Pacific Partnership (TPP) is taking a long time to conclude. This column argues that the TPP agenda, unlike the Doha round, is more ambitious and controversial. Many see it as skewed in favour of one country – the US. There are fears that even the US may lose interest in the Partnership without the fast-track authority given by the current Congress. The only useful way forward is for countries to take matters in their own hands.
Alan Winters, 22 May 2014
Most economists cheer the Trans-Atlantic Trade and Investment Partnership that the EU is currently negotiating with the US. This column argues it is a pity that TTIP and other mega-regional agreements have emerged. It sees the exclusion of China in particular as an existential threat to the world trading system. It urges policymakers in the EU to focus instead on the world trading system or even consider an agreement with China.
Juan Blyde, Alejandro Graziano, Christian Volpe, 13 May 2014
Joining international production networks has been the successful path to industrialisation taken by some Asian and eastern European countries in the last decades. This column argues economic integration agreements are a major force behind the formation of these international linkages. Using a global dataset of establishments to measure global value chains, it shows that countries with integration agreements have 8% more linked subsidiaries.
Jaime de Melo, Mariana Vijil, 01 April 2014
The Bali agreement last December has given new hope that the WTO is not dead. The recent announcement that negotiations on the reductions of tariffs on environmental goods are to resume gives hope that the triple-win outcome of the Doha round – for trade, for development and for the environment – might materialise, at least partly. Or does it? This column argues that unless the field of negotiations is widened, the initiative will not help much.
Wolfgang Keller, Carol Shiue, 19 December 2013
Estimating the trade effect of trade agreements is no easy task. Agreements with higher trade returns may be formed before agreements with lower returns, and comparing these naïvely could bias our estimates of the true effects. This column studies the case of the German Zollverein of 1834 to show that it is important to examine the sequence of membership to estimate the effects of trade agreements.
Nadia Rocha, Gianluca Orefice, 25 November 2011
What is the relationship between deep preferential trade agreements and international production-sharing? This column introduces a new CEPR Policy Insight providing new evidence on the effects of deep integration on production networks trade and on the impact that production networks trade has on the likelihood of signing deeper agreements.
Nadia Rocha, Gianluca Orefice, 25 November 2011
Do deep preferential trade agreements enhance the development of cross-border production networks? CEPR Policy Insight No. 60 examines new evidence on this relationship and finds that the link runs both ways: deep integration often leads to production-sharing, and the formation of production networks often lays bare the ‘gaps’ in governance and institutions that deep integration can address.
Peter Draper, 01 March 2011
Regional integration in Africa is seen as a priority by many of the continent’s policymakers. This column argues against a formal EU-like structure and instead proposes an African model that is responsive to the economic and political reality of the region. It says that the model should be underpinned by a security regime and should prioritise trade and regulatory cooperation.
Richard Baldwin, 29 February 2008
Trade liberalisation is proceeding everywhere but at the WTO: while nations drag their feet in Geneva, they sign bilateral trade agreements by the dozen. Finishing the ongoing WTO talks is important, but regionalism is the new reality. To maintain its relevance, the WTO must adapt, as regionalism is here to stay.