FUTURE TRADE RESEARCH AREAS THAT MATTER TO DEVELOPING COUNTRY POLICYMAKERS

This chapter highlights the role of the WTO in service trade liberalizationWTO, Service trade, development

Climate Change Policy, Emissions Trading Schemes and Carbon Pricing: California and Tokyo

In this paper, we provide up-to-date explicit critical comparisons of two very important and successful regional emissions trading schemes: California and Tokyo. We focus on the contrasts of the different rules and functioning of the carbon credit trading markets. We also compare the carbon leakages and the compliance of the two schemes. We highlight the “negative” carbon leakage and the voluntary compliance associated with the Tokyo- Saitama Prefecture schemes. Finally, we provide a formal model linking some “unique” Japanese labour market practices to the incentives facing the Japanese facilities

Integration of markets vs. integration by agreements

This paper provides an analysis of the two channels of regional integration: integration via markets and integration via agreements. Given that East Asia and Latin America are two fertile regions where both forms of integrations have taken place, the authors examine the experiences of these two areas. There are four related results. First, East Asia had been integrating via markets long before formal agreements were in vogue in the region. Latin America, by contrast, has primarily used formal regional trade treaties as the main channel of integration. Second, despite the relative lack of formal regional trade treaties until recently, East Asia is more integrated among itself than Latin America. Third, from a purely economic and trade standpoint, the proper sequence of integrations seems to be first integrating via markets and subsequently via formal regional trade agreements. Fourth, regional trade agreements often serve multiple constituents. The reason why integrating via markets first can be helpful is because this can give stronger political bargaining power to the outward-looking economic-oriented forces within the country.Trade Law,Free Trade,Trade and Regional Integration,Trade Policy,Emerging Markets

Can competition policy control"301"?

Should fair trade rules be replaced by national or international competition rules? A familiar argument for doing so is that more rigorously enforced competition standards might eliminate the basis for the burgeoning number of antidumping cases of recent years. A less familiar argument is that the implementation of internationally agreed competition standards might reduce the frequency with which the U.S government uses section 301 of U.S. trade law. Section 301 lists foreign government toleration of systematic anticompetitive activities as one of the bases for taking retaliatory action against foreign uncompetitive practices but were taken up through other mechanisms; extraterritorial application of U.S. antitrust law or direct negotiations sometimes capped by an understanding at the presidential level. These negotiations often included the threat of initiation of antidumping,"301,"or other trade remedies cases. (The structuralimpediments initiative negotiations with Japan are the most familiar example.) In several of these cases, the foreign government agreed to and implemented more rigorous antitrust enforcement, but these actions seldom ended the dispute. The U.S. government pressed on for tangible evidence of increased U.S. export sales. The authors conclude that removing the basis for these disputes -- alleged lax enforcement of competition policy -- did not remove the motive for them -- increased U.S. exports. Competition policy then is not the antidote for"301."The last section of the paper reviews the compatibility of"301"with the preservation of open international trading system. Of 70"301"cases (through December 31, 1992) that have led to policy changes, 52 have led to liberalizations, and only 18 have led to increased trade restrictions. Viewed from the point of view of results, the major shortcoming of"301"is that the United States is the only country whose policies do not come under its scrutiny.TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Access to Markets,Markets and Market Access,Environmental Economics&Policies,National Governance

Will GATT enforcement control antidumping?

The authors try to gauge why the GATT dispute settlement process has, to date, been so ineffective in disciplining the use of antidumping measures. Focusing on the five cases in which panels have completed their findings and recommendations, the authors identify the sources of this ineffectiveness and evaluate the likelihood that the process will become effective. Changing the bureaucratic momentum of the system is possible, they contend, but would not be easy. It would require greater resolve by member countries'GATT delegates to see that GATT rules are enforced - a greater willingness to stand up to domestic pressures to bend GATT rules to suit the demands of national politics. Changing the legal momentum of the system will be even more difficult, say the authors. Interpreting the GATT in a legalistic way compels one to interpret it as a statement of rights to impose antidumping duties. The substantive criteria for action are broad: the injury concept justifies protection for anyone to whom it is worth the time to ask for it. The constraints onantidumping actions - loopholes and procedural technicalities - are artificial, so legal reform means getting rid of them. Where do the GATT articles on trade remedies lead? The authors contend that if you take a legalistic view, you come to a protectionist conclusion.TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Globalization and Financial Integration,Environmental Economics&Policies,Transport and Trade Logistics,Common Carriers Industry

How vertically specialized is Chinese trade?

Two recent phenomena have transformed the nature of world trade: the explosive growth of Chinese trade, and the growth of vertically specialized trade due to international production fragmentation. While vertical specialization may explain much of the growth and unique features of Chinese trade, few papers have quantitatively assessed these two phenomena together. In part, this is because it is difficult to measure just how vertically specialized Chinese trade is. The unique features of China's extensive processing trade cause both the identification of imported intermediate goods, and their allocation across sectors, to depend upon the Chinese trade regime. In this paper, we estimate the vertical specialization of Chinese exports, addressing these two challenges. Using two Chinese benchmark input-output tables, and a detailed Chinese trade dataset which distinguishes processing trade from other forms of trade, we develop a new method of identifying intermediate goods imported into China. Vertical specialization is then estimated using two methods. The first method uses the Hummels, Ishii and Yi (2001) measure, the official benchmark IO tables, and incorporates our identification correction. The second method follows the first, but also incorporates the Koopman, Wang and Wei (2008) method of splitting the benchmark IO tables into separate tables for processing and normal exports, in order to address the allocation problem. Results show strong evidence of an Asian network of intermediate suppliers to China, and the two methods provide a range of estimates for the foreign content of Chinese exports. In 2002 aggregate exports ranges between 25% and 46%, with some individual sectors are as high as 52%-95%. Across destinations, under both methods, the vertical specialization of Chinese exports declines with the level of development of the trading partner.China; fragmentation; vertical specialization; trade growth

China and Central and Eastern European Countries: Regional networks, global supply chain or international competitors?

China has emerged as one of the world's leading recipients of foreign direct investment (FDI). Meanwhile, the successful transition experience of many Central and Eastern European countries (CEECs) also enables them to attract an increasing share of global foreign investment, particularly from the European Union (EU). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: 1) China and the CEECs each exist in its own regional production network, with no linkage between FDI flows into China and into CEECs; 2) China and the CEECs together comprise a global production network, so that FDI into China is positively related to FDI into CEECs; and 3)FDI into China is a substitute for FDI into the CEECs, so that the correlation between them is negative. In this paper, we employ panel data to study this issue in detail. Specifically, we compare empirical estimates for 15 CEECs over the 15-year period 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some circumstances FDI flows in these two regions are moderately complementary. In addition, our analysis confirms the importance for FDI flows of recipient-country characteristics such as market size, degree of trade liberalization and labor quality, as well as a healthy global capital market.foreign direct investment (FDI); regional networks; global supply chain; China’s FDI; Central and Eastern European Countries’ FDI

China and central and eastern European countries : regional networks, global supply chain, or international competitors?

China has emerged as one of the top recipients of foreign direct investment in the world. Meanwhile, the successful transition experience of many Central and Eastern European countries has also allowed them to attract an increasing share of global foreign direct investment. In this paper, the authors use a panel data set to investigate whether foreign direct investment flows to these two regions are complements, substitutes, or independent of each other. Taking into account the role of host country characteristics - such as market size, degree of trade liberalization, and human capital - the authors find no evidence that foreign direct investment flows to one region are at the expense of those to the other. Instead, the results suggest that foreign direct investment flows are driven by distinct regional production networks (and thus are largely independent of each other) and the development of global supply chains (indicating that foreign direct investment flows are complementary).Debt Markets,Foreign Direct Investment,Emerging Markets,Economic Theory&Research,Investment and Investment Climate

Accounting for Chinese Trade: Some National and Regional Considerations

China's trade has three features: high incidence of re-exports through Hong Kong, high degree of trade related to foreign investment, and large amount of `illegal' trade. Re-exports occur when imports to Hong Kong are consigned to a buyer in Hong Kong, who adds a markup, and exports the goods elsewhere without fundamentally changing the goods. Using U.S. data and accounting for re-exports, the U.S.-China trade balance has to be lowered by 35 percent. Foreign investments in China accounted for 45 percent of China's exports. Foreign investments include foreign direct investment (FDI) and foreign subcontracting. `Illegal' trade between China and Taiwan has been induced by Taiwan's `no direct trade' policy. Illegal trade such as smuggling and tariff evasion also affect China's trade with her other trading partners.