Quantitative Restrictions on Clothing Imports: Impact and Determinants of the Common Trade Policy Towards Developing Countries

This study aims to assess the impact of the phasing out of quotas on European clothing imports within the framework of dismantling the Multi-Fibre Agreement and the adhesion of the CEEC. An econometric study is carried out on cross-sectional data for 1996 thanks to an original gathering of data on tariff and non-tariff barriers, which treatment presents an economic policy interest as well as a methodological challenge. The negative impact of tariff barriers is quite evident, whereas the impact of non-tariff barriers is considered positive, due to an endogeneity bias which is controlled by instrumental variables. The common trade policy in this sector thus seems to be quite discriminating among the partner countries. The model of our study is meant to simulate the impact of the suppression of quotas on the growth of the member countries' imports of articles of the garment industry.MFA, Trade policy, quantitative restrictions, endogeneity bias,gravity model.

Does a free trade area favors an optimum currency area? The Case of Morocco and the European Union

The purpose of this paper is to investigate simultaneously the potential effects of European Union's Association Agreement with Morocco and the adoption of the Euro as a single currency on exchange rate regime of Moroccan Dirham. Since Morocco depends heavily on EU as a market for its exports and a source for its imports, limited variability of the DH against the Euro seems à priori, to be an appropriate policy option. This option may even be strengthened within the FTA. However, the nature and the composition of Moroccan exports are typical of North-South trade with little diversification and high concentration on textiles and agricultural products. From this perspective, the risk of asymmetric shocks is more likely, which reduces the expected gains from nominal anchorage. This paper aims at contributing to the future exchange rate regime in Morocco and focuses on three main issues. The first issue is to investigate the potential effects of the FTA on trade structure and industrial specialization in Morocco. To this end, a computable general equilibrium model is used to simulate macroeconomic and sectoral effects of the implementation of the FTA on industrial sector. The second issue is to estimate the real exchange rate equilibrium based on macroeconomic fundamentals and assess the degree of misalignment of the actual value of the Dirham. Finally, the question of exchange rate arrangement is examined by combining the expected effects of free trade area between Morocco and the European Union, the existing degree of misalignment of the Dirham, and considering the adoption of the Euro as a single currency in 12 European countries. Our results seem to suggest that the implementation of a FTA may lead to a reallocation of industrial production toward an even more specialization in labor-intensive products. Under such circumstances, the symmetry of shocks, as an important condition for anchoring the DH to the Euro, is not satisfied making this option non-desirable.Free Trade Area, CGE Model, Exchange rate

Trade,Tariffs and Total Factor Productivity: The Case of Spanish Firms

The aim of this paper is to examine the sensitivity of total factor productivity (TFP) to foreign competition in the case of a European country. Using the Olley and Pakes (1996) method, we calculate the TFP of Spanish manufacturing firms and study the impact of EU tariffs, foreign competition and imports on TFP at the firm level. Applying the System-GMM method, we find that TFP is negatively impacted by European tariffs, whereas the competition, in the form of increased presence of foreign products in the domestic market and firms' imports, leads to improvements of the TFP. Moreover, these two effects are complementary. We also find evidence of important asymmetries among firms depending on their involvement in foreign markets. El objetivo de este artículo es estudiar la sensibilidad de la productividad total de los factores (PTF) a la competencia extranjera en el caso de un país europeo. Calculamos la PTF de las empresas manufactureras españolas con el método de Olley y Pakes (1996) y estudiamos el impacto de los aranceles europeos, de la competencia extranjera y de las importaciones sobre la PTF de las empresas. Utilizando el método System-GMM, obtenemos que la PTF se ve negativamente afectada por los aranceles europeos, mientras la competencia, bajo la forma de una presencia mayor de productos extranjeros en el mercado domestico o en términos de importaciones de las empresas, contribuye a mejorar la PTF. Además, estos dos efectos son complementarios. Encontramos también pruebas de importantes asimetrías entre las empresas, dependiendo de su grado de implicación en los mercados internacionales.productividad total de los factores, España, comercio, aranceles, heterogeneidad de las empresas. Total factor productivity, Spain, trade, tariffs, heterogeneity of firms.

Exchange-rate policies and trade in the MENA countries

Compared to the new European members (NEM) and to the new candidate countries, the Middle-East and North African (MENA) countries are a very heterogeneous and fragmented EU frontier. As far as monetary issues are concerned, exchange rate regimes are very different and bilateral exchange rates quite volatile. Moreover, weak trade integration and generalized capital controls constitute major obstacles to economic and financial integration. Existing works yet suggest that anchoring to the euro would undoubtedly be the best exchange-rate strategy for most MENA countries. Monetary integration and trade integration are interdependent. This is especially the case when trade flows are sensitive to the volatility of exchange rates or to movements in relative prices. The objective of this paper is to evaluate the potential of monetary integration in the South Mediterranean area, in a context of trade liberalization and of a strong orientation of trade flows towards the EU. The empirical part of the paper would rely on a gravity equation of trade which would include exchange rates volatility and relative prices, in order to gauge the impact of de facto exchange-rate and monetary conditions on trade integration. The sample of countries is large (OECD, NEM, MENA and Asian countries) in order both to have robust estimates and to investigate whether the MENA countries exhibit a specific sensitivity of trade flows to exchange-rate volatility and exchange-rate misalignments. The impact of the competitiveness of third countries will also be investigated. This latter issue is especially important, though seldom assessed, when it comes to the potential trade-diverting effect of the latest EU enlargement on MENA trade wit the EU. The gravity setting also allows simulating the consequences for the trade of MENA countries of a deeper monetary integration, by comparing the impact on trade of a regional monetary integration and of a euro peg.Exchange rate regime, trade, regional integration, Euro, MENA

The Asymmetric Effect of Endowments on Vertical Intra-Industrial Trade

This paper investigates the determinants of Spanish vertical intra-industrytrade with a large sample of countries. We empirically test the comparative advantageexplanation. For this aim, we build physical, human and technologicalcapital stocks. On average, when using OLS techniques, differences in endowmentsare a limitation for vertical intra-industry trade. Using quantile regressionstechniques, we observe that this negative effect decreases in absolute terms asvertical intra-industry trade flows increase and, in some cases, become positivefor the upper tails, thus supporting the view of a reduced version of the comparativeadvantage explanation. Este artículo trata de analizar los determinantes del comercio intra-industrialvertical en Espña con una muestra de países extensa. Se contrasta empíricamentela hipóteis de la ventaja comparativa. Con esta finalidad, hemos construido seriesde capital físico, humano y tecnológico. En media, cuando se utiliza la estimaciónMCO, las diferencias en dotaciones suponen una limitación al comercio intraindustrialvertical. Usando la técnica de regresion por cuantiles, se observa queeste efecto negativo disminuye, en términos absolutos, a medida que los flujos decomercio intra-industrial vertical se incrementan y, en algunos casos, llegan a serpositivos en los cuantiles altos de la distribución. Este resultado ofrece evidenciaa favor de una versión reducida de la hipótesis de la ventaja comparativa.Comercio Intra-industrial, Ventaja Comparativa, Diferenciación Vertical, Stocks de Capital, Regresión Quantilica. Comparative Advantage, Vertical Differentiation, Capital Stocks, Quantile Regressions.

Trade types with Developed and Developing Countries What can we learn from Spanish data?

In this paper, we investigate the nature of Spanish intra-industry trade and find that intra-industry trade with CEEC, Asian and Mediterranean countries has increased considerably since the middle of the Nineties. The second aim of the paper is to study if the comparative advantage argument also explains vertical intra-industry trade between different income countries. According to OLS estimations, technological differences do increase DVIIT while physical capital differences decreases it. Results obtained applying Heckman method support the idea that differences in physical capital reduce the probability of IIT to occur but the level of vertical and horizontal IIT is better explained by the proximity of partners, the similarity in development level and size of market than by differences in physical capital endowments. The variables considered, mostly country-specific do have the same impact on vertical and horizontal IIT with emergent countries.

Explaining protectionism support: the role of economic factors

In this paper, we investigate some factors shaping individual support for protectionism that have not been studied previously. We examine a heterogeneous sample of thirty countries which includes both small and large and developed and developing countries using data from the 2003 International Social Survey Program (ISSP). We confirm the influence of social status, relative income, values and attachments on preferences for trade policies and the fact that skilled people are also more likely to be pro-trade. We also verify previous findings concerning the fact that individual¿s opinions match with how their revenue could be affected in the medium or long term by trade liberalization. We highlight other important factors influencing public opinion towards protectionism: individual support for protectionism is also affected by the macroeconomic context and size of their country of residence. Este trabajo analiza cuales son los factores que explican el apoyo de los individuos a políticas proteccionistas incluyendo características tanto del individuo como de su país de residencia, que no han sido incluidos en trabajos previos. Para ello, se utiliza una muestra heterogénea de treinta países que incluye economías de distinto tamaño, países desarrollados y en vías de desarrollo. La base de datos corresponde a la encuesta realizada en el año 2003 por la red International Social Survey Program (ISSP). Se confirma que el status social, el ingreso relativo, los valores y los apegos juegan un rol significativo en la determinación de las preferencias por el libre comercio. En segundo lugar, se constata que los individuos con mayores niveles de educación tienden a preferir el libre comercio. Además, se verifica que las opiniones de los individuos son determinadas por la percepción de cómo afecta la liberalización comercial a su ingreso en el medio y largo plazo. Por ultimo, se destacan factores adicionales relevantes en la determinación de las actitudes individuales frente al proteccionismo: el contexto macroeconómico y el tamaño relativo del país de residencia.Preferencias, apoyo al proteccionismo, libre comercio, políticas comerciales, mercantilismo, nacionalismo Preferences, protectionism support, free trade, trade policies, mercantilist, nationalism.

The Free Trade Agreement Morocco-EU: a simulation of the impact on EU exports.

We analyse the effect due of the next FTA between Morocco and the EU on bilateral Moroccan imports. As our main contribution to the existing literature, we include in our gravity equation tariff data at the industry level. This allows to better estimate trade determinants and also makes possible to perform simulations of the tariff dismantling taking into account its different path for each industry and year. A complete tariff dismantling will double the average yearly trade growth observed in the years just before the transition period to the FTA begun. The average effect follows the tariff reduction schedule being greater at the beginning and at the end of the transition period. The effect is positive for all EU Member States but exports growth to Morocco is greater for Portugal, Greece, Slovakia, Lithuania and Spain and lower for Germany, Denmark, Finland, France and Sweden. By industries, the faster growth are predicted for Leather and leather products, Wood and wood products, Textiles and textile products, Rubber and plastic products and Pulp, paper an paper products and publishing and printing. Finally, we also find a positive effect of Moroccan immigration in the EU on bilateral trade.liberalisation; EU; Morocco; Free Trade Area; Tariff; Immigration; Liberalisation; gravity equation.

The role of macroeconomic performance in individual’s attitudes towards protectionism

In this paper we investigate some factors shaping individual support for protectionism that have not been studied previously. We examine a heterogeneous sample of thirty countries which includes both small and large and developed and developing countries using data from the 2003 International Social Survey Program (ISSP). We confirm the influence of social status (education, age and relative income), values and attachments on preferences for trade policies and the fact that skilled people are also more likely to be pro-trade. We also verify previous findings concerning the fact that individual’s opinions match with how their revenue could be affected in the medium or long term by trade liberalization. We highlight other important factors influencing public opinion towards protectionism: individual support for protectionism is also affected by the macroeconomic context and size of their country of residence.Preferences, protectionism support, free trade, mercantilist, nationalism

Preferences for Protectionism: Do economic factors really matter?

A common scenario for international commerce is the existence of restrictions on free trade,even when the majority of economists agree on the benefits of it, whatever the country’s size or whatever the country’s economic development. In contexts where politicians offer different policy options and voters demand them based on their individual preferences, one may ask what determines individuals preferences on trade policy; which economic, cultural, social and elements shape them. Our goal in this paper is to address this issue for an heterogeneous sample of 34 countries which includes developed and developing countries and small and big ones. In this paper we use data from the 2003 International Social Survey Program (ISSP). Based on an ordered probit model, we conclude that elements such as religion, political preferences, and nationalism, as well as demographic characteristics and country performance, have a significant impact on trade policy preferences.Preferences, protectionism, religion, nationalism, ISSP