Bernard Hoekman, Anirudh Shingal, Varun Eknath, Viktoriya Ereshchenko, 25 November 2020

A prominent feature of the public policy response to COVID-19 has been the active use of trade policy instruments to enable access to essential supplies. This column finds the use of export restrictions targeting medical products to be strongly positively correlated with characteristics of prevailing public procurement regimes. Membership of trade agreements encompassing public procurement disciplines is associated with actions to facilitate trade in medical products. These findings suggest that future empirical assessments of trade policy drivers during the pandemic should consider the role of national public procurement systems and deep trade agreements.

Mitsuo Inada, Naoto Jinji, 10 September 2020

Policy uncertainty is believed to affect foreign direct investment significantly, but, empirical evidence on the impact is scarce. This column proposes a unique empirical strategy for identifying the impact of a change in policy uncertainty on FDI at the sector level by utilising information about reservations of certain obligations contained in international investment agreements. It provides evidence that policy uncertainty discourages FDI. Policy uncertainty will continue to rise in the post-COVID-19 era, and the results highlight the importance of aligning globalisation with the mitigation of public health threats by implementing policies to reduce uncertainty.

Ingo Borchert, Paola Conconi, Mattia Di Ubaldo, Cristina Herghelegiu, 05 May 2020

The EU often conditions preferential access to its market on the achievement of non-trade policy objectives such as sustainable development, human rights, and good governance. This column studies the evolution of such objectives in EU trade agreements and Generalised System of Preferences (GSP) schemes over time, and reveals the legal and economic limitations of imposing conditionalities in trade agreements compared to the GSP. The findings suggest that if the EU wishes to rely more on trade policy to promote such objectives, it should focus on GSP programmes.

Gene Grossman, Phillip McCalman, Robert Staiger, 23 September 2019

While tariffs have been reduced significantly in the last decades, other barriers to trade, such as differing regulations across countries, continue to pose obstacles. This column presents a new framework to analyse how different forms of trade agreements can address these non-tariff barriers. For various economic environments, it discusses whether and how these treaties can achieve global efficiency.

Barry Eichengreen, Arnaud Mehl, Livia Chiţu, 14 March 2019

Both economics and geopolitics matter for trade agreements. In particular, defence pacts raise the probability of a trade agreement between a pair of countries by as much as 20 percentage points. This column estimates that were the US to alienate its geopolitical allies, the likelihood and benefits of successful bilateral agreements would diminish significantly. Expected trade creation from an agreement between the US and EU countries would decline by 0.6% of total US exports.

Rebecca Freeman, Samuel Pienknagura, 19 September 2018

The negotiation of trade deals among distant trade partners is hot on policymakers’ agendas as a means to facilitate integration into global supply chains. This column examines the impact of trade agreements at varying levels of distance across product types. Granular bilateral trade data show that the boost from trade agreements is smaller over longer distances, and that this is primarily driven through the channel of intermediate goods.

Edith Laget, Alberto Osnago, Nadia Rocha, Michele Ruta, 14 July 2018

The making and unmaking of trade agreements affects global production. This column reveals how deeper agreements have boosted countries’ participation in global value chains and helped them integrate in industries with higher levels of value added. Investment and competition now drive global value chain participation in North-South relationships, while removing traditional barriers remains important for South-South relationships.

Brian Varian, 23 June 2018

Brexit has sparked interest in trade agreements between Britain and the Commonwealth. This has a precedent in the Edwardian era, when the Dominions adopted policies of imperial preference toward imports from Britain. This column argues that New Zealand’s policy of imperial preference, enacted in 1903, was ineffective in diverting trade toward Britain, suggesting that trade policies within the British Empire or Commonwealth do not always achieve what they intend. 

Lionel Fontagné, Gianluca Santoni, 30 April 2018

Country-pairs self-select in regional trade agreements, and this endogeneity biases the estimation of the impact of such agreements within a gravity framework. This column uses a framework for predicting which countries should engage in RTAs based solely on economic determinants, including global value chains, and compares this ‘natural’ geography of agreements with the actual geography. The results suggest that the endogenous geography of RTAs is shaped by the development of GVCs.

Stéphanie Brunelin, Jaime de Melo, Alberto Portugal-Perez, 27 April 2018

Rules of origin play a crucial role in preferential trade agreements, and they can also deny intended market access for preference receivers. This column examines a relaxation by the EU of the origin requirements for selected products from Jordan, which is intended to create 200,000 job opportunities for Syrian refugees. While the relaxation decision may have an effect on the refugee crisis in Jordan, further simplifications in RoO requirements are called for.

Jerónimo Carballo, Kyle Handley, Nuno Limão, 16 March 2018

Economic downturns can be both a cause and an effect of uncertainty. This column argues that uncertainty has international spillovers that can be mitigated via credible international trade agreements such as NAFTA, which provided US firms with valuable insurance against the widespread threat of a global trade war during the 2008 crisis. However, the credibility and insurance value of these agreements is being trumped by events such as Brexit, the renegotiation of NAFTA, and US threats of a trade war, which mark the start of a ‘trade cold war’.

Giuseppe Berlingieri, Holger Breinlich, Swati Dhingra, 12 March 2018

There has been a surge in the number of trade agreements over the past two decades. This column investigates the impact of trade agreements implemented by the EU between 1993 and 2013 and asks how consumers benefit from such agreements. The evidence shows that trade agreements increased quality by 7% on average but did not affect prices or variety. This translates into a cumulative reduction in consumer prices of 0.24%, equivalent to savings of €24 billion per year for EU consumers. Higher-income EU countries enjoyed much stronger quality increases and larger overall consumer benefits.

Céline Carrère, Marcelo Olarreaga, Damian Raess, 15 December 2017

Protecting workers through the inclusion of labour clauses in trade agreements has become more common since the first such causes were included in NAFTA, but some argue that by increasing labour costs in developing countries, they represent a form of protectionism. This column uses new data to argue that there is no evidence for adverse effects on trade from labour clauses. When such clauses are strong, and if they emphasise cooperation in their implementation, they have a positive effect on the commercial interests of developing countries.

Scott Baier, Yoto Yotov, Thomas Zylkin, 28 April 2017

There is a large empirical literature examining the effects of free trade agreements. However, most studies to date have focused on a common average effect across all agreements or have assumed that the effects are common across similar types of agreements. This column examines heterogeneity in the effects of free trade agreements. Along with across-agreement heterogeneity, substantial within-agreement heterogeneity is observed. The effects of a specific agreement can be starkly different for two trading partners.

Chang-Tai Hsieh, Nicholas Li, Ralph Ossa, Mu-Jeung Yang, 26 March 2017

Trade economists typically believe that in addition to lower prices for imported goods, trade liberalisation also brings import variety and domestic productivity gains. This column accounts for these ‘new’ gains in a careful reconsideration of the Canada-US Free Trade Agreement. Although the agreement did see improvements in Canadian income associated with import variety and domestic productivity, these were far outweighed by the welfare loss associated with the reduction in domestic variety. Nonetheless, Canadian welfare did improve overall when one takes into account the ‘traditional’ gains associated with lower import prices.

Alen Mulabdic, Alberto Osnago, Michele Ruta, 23 January 2017

The British government and the EU face a difficult negotiation over the terms of Brexit. This column uses new data on the content of trade agreements to assess the trade impact of Brexit, identifying a tradeoff between the depth of the post-Brexit agreement and the intensity of future UK-EU trade. A ‘harder’ Brexit may have a stronger negative impact on the UK’s services trade and supply chain integration, which have relied more on the depth of the EU. This tradeoff will likely delimit future policy choices. 

Chad Bown, 29 November 2016

Trade agreements involving the US could be the first economic casualty of the 2016 election. The existing US trade agreements rose from the ashes of WWII and the Great Depression. This column argues that understanding how they protect the US economy, American workers, and consumers is critical to avoiding a repeat of the policy mistakes of earlier eras.

Gary Hufbauer, Euijin Jung, 29 September 2016

Donald Trump has consistently made headlines with unusual and potentially dangerous economic policy proposals, including threatening to pull out of the WTO, renegotiating trade agreements, and imposing tariffs on imports from Mexico and China. This column explores the legal and economic dimensions of these proposals. Old and modern legal statutes could allow a US president to implement such policies, and the repercussions for the US economy could be severely negative.

Sergey Nigai, 04 September 2016

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.

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.



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