The economic benefits of the EU Single Market in goods and services

This paper examines the macro-economic benefits of the Single Market in goods and services by simulating a counterfactual scenario in which tariffs and non-tariff barriers are reintroduced. In this counterfactual scenario, intra-EU trade flows are significantly reduced. Lower trade openness also means reduced market size and less competition. Using empirical evidence on the effect of the Single Market on firms’ mark-ups over marginal costs, we add these competition effects and arrive at a total estimate of around 9% higher GDP on average for the EU, but with a strong degree of heterogeneity across EU countries.     

A disaggregated model of world production and trade: An estimate of the impact of the Tokyo Round

We present in this paper a computational model of world production, trade, and employment that is disaggregated by country and sector and report on the application of the model to the changes in tariffs and quantifiable nontariff barriers negotiated in the Tokyo Round that was concluded in 1979. The model incorporates supply and demand functions and market-clearing conditions for 22 tradable industries, plus markets for 7 nontradable industries, in each of the 18 major industrialized countries and 16 major developing countries. The equations of the model are presented in the text and the explicit functional forms in an appendix. The implementation of the model is discussed briefly.Application of the model to the Tokyo Round suggested that there will be small but beneficial effects on trade, domestic prices, and economic welfare in practically all the major industrialized countries and in some of the major developing countries. Because many of the NTB codes negotiated in the Tokyo Round were stated in advisory terms, their impact cannot be evaluated unambiguously at present. Further, many existing NTBs of importance were exempted altogether from the negotiations. The Tokyò Round must be viewed accordingly as having dealt with a somewhat limited part of all interferences with trade.     

Non-tariff barrier on chicken imports into Russia: Impact on production,trade and prices

We analyze the Russian restriction on chicken imports as an example of a non-tariff barrier (NTB). Cointegration test results support the hypothesis that the NTB limited trade. We calibrate an equilibrium market model to cointegration results to assess the market impact. The tariff equivalent of the Russian chicken NTB is estimated to be 30 − 40% depending on the representation of consumer demand. Removing the NTB decreases domestic production by 4–5% and domestic price by 27%–34%, while imports increase by 326–423 thousand tons annually in 2015–2019.     

Modeling manufactured imports: Methodological issues with evidence from Australia

This paper investigates the relationship between manufactured import flow to Australia, and relative prices and domestic economic activity net of cyclical demand effects over the period 1981Q3 to 1991Q2. This is done through the estimation of import demand functions for total manufactured imports and nine major import categories using the general-to-specific modeling approach. We find that the homotheticity assumption on activity elasticity is met in most cases. The price elasticity estimates for individual categories range from 0.32 to 2.1, with a weighted average of 0.52. We also find some evidence of upward bias in price elasticity estimates when an aggregate import function is employed in a context where a significant portion of imports are subject to quantitative restrictions (QRs).     

Short run responses to foreign exchange crises

This paper constructs a short-run general equilibrium model for an LDC-type economy. Some key features are the possibility of excess capacity and the presence of quantitative restrictions on exports and imports. A rich variety of pricing possibilities for tradeable goods is allowed for, including “water in the tariff” as well as domestic prices exceeding world prices with binding import quotas.The model is used to analyze alternative responses to a foreign-exchange crisis. Import controls, devaluation and cuts in government expenditures are compared. We find that: i) import quotas can worsen the balance of trade, ii) rationing foreign exchange for noncompetitive imports is stagflationary, increasing prices even under excess capacity, iii) a devaluation has strong effects on income distribution, although output and employment expand, and iv) cuts in government spending are deflationary but the income distribution effects are neutral.     

“碳关税”对中国经济的潜在影响

近年来,一些发达国家以应对气候变化为由,提出对进口的碳排放密集型产品征收特别的CO2排放关税,并将"碳贸易限制措施"扩大为"碳关税"壁垒。"碳关税"的开征必然对我国经济、出口贸易造成严重冲击。因此,我们应该积极主动参与相关国际规则的制定,优化出口贸易结构,加强低碳技术创新,实现向低碳经济的转型,以便充分地应对"碳关税"壁垒。     

Applied general equilibrium analysis of trade liberalisation on land-based sectors in Malaysia and Indonesia

This paper presents general equilibrium evaluations of forest sector trade for Southeast Asian exporters. The four scenarios examined range from the 1994 Uruguay Round tariff reductions to a complete liberalisation of forest and agricultural products trade. We find that simultaneous reductions in forest and agricultural sector tariffs make Indonesia and Malaysia worse off. For Indonesia, this is due to the fall in forest rent and agricultural tariff revenues. Malaysia has the highest ratio of agricultural imports to total land-based sector imports, the rise in agricultural prices thus hits Malaysian consumers the hardest.We find that terms of trade effect omitted from the partial equilibrium framework may reduce the welfare calculations for Malaysia and Indonesia in the forest sector trade by as much as 106 and 58%, respectively. This points to the importance of general equilibrium modelling in the logging industry. The same applies to other sector specific analyses where trade is concentrated between few countries.     

Protectionism: An analysis from project LINK

The LINK system of world trade is used to examine present tendencies toward protectionism. In protectionist scenarios we increase the prices of manufactured imports into 13 LINK-OECD countries by 5, 10, and 20 percent respectively, for 1978–1979. If a country's import equations do not depend significantly on relative price, we impose corresponding quantitative import restrictions of 5, 10, and 20 percent. Smaller OECD countries, developing countries, and socialist countries are assumed to be nonprotectionist in these scenarios. The discrepancies between the values of leading variables in the protectionist scenarios and in a baseline case show the effects of the different degrees of protectionism assumed. The results describe and validate Adam Smith's principles of the gains from free trade.     

Trade liberalisation and urban–rural linkages: a CGE analysis for Ethiopia

Using a rural–urban computable general equilibrium (CGE) model, this paper examines the impacts of trade liberalisation on structural transformation and overall growth of the Ethiopian economy. The simulation experiments suggest that the impacts of trade liberalisation depend on wage-setting conditions in the urban region. With a fixed urban real wage, trade reform adversely affects overall economic growth mainly because of large contractions in the urban region. If urban nominal wage is flexible, both rural and urban regions experience expansion in GDP. An important policy implication of this analysis is that the success of trade liberalisation critically depends on the extent to which product and labour market reforms are synchronised. On the other hand, simultaneous implementations of nominal devaluation and reductions in external trade tariffs would not enhance structural transformation of the economy. However, this policy conflict does not necessarily arise if the introduction and implementation of different policy instruments of trade reforms are appropriately sequenced.     

Prospects for trade in manufactured goods between industrial and developing countries, 1978–1990

This paper examines prospective changes in trade in manufactured goods between the industrial and the developing countries. Assuming the continuation of the policies followed by the industrial countries, it is projected that the manufactured imports of these countries from the developing countries would rise at an average annual rate of 12.5% between 1978 and 1980 while their manufactured exports would increase 9 7% a year. Nonetheless, the export surplus of the industrial countries in trade in manufactured goods would rise, contributing to the growth of industrial output. The expansion of their exports of manufactured goods would also contribute to economic growth in the developing countries, and both groups of countries would benefit from specialization according to comparative advantage.     

The impact of US fresh milk production standards on dairy trade

We examine the impact of proposed changes in US legislation to allow greater use of concentrated dairy products when producing fresh milk commodities. Although this change will allow dairy producers to partially circumvent high tariff-rate quotas (TRQs) for fresh milk products, changes in dairy production and trade are small, reflecting limited use of concentrated dairy products as inputs to fresh milk products. We also show that, at the global level, high trade barriers on other dairy commodities do not have a significant impact on trade in concentrated milk products. We conclude that trade negotiations should focus on the removal of tariffs and TRQs.     

Capital goods imports and long-run growth: Is the Chinese experience relevant to developing countries?

In this paper, we analyze the role played by capital goods imports in the long-run growth of developing countries. We focus in the case of the Chinese economy in the last few decades. We find evidence that the ratio of imported to domestic capital goods, that is, the composition of investment, as well as the capital accumulation (both physical and human), was key determinants of the long-run growth rate of per capita GDP over the analyzed period. Furthermore, our results are also consistent with the hypothesis that the link between trade openness and long-run growth operates mainly through imports. This finding supports some recent developments of Schumpeterian models of growth, and the very specific economic policy recommendations arising thereof. In short, these models state that, in the early stages of growth, government intervention to encourage an investment-based strategy, with emphasis on large investment efforts and the adoption of foreign technology, could be an appropriate strategy for development.     

Trade in services: Impact on employment in India

India's services sector has been growing rapidly and so also the trade in services. This paper attempts to assess if trade is able to generate employment in the services sector. Based on the time series macro data the direct and indirect effects of exports and imports on employment after deciphering their effects included in the overall growth, are seen to be mostly negligible. This holds both in the case of formal and informal services. Also, as per the company-level data international trade is not found to be an important determinant of employment in the services sector. On the whole, trade in services sector may enhance growth but this pattern of growth is less likely to be inclusive. Finally, the paper brings out the policy implications.     

警惕新贸易保护主义的影响

我国加入世贸组织后,新贸易保护主义对我国的负面影响日渐突出。新贸易保护主义的主要特点是使用非关税壁垒,利用区域经济一体化,滥用世贸相关规则等。突破新贸易保护主义壁垒的措施;加快立法和相关标准的制定与修改,企业强化内功,加强民间中介机构的协调作用。     

The Eurasian Economic Union: Development Prospects and Possible Obstacles

This article analyzes the development prospects and problems for the Eurasian Economic Union (EAEU). It examines issues of integration within the EAEU, as well as interactions with other countries, both CIS (Commonwealth of Independent States) and non-CIS. The main problem of integration within the EAEU is the dominance of redistributive motives over productive ones. This article assesses the extent of Russian oil and gas transfers to EAEU partners and the impact of tax maneuvers on their size. It shows that the creation of mechanisms for redistributing profits within the EAEU will allow a positive economic effect to materialize from free trade agreements with non-CIS countries. The article assesses the risks for the EAEU related to Russia’s introduction of a unilateral ban on food imports from countries on the sanctions list and to the possible establishment of tariffs on trade with Ukraine.     

Global adjustment to US disengagement from the world trading system

US trade policy in the Trump administration is protectionist, raising tariffs outside of WTO rules, threatening trade wars, withdrawing from existing trade agreements, and negotiating new bilateral trade deals rather than free trade agreements. The reaction of the rest of the world has been to support the WTO rules-based trading system and to pursue new and expanded regional trade agreements that do not include the US. The result may be US disengagement from the world trading system, with countries diverting trade around the US. We use a global computable general equilibrium (CGE) model to analyze changes in trade and production patterns for a variety of scenarios, including US trade wars. We find that adjustment to US disengagement is feasible—the changes in trade shares as countries divert trade are modest and achievable, with very little impact on the volume of global trade. If the US engages in trade wars with major partners, the best response for other trade partners is to sit out the trade war, accept higher US tariffs, and gain markets from global trade diversion around the US. Finally, because of indirect effects, widespread tariffs fail to benefit the protected sectors—a fallacy of composition in a protectionist trade policy.     

Efficiency in natural resource usage: A comparison of market central planning policies

The foreign trade structure of Czechoslovakia is examined to explain the intensive absorption of natural resources in centrally planned economies (CPEs). A comparison with Austria using input-output pricing models indicates that imports are the main source of this foreign trade bias. This is traced to a bias in technology and domestic preferences towards natural resource products. It is concluded that pricing in CPEs should reflect the resulting scarcities.     

The US–China trade war and Phase One agreement

The Trump administration changed US trade policy toward China in ways that will take years for researchers to sort out. This paper makes four specific contributions to that research agenda. The first is to carefully mark the timing, definitions, and scale of the products subject to the tariff changes affecting US–China trade from January 20, 2017 through January 20, 2021. One result was each country increasing its average duty on the other to rates of roughly 20 percent, with the new tariffs and counter-tariffs covering more than 50 percent of bilateral trade. The second contribution is to highlight two additional channels through which bilateral tariffs changed during this period that received less research attention. One tariff change is through product exclusions, another is trade remedy policies of antidumping and countervailing duties. The third contribution is to provide an initial exploration into why China fell more than 40 percent short of meeting the goods purchase commitments set out under the first year of the Phase One agreement. The last contribution is to consider additional trade policy actions—involving forced labor, export controls for reasons of national security or human rights, and reclassification of trade with Hong Kong—likely to affect US–China trade beyond the Trump administration.     

A computational general equilibrium approach to the shadow pricing of trade restrictions and the adjustment of the exchange rate, with an application to Argentina

A general equilibrium model of an open economy in which there are ad valorem texes on domestic production and export activities, and import activities are subject to both tariffs and quotas is constructed. A domestic monetary asset, foreign exchange, and a corresponding nominal exchange rate are introduced and a numerical example of the model is constructed. The example is solved via the Scarf fixed point algorithm, first with taut quotas and then after having relaxed quotas. Various price indices are then used to guide programs designed to stabilize the trade balance against the quota liberalization. An empirical example, using Argentine data, is carried out to find the quota equivalent of a particular tariff.     

Currency devaluation and trade balance: Evidence from the US services trade

This study aims to revisit the effectiveness of using currency devaluation as a policy tool to improve trade balance by estimating the exchange rate elasticities of services trade between the US and rest of the world with quarterly disaggregated services trade data from 1999 to 2015. Empirical results reveal that the impacts of currency devaluation on individual services trade are mixed and largely depend on the nature of services. Using currency devaluation to raise export services trade and reduce import services trade seems to be more effective in the long-run but not in the short-run. It is interesting to note that some individual services trades are insensitive to exchange rate changes. The estimates also reveal that most categories of services trade are income elastic and economic growth plays a key role in determining the imports and exports of services trade.