The EU has been one of the largest trade partners for so called Eastern Partnership (EaP) countries, namely Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Commodity turnover of these countries with the EU vary between 30% and 50% of total, but their access to the EU market is less preferential than for many other neighboring countries. They trade with the EU on the basis of MFN regime, and five EaP countries, with exemption of Belarus, use privileges provided by Generalized System of Preferences (GSP) or the GSP+ or autonomous trade preferences (Moldova). With the launch of EaP initiative in 2009, relations between the EU and the Eastern European countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) have received new impetus for development. The EaP offers upgrade of relations within three major dimensions, namely (a) the Association Agreement (AA), (b) Agreement on a Deep and Comprehensive Free Trade Area (DCFTA), and (c) Visa Facilitation and Readmission agreements. The AA talks have been launched with all EaP countries expect for Belarus, and four of them have been involved in the DCFTA talks. Ukraine has progressed the most, as after five years of negotiations the EU-Ukraine Association Agreement with embedded DCFTA has been initialed in 2012. The aim of this study is to assess gains and losses that could arise from the DCFTA with the EU for the EaP countries, using information about EU-Ukraine DCFTA as model case for EaP regional trade cooperation. The focus of the paper is on non-tariff (regulatory) component of the EU DCFTA and potential implications of regulatory approximation. Also, current level of harmonization of EaP countries’ regulatory framework with the EU acquis in the areas related to the DCFTA is analyzed.
{"title":"EU-Ukraine DCFTA: The Model for Eastern Partnership Regional Trade Cooperation","authors":"V. Movchan, V. Shportyuk","doi":"10.2139/SSRN.2158664","DOIUrl":"https://doi.org/10.2139/SSRN.2158664","url":null,"abstract":"The EU has been one of the largest trade partners for so called Eastern Partnership (EaP) countries, namely Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. Commodity turnover of these countries with the EU vary between 30% and 50% of total, but their access to the EU market is less preferential than for many other neighboring countries. They trade with the EU on the basis of MFN regime, and five EaP countries, with exemption of Belarus, use privileges provided by Generalized System of Preferences (GSP) or the GSP+ or autonomous trade preferences (Moldova). With the launch of EaP initiative in 2009, relations between the EU and the Eastern European countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) have received new impetus for development. The EaP offers upgrade of relations within three major dimensions, namely (a) the Association Agreement (AA), (b) Agreement on a Deep and Comprehensive Free Trade Area (DCFTA), and (c) Visa Facilitation and Readmission agreements. The AA talks have been launched with all EaP countries expect for Belarus, and four of them have been involved in the DCFTA talks. Ukraine has progressed the most, as after five years of negotiations the EU-Ukraine Association Agreement with embedded DCFTA has been initialed in 2012. The aim of this study is to assess gains and losses that could arise from the DCFTA with the EU for the EaP countries, using information about EU-Ukraine DCFTA as model case for EaP regional trade cooperation. The focus of the paper is on non-tariff (regulatory) component of the EU DCFTA and potential implications of regulatory approximation. Also, current level of harmonization of EaP countries’ regulatory framework with the EU acquis in the areas related to the DCFTA is analyzed.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117009036","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article explores the policy foundations behind regional trade in sub-Saharan Africa with particular focus on West Africa and its application in practice. It criticizes the relevance of the Economic Community of West African states (ECOWAS) and questions its effect on the primacy of the multilateral trading established under the World Trade Organization (WTO). This work delves into an important analysis of the purport and essence of such agreements that tend to unite a particular region. The essence of any regional trade agreement is to ensure that such region develops and grows geometrically. To achieve this, the particular Member States of the region must align their domestic policies with the policies of the agreement. The thematic strand that runs through this work is the hypothetical question whether this Treaty is a building block or stumbling block for the WTO.
{"title":"Deepening Regional Integration and Organizing World Trade: The Limits of ECOWAS","authors":"Oyeniyi Abe","doi":"10.2139/SSRN.2151519","DOIUrl":"https://doi.org/10.2139/SSRN.2151519","url":null,"abstract":"This article explores the policy foundations behind regional trade in sub-Saharan Africa with particular focus on West Africa and its application in practice. It criticizes the relevance of the Economic Community of West African states (ECOWAS) and questions its effect on the primacy of the multilateral trading established under the World Trade Organization (WTO). This work delves into an important analysis of the purport and essence of such agreements that tend to unite a particular region. The essence of any regional trade agreement is to ensure that such region develops and grows geometrically. To achieve this, the particular Member States of the region must align their domestic policies with the policies of the agreement. The thematic strand that runs through this work is the hypothetical question whether this Treaty is a building block or stumbling block for the WTO.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-09-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123887590","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
It is argued that a rule-based, transparent and predictable multilateral trading regime under the WTO is beneficial for developing and other transitional economies. As world economy is progressing, joining the WTO becomes a good bet for them who are still outside the system. Many developing and LDCs have in the past therefore acceded to the WTO with this intention in mind. These countries other wise knows as Recently Acceded Member (RAM) countries. It is commonly portrayed that the accession process for these countries has been extremely bureaucratic, cumbersome, cost adding and technical. This paper aims to understand why there is a need for the countries to join the WTO. What measures can be prescribed to make the process more flexible and accommodative for applicants. While analyzing the issue, the paper suggests that the faith and confidence of developing and transitional economies in the WTO are still valid. It finally charts out a path for member countries to make process of action relatively easier.
{"title":"Experience of Recently Acceded Member Countries to the WTO","authors":"A. K. Kanungo","doi":"10.2139/ssrn.2144693","DOIUrl":"https://doi.org/10.2139/ssrn.2144693","url":null,"abstract":"It is argued that a rule-based, transparent and predictable multilateral trading regime under the WTO is beneficial for developing and other transitional economies. As world economy is progressing, joining the WTO becomes a good bet for them who are still outside the system. Many developing and LDCs have in the past therefore acceded to the WTO with this intention in mind. These countries other wise knows as Recently Acceded Member (RAM) countries. It is commonly portrayed that the accession process for these countries has been extremely bureaucratic, cumbersome, cost adding and technical. This paper aims to understand why there is a need for the countries to join the WTO. What measures can be prescribed to make the process more flexible and accommodative for applicants. While analyzing the issue, the paper suggests that the faith and confidence of developing and transitional economies in the WTO are still valid. It finally charts out a path for member countries to make process of action relatively easier.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"112 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-09-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117255029","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2012-08-01DOI: 10.1111/j.1467-9396.2012.01036.x
Tiziano Arduini, Giuseppe De Arcangelis, Carlo L. Del Bello
During the 2007–09 financial crisis large volatility and wide currency swings characterized the foreign exchange market. This paper utilizes the early‐warning framework to evaluate whether during the period of the Great Recession there has been a structural break in the relationship between fundamentals and exchange rates. This is done by extending an original data set from 1999 and including not only the most recent period, but also 17 new countries. The analysis considers two variations of the original early‐warning system. First, two new methods are proposed to obtain the probability distribution of the early‐warning indicator (conditional on the occurrence of a crisis) - one fully parametric and one based on a novel distribution‐free semi‐parametric approach. Second, the original early‐warning indicator is compared with a core indicator that includes only “pseudo‐financial variables” (domestic credit/GDP, the real exchange rate, international reserves and the real interest‐rate differential) and their performance is evaluated not only for currency crises during the Great Recession, but also for the Asian Crisis. The conclusion from all tests is that “this time is different”, i.e. early‐warning systems based on traditional macroeconomic variables have not only failed to forecast currency crises during the Great Recession, but have also significantly worsened with respect to the period of the Asian crisis.
{"title":"Balance‐of‐Payments Crises During the Great Recession: Is this Time Different?","authors":"Tiziano Arduini, Giuseppe De Arcangelis, Carlo L. Del Bello","doi":"10.1111/j.1467-9396.2012.01036.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2012.01036.x","url":null,"abstract":"During the 2007–09 financial crisis large volatility and wide currency swings characterized the foreign exchange market. This paper utilizes the early‐warning framework to evaluate whether during the period of the Great Recession there has been a structural break in the relationship between fundamentals and exchange rates. This is done by extending an original data set from 1999 and including not only the most recent period, but also 17 new countries. The analysis considers two variations of the original early‐warning system. First, two new methods are proposed to obtain the probability distribution of the early‐warning indicator (conditional on the occurrence of a crisis) - one fully parametric and one based on a novel distribution‐free semi‐parametric approach. Second, the original early‐warning indicator is compared with a core indicator that includes only “pseudo‐financial variables” (domestic credit/GDP, the real exchange rate, international reserves and the real interest‐rate differential) and their performance is evaluated not only for currency crises during the Great Recession, but also for the Asian Crisis. The conclusion from all tests is that “this time is different”, i.e. early‐warning systems based on traditional macroeconomic variables have not only failed to forecast currency crises during the Great Recession, but have also significantly worsened with respect to the period of the Asian crisis.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"82 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131372315","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Most of the expansion of global trade since 1980 has been of the North–South kind — between capital-abundant developed and labour-abundant developing countries. Based on this observation, I argue that the recent growth of world trade is best understood from a factor-proportions perspective. Using data on trade barriers and estimates of capital–labour ratios for a group of 45 economies between 1980 and 2008, I find that a calibrated factor-proportions model can generate significant trade growth during this period, amounting to 90% of the observed rise in North–South trade. The opening up of China alone accounts for three quarters of the predicted increase. In line with the model, I present evidence that China's liberalisation has raised the exports and imports of capital-abundant countries relative to more labour-abundant economies. Overall, my findings suggest that factor-proportions theory may be useful for interpreting several quantitative and qualitative aspects of growing world trade in a period during which the group of large, open economies has become significantly less homogenous.
{"title":"Factor Proportions and the Growth of World Trade","authors":"Robert Zymek","doi":"10.2139/ssrn.2128629","DOIUrl":"https://doi.org/10.2139/ssrn.2128629","url":null,"abstract":"Most of the expansion of global trade since 1980 has been of the North–South kind — between capital-abundant developed and labour-abundant developing countries. Based on this observation, I argue that the recent growth of world trade is best understood from a factor-proportions perspective. Using data on trade barriers and estimates of capital–labour ratios for a group of 45 economies between 1980 and 2008, I find that a calibrated factor-proportions model can generate significant trade growth during this period, amounting to 90% of the observed rise in North–South trade. The opening up of China alone accounts for three quarters of the predicted increase. In line with the model, I present evidence that China's liberalisation has raised the exports and imports of capital-abundant countries relative to more labour-abundant economies. Overall, my findings suggest that factor-proportions theory may be useful for interpreting several quantitative and qualitative aspects of growing world trade in a period during which the group of large, open economies has become significantly less homogenous.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131882182","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using data on cross border transactions together with an informative measure of financing constraints this paper provides new evidence that limited access to external capital narrows the scale of foreign sales, the exporters’ product scope and the number of trade partners. It shows that constrained firms have a reduced probability of adding and a higher probability of dropping products and destinations. Further it documents that constrained firms sell their products at higher prices as compared to unconstrained firms. All the results are robust to specific control for unobserved heterogeneity, self-selection into export and potential endogeneity of the financial constraints proxy.
{"title":"Exporting Under Financial Constraints: Margins, Switching Dynamics and Prices","authors":"A. Secchi, Federico Tamagni, Chiara Tomasi","doi":"10.2139/ssrn.2148467","DOIUrl":"https://doi.org/10.2139/ssrn.2148467","url":null,"abstract":"Using data on cross border transactions together with an informative measure of financing constraints this paper provides new evidence that limited access to external capital narrows the scale of foreign sales, the exporters’ product scope and the number of trade partners. It shows that constrained firms have a reduced probability of adding and a higher probability of dropping products and destinations. Further it documents that constrained firms sell their products at higher prices as compared to unconstrained firms. All the results are robust to specific control for unobserved heterogeneity, self-selection into export and potential endogeneity of the financial constraints proxy.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-06-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128582952","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The proliferation of regional trade agreements (“RTAs”) behoves all WTO members to assess the extent to which RTAs depart from fundamental principles in the WTO such as the most-favoured-nation (“MFN”) treatment in the GATT and in particular, the WTO Agreement on Technical Barriers to Trade. This paper focuses on technical barriers to trade (“TBT”) provisions in RTAs concluded by the United States, European Union, Australia and Singapore and finds that these TBT provisions complement the existing disciplines in the TBT Agreement. To the extent that TBT provisions in RTAs may be inconsistent with the TBT Agreement, this paper examines the extent to which they can be justified under Article XXIV of GATT. This paper concludes that the ambiguity of key terms in Article XXIV of GATT allows WTO Members to adopt an expansive interpretation of the scope of Article XXIV of GATT.
{"title":"Technical Barriers to Trade Provisions in Regional Trade Agreements","authors":"Lee Ti Ting","doi":"10.2139/SSRN.2088215","DOIUrl":"https://doi.org/10.2139/SSRN.2088215","url":null,"abstract":"The proliferation of regional trade agreements (“RTAs”) behoves all WTO members to assess the extent to which RTAs depart from fundamental principles in the WTO such as the most-favoured-nation (“MFN”) treatment in the GATT and in particular, the WTO Agreement on Technical Barriers to Trade. This paper focuses on technical barriers to trade (“TBT”) provisions in RTAs concluded by the United States, European Union, Australia and Singapore and finds that these TBT provisions complement the existing disciplines in the TBT Agreement. To the extent that TBT provisions in RTAs may be inconsistent with the TBT Agreement, this paper examines the extent to which they can be justified under Article XXIV of GATT. This paper concludes that the ambiguity of key terms in Article XXIV of GATT allows WTO Members to adopt an expansive interpretation of the scope of Article XXIV of GATT.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115575619","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
While the legal literature contains numerous discussions on how to increase cooperation and resolve disputes in trade, investment, environment, intellectual property, and other areas, there has been remarkably little written on how to utilize these mechanisms to increase multinational cooperation for tax purposes. Rather, the debate has tended to devolve into two competing and irreconcilable camps: those supporting worldwide harmonization based on the network of bilateral tax treaties and those invoking the right to tax sovereignty to oppose any efforts at harmonization or cooperation. The primary thesis of this Article is that the fundamental problem with cooperation in the modern international tax regime is that it builds on the tax treaty model, thus effectively excluding countries which have not entered into tax treaties — mostly small, poorer countries. Reconsidering international tax in this light leads to a potentially surprising conclusion: that the move towards institutionalizing the web of bilateral tax treaties — which has dominated the modern international tax debate — may actually be counter to its stated goal of encouraging broader worldwide tax cooperation across all nations of the world. Instead, this Article proposes the creation of a tax cooperation mechanism specifically geared towards non-treaty member countries, conceding certain disputes in exchange for increased cooperation more generally. Such an approach could effectively replicate some of the benefits of a tax treaty, but with non-treaty member countries, without needing to overcome the obstacles which have prevented full treaties from being entered among such countries to date. Building a tax cooperation mechanism specifically around the premise of incentivizing cooperation of the least cooperative states in this manner could harness the same forces that led to the emergence of the modern international tax regime in the early twentieth century to address the fiscal crisis facing the early twenty-first century.
{"title":"Thinking Outside the (Tax) Treaty","authors":"Adam H. Rosenzweig","doi":"10.2139/ssrn.1986357","DOIUrl":"https://doi.org/10.2139/ssrn.1986357","url":null,"abstract":"While the legal literature contains numerous discussions on how to increase cooperation and resolve disputes in trade, investment, environment, intellectual property, and other areas, there has been remarkably little written on how to utilize these mechanisms to increase multinational cooperation for tax purposes. Rather, the debate has tended to devolve into two competing and irreconcilable camps: those supporting worldwide harmonization based on the network of bilateral tax treaties and those invoking the right to tax sovereignty to oppose any efforts at harmonization or cooperation. The primary thesis of this Article is that the fundamental problem with cooperation in the modern international tax regime is that it builds on the tax treaty model, thus effectively excluding countries which have not entered into tax treaties — mostly small, poorer countries. Reconsidering international tax in this light leads to a potentially surprising conclusion: that the move towards institutionalizing the web of bilateral tax treaties — which has dominated the modern international tax debate — may actually be counter to its stated goal of encouraging broader worldwide tax cooperation across all nations of the world. Instead, this Article proposes the creation of a tax cooperation mechanism specifically geared towards non-treaty member countries, conceding certain disputes in exchange for increased cooperation more generally. Such an approach could effectively replicate some of the benefits of a tax treaty, but with non-treaty member countries, without needing to overcome the obstacles which have prevented full treaties from being entered among such countries to date. Building a tax cooperation mechanism specifically around the premise of incentivizing cooperation of the least cooperative states in this manner could harness the same forces that led to the emergence of the modern international tax regime in the early twentieth century to address the fiscal crisis facing the early twenty-first century.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133332337","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the patterns of trade and the incentives to innovate in an unequal global economy. We introduce non-homothetic preferences in a general-equilibrium model of endogenous growth and international trade between two countries, and argue that the effects of market integration on the consequent trade patterns and the incentives to innovate depend on the degree of income inequality across countries. We find that if inequality across countries is low, the extensive margin of trade between countries is high whereas the world growth rate is low. The introduction of non-homothetic preferences rises a number of interesting questions that are not an issue in the standard model. For example, we discuss the design of intellectual property rights, in particular national vs. international exhaustion of patents, and argue that households in poor and rich countries might not see eye to eye depending on how poor households weigh future losses in consumption against present gains. Furthermore, we address the welfare consequences of a trade liberalization, and show that households in the poor country might loose relative to households in the rich country if trade costs fall from a high to a sufficiently low level.
{"title":"Trade and Growth in an Unequal Global Economy","authors":"A. Kohler","doi":"10.2139/ssrn.2079084","DOIUrl":"https://doi.org/10.2139/ssrn.2079084","url":null,"abstract":"This paper studies the patterns of trade and the incentives to innovate in an unequal global economy. We introduce non-homothetic preferences in a general-equilibrium model of endogenous growth and international trade between two countries, and argue that the effects of market integration on the consequent trade patterns and the incentives to innovate depend on the degree of income inequality across countries. We find that if inequality across countries is low, the extensive margin of trade between countries is high whereas the world growth rate is low. The introduction of non-homothetic preferences rises a number of interesting questions that are not an issue in the standard model. For example, we discuss the design of intellectual property rights, in particular national vs. international exhaustion of patents, and argue that households in poor and rich countries might not see eye to eye depending on how poor households weigh future losses in consumption against present gains. Furthermore, we address the welfare consequences of a trade liberalization, and show that households in the poor country might loose relative to households in the rich country if trade costs fall from a high to a sufficiently low level.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-06-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131087945","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
What has been the overall global welfare impact of the accession to the World Trade Organization of a large country like China, or the global welfare impact of the completion of the Uruguay round of GATT negotiations? Can we come up with a simple user-friendly formula to calculate the global welfare impact of the simultaneous trade liberalization of a number of countries? How sensitive is the answer to the assumption of the trade model? We find a striking answer to these questions. We find that, for a very broad class of models and settings, the global welfare impact of trade liberalization in a country, or a simultaneous liberalization of a number of countries, is given by the same simple formula. We find that the global welfare impact of the simultaneous trade liberalization of different countries only depends on two sets of statistics: (i) the ratio of the value of bilateral trade between each and every pair of trading partners and global income; and (ii) the change in exporting cost for each and every pair of trading partners. Most interestingly, the formula applies to a very broad class of models and settings, which include the general Ricardian model (including, for example, Anderson, 1979, and Eaton and Kortum, 2002), the models of Krugman (1980), Melitz (2003) and its extensions, and the extensions of these models to the multi-sectoral case, multi-factor production technology, multi-stage production, the existence of tradable intermediate goods and the existence of a large outside good sector in each country. We find that global welfare would have been 0.05% lower in the year 2008 if China had not gained accession to the WTO in 2001.
{"title":"Global Gains from Trade Liberalization","authors":"Haichao Fan, E. Lai, H. Qi","doi":"10.2139/ssrn.2034256","DOIUrl":"https://doi.org/10.2139/ssrn.2034256","url":null,"abstract":"What has been the overall global welfare impact of the accession to the World Trade Organization of a large country like China, or the global welfare impact of the completion of the Uruguay round of GATT negotiations? Can we come up with a simple user-friendly formula to calculate the global welfare impact of the simultaneous trade liberalization of a number of countries? How sensitive is the answer to the assumption of the trade model? We find a striking answer to these questions. We find that, for a very broad class of models and settings, the global welfare impact of trade liberalization in a country, or a simultaneous liberalization of a number of countries, is given by the same simple formula. We find that the global welfare impact of the simultaneous trade liberalization of different countries only depends on two sets of statistics: (i) the ratio of the value of bilateral trade between each and every pair of trading partners and global income; and (ii) the change in exporting cost for each and every pair of trading partners. Most interestingly, the formula applies to a very broad class of models and settings, which include the general Ricardian model (including, for example, Anderson, 1979, and Eaton and Kortum, 2002), the models of Krugman (1980), Melitz (2003) and its extensions, and the extensions of these models to the multi-sectoral case, multi-factor production technology, multi-stage production, the existence of tradable intermediate goods and the existence of a large outside good sector in each country. We find that global welfare would have been 0.05% lower in the year 2008 if China had not gained accession to the WTO in 2001.","PeriodicalId":285675,"journal":{"name":"PSN: International Trade Policy (Topic)","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-03-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125402928","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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