Merger Policies and Trade Liberalization

This paper is about the interactions between what is traditionally considered trade policy and a narrow but important aspect of competition policy, namely merger policy. We focus on links between merger policies and trade liberalization. We put special emphasis on the topical issue of the role that international agreements such as the GATT play when merger policies are nationally chosen. Of particular concern is the possibility that liberalization of international trade will induce countries to increasingly use competition policies to promote national interests at the expense of others. We examine the incentives for a welfare maximizing government to make such a substitution. Interpreting merger policy as a choice of degree of industrial concentration, we investigate how the merger policy that is optimal from the point of view of an individual country is affected by restrictions on the use of tariffs and export subsidies.

Antitrust in Open Economies

We examine antitrust rules in a two county general equilibrium trade model, contrasting national and multilateral (cooperative) determination of competition policy, exploring the properties of the policy equilibrium. It is not imperfect competition, but variation in competitive stance between sectors that matters for trading partners. Beggar-thy-neighbor competition policies relate to countries’ comparative advantages, and hurt the factor intensively used, or specific to, the imperfectly competitive sector. They also create a competitive advantage for export firms. FDI can be pro-competitive in this context, reducing the scope for beggar-thy-neighbor policies and reducing the gains from a multilateral competition agreement.antitrust policy, competition policy, merger policy, trade and imperfect competition, FDI

Infant-Industry Protection Reconsidered: The Case of Informational Barriers to Entry

In industries with imperfect consumer information, the lack of a reputation puts latecomers at a competitive disadvantage vis-a-vis established firms. We consider whether the existence of such informational barriers to entry provides a valid reason for temporarily protecting infant producers of experience goods and services. Our model incorporates both moral hazard in an individual firm's choice of quality and adverse selection among potential entrants into the industry. We find that infant-industry protection often exacerbates the welfare loss associated with these market imperfections.

Trade Agreements as Endogenously Incomplete Contracts

We propose a model of trade agreements in which contracting is costly, and as a consequence the optimal agreement may be incomplete. In spite of its simplicity, the model yields rich predictions on the structure of the optimal trade agreement and how this depends on the fundamentals of the contracting environment. We argue that taking contracting costs explicitly into account can help explain a number of key features of real trade agreements.

Climate Change and the WTO: Legal Issues Concerning Border Tax Adjustments

Climate change is a multi-faceted discussion: for the trading community, one of many contentious issues in the policy debate over how to deal with greenhouse gas (GHG) emissions is the appropriate role of Border Carbon Adjustments (BCAs)/Border Tax Adjustments (BTAs). The role of BCAs has been analyzed in a very large policy discussion literature, as well as in a significant number of academic writings in both law and economics. One can safely summarize the state of each of these literatures as bewildering: in the legal literature there is still no consensus as to whether such measures are legal under the WTO Agreement, and while the economic literature often show that such schemes in theory at least could have a role to play, there is doubt whether the literature addresses the concerns of critics of BCA schemes. The views concerning BCAs also differ widely in the policy areas. For instance, in November 2006 French Prime Minister de Villepin voiced his concerns with countries that will not take part in a successor to the Kyoto Protocol, expressing fear that this will lead to both competitiveness problems for European industry, and to carbon leakage. Some form of BCA was suggested to cope with these problems. However, the European Trade Commissioner Peter Mandelson discouraged effectively shelved this proposal arguing that such policies would ultimately prove counter-productive, since international cooperation was claimed to be necessary to combat climate change. In 2009 German officials even called a French proposal to target countries that would not participate in reductions of GHG a form of eco-imperialism. The purpose of this paper is to discuss the legal possibility for WTO Members to use trade remedies in the form of BTAs/ BCAs against other WTO Member, without pronouncing on the policy question concerning the desirability for such schemes. In Section 2, we take this discussion within the legal multilateral trade context: we explore the question under what conditions recourse to BTAs/BCAs is consonant with WTO law. The Section provides the relevant regulatory framework that a WTO adjudicating body must have recourse to in order to adjudicate a dispute like the one presented here. Section 3 then seeks to determine how a WTO adjudicating body would likely view BTAs/BCAs. Section 4 changes the perspective, and discusses the question of how BTAs/BCAs should be viewed. We here first briefly highlight the view of the legal doctrine, and then turn to our own proposed approach. To ease the exposition we consider a series of scenarios in which an importing country levies carbon tariffs on the exports of a country with less ambitious environmental policies. Section 5 concludes

United States - Continued Dumping and Subsidy Offset Act of 2000 (WT/DS217/AB/R: DSR 2003:I,375)

On January 16, 2003, the WTO Appellate Body (AB) issued its report on the appeal by the United States (US) of the Panel decision in United States - Continued Dumping and Subsidy Offset Act of 2000. The report concerns the consistency of the United States Continued Dumping and Subsidy Offset Act of 2000 (the "CDSOA,” or the so-called Byrd Amendment) with several WTO provisions. This legislation requests the federal state to distribute proceeds from antidumping and countervailing duties to all US economic operators that have supported a request previously submitted to the ratione materiae competent US authority to investigate alleged dumping or subsidization. The appeal was directed against the Panel's finding that the Byrd legislation was inconsistent with the US obligations under the WTO Antidumping Agreement (AD), and the Agreement on Subsidies and Countervailing Measures (SCM). A total of 11 complainants (Australia, Brazil, Canada, Chile, the European Community, India, Indonesia, Japan, Korea, Mexico, and Thailand), and five additional third parties (Argentina, Costa Rica, Hong Kong (China), Israel, and Norway), evidence the interest among WTO Members in the issues at stake in the disput

European Community - Antidumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil (WT/DS219/AB/R: DSR 2003:VI, 2613)

This chapter addresses the Appellate Body (AB) report on European Community - Antidumping Duties on Malleable Cast Iron Tube or Pipe Fittings from Brazil. The underlying Panel determination was appealed by the complainant Brazil only. Following the approach it took before the Panel, Brazil raised a number of issues concerning the antidumping investigation by the European Community (EC

United States - Preliminary Determination with Respect to Certain Softwood Lumber from Canada: What is a Subsidy?

In August 2001, the United States Department of Commerce (USDOC) issued a preliminary determination that Canadian schemes for allocating standing timber to private harvesters - "stumpage” programs - provided countervailable subsidies to Canadian softwood lumber producers. It also preliminarily determined that critical circumstances existed in the US softwood lumber industry, caused by Canadian imports. Provisional measures were imposed on the basis of a preliminary subsidy rate of 19.31 percent, applicable to all producers/exporters, and applied to all entries of softwood lumber from Canad

United States - Final Determination with Respect to Certain Softwood Lumber from Canada (AB-2003-6, WT/DS257/AB/R)

This note addresses the Word Trade Organization (WTO) dispute United States - Final Countervailing Duty Determination With Respect To Certain Softwood Lumber From Canada (WT/DS257); denoted "Softwood Lumber IV” below. The issues discussed by the Panel and the Appellate Body (AB) in this dispute are very closely related to those examined by the Panel in United States - Preliminary Countervailing Duty Determination With Respect To Certain Softwood Lumber From Canada (WT/DS236); to be referred to as "Softwood Lumber III.” This dispute was not appealed, and the AB thus did not have the opportunity to provide its view on the issues raised in the dispute. The fundamental character of several of the issues at stake in both these disputes makes the AB's determination in Softwood Lumber IV particularly interestin

The Gang that Couldn\u27t Shoot Straight: \u3ci\u3eThe Not so Magnificent Seven of the WTO Appellate Body\u3c/i\u3e

The WTO Appellate Body (AB) has produced a volume-wise important body of case law, which is often difficult to penetrate, never mind classify. Howse (2016) has attempted a very lucid taxonomy of the case law using the standard of review as benchmark for it. His conclusion is that the AB is quite cautious when facing nondiscriminatory measures, especially measures relating to the protection of human life and health, while it has adopted a more intrusive (into national sovereignty) standard when dealing with trade measures (like antidumping), which are by definition discriminatory as they concern imports only. In my response, I share his basic conclusion with no buts and ifs. I simply add that this approach is not the outcome of a process that mandates this standard of review, but simply a political (e.g., nonlegal) reaction aimed at placating its clientele, the WTO membership