In Search of a Feasible EU-Mercosul Free Trade Agreement. CEPS Working Document No. 378, 25 February 2013

This paper aims at identifying ways to pursue the EU–Mercosul negotiations leading to a free trade agreement (FTA). After reviewing their already long history, it outlines a basic framework, in goods, services and other themes, judged possible. The main point is that, given the prevailing conditions on both sides, an agreement to be signed within a reasonable time must be modest, i.e. along the described lines. It then clearly sets up the decisions confronting the negotiators: either to pursue the modest, feasible option or to terminate negotiations under the FTA heading. The latter, however, does not imply an end to the dialogue. Many actions and measures may be taken – which are easier to discuss and fix – that could pave the way for, in due time, a closer-to-ideal FTA to be considered again. These are the subjects of a last section

Possibilities for consumer government actions to support coffee producers

This is the final report of a study commissioned by the Belgian Secretary of State for Development Co-operation, with the purpose of outlining possible actions to be adopted by the European Union to ensure a better share of total coffee revenues to producers in developing countries. The way to improve the participation of coffee producers in the economic gains accrued in the world coffee market translates, ultimately, in their receiving a fair price for the commodity they supply. A fair price is not an abstract entity in itself, but - in the competitive world economy - is perhaps better defined as a market price that results from fair market conditions in the whole coffee producing chain. Because of this, as will be seen below, for improving the lot of coffee producers, this reports outlines proposals to take place in the consuming countries, particularly Europe. At first sight, it might seem a contradiction acting in one region to directly impact others, far away. The key to the logic of the argument lies in the definition in the previous paragraph. As we try to demonstrate, market conditions in the consuming-countries side of the coffee producing chain are not fair; the market failures and distortions ingenuously created there are responsible for the enormous asymmetry of gains in the two sides. Radical positive measures for the coffee farms must begin, ironically, in Brussels. The structure of this report is as follows. Section 2 introduces preliminary background considerations. A summary of the past and present experiences in the application of supply management schemes is the content of Section 3 . Section 4 is an introduction to the main issues in the analysis of the coffee market . Finally, section 5 presents the proposals for consumer government supporting actions, and suggestions for a series of detailed studies to support the actions.

Beyond Indifferent Players: On the Existence of Prisoners Dilemmas in games with amicable and adversarial preferences

Why don’t agents cooperate when they both stand to gain? This question ranks among the most fundamental in the social sciences. Explanations abound. Among the most compelling are various configurations of the prisoner’s dilemma (PD), or public goods problem. Payoffs in PD’s are specified in one of two ways: as primitive cardinal payoffs or as ordinal final utility. However, as final utility is objectively unobservable, only the primitive payoff games are ever observed. This paper explores mappings from primitive payoff to utility payoff games and demonstrates that though an observable game is a PD there are broad classes of utility functions for which there exists no associated utility PD. In particular we show that even small amounts of either altruism or enmity may disrupt the mapping from primitive payoff to utility PD. We then examine some implications of these results.

Monetary Union and productivity differences in Mercosur countries

This paper investigates cross-country productivity convergence for the period 1960-1999. The testing strategy is based on a combination of tests and estimation methods. We use the de…nitions of time-series convergence by Bernard and Durlauf (1995), applying multivariate unit root tests, such as those proposed by Sarno and Taylor (1998). Moreover, in this same multivariate context, the Flôres et al. (1996) and Breuer et al. (1999) tests identify the countries that converge. Based on a sample of the 4 Mercosur countries plus associates (Chile and Bolivia) and Peru our results show evidence of convergence among the four Mercosur countries, both using Argentina and Brazil as benchmark countries. Moreover, some weaker evidence of convergence is also found with Bolivia. In contrast, convergence is rejected with Chile and Peru.Stochastic convergence, deterministic convergence, SUR estimation, productivity, Mercosur

Challenging the pro-development role of trade agreements when remoteness counts: the Ecuadorian experience

The question whether global financial integration is beneficial for everyone remains highly disputed. It is often assumed that financial globalization involves threshold effects, where integration is worthwhile only when certain preconditions are met. However, it has also been noted that financial account liberalization also brings about considerable additional indirect benefits. These indirect benefits are often the same as the preconditions, such that there exists a complex two-way relationship between financial globalization and the preconditions/additional benefits. Such a relationship can lead to financial globalization traps, where some economies are trapped at a low level stable equilibrium, while others enjoy ever increasing financial integration. In this paper, we use de facto indicators of international financial integration to investigate if the dynamics of financial integration exhibit signs of such thresholds and traps. We present a parametric way of estimating these important parameters, based on recently developed sample splitting and threshold estimation methods. We find that there are indeed signs of multiple equilibriums if we look at the growth rates of total assets and liabilities. We also find that a group of countries are apparently caught in a high debt stock trap.

Far from champions, close to midgets : international production sharing in Central and South America

This paper assesses the relative participation of Argentina, Brazil, Guatemala and Nicaragua in fragmented world production. Based on trade statistics from 2000 to 2004, it analyses whether the trade flows of these economies have evolved towards production sharing schemes, and how great this type of trade is, in order to sustain their presence in the world economy. Guatemala and Nicaragua have reached a moderate insertion in a production sharing scheme, following a North-South trade pattern. Nonetheless, their participation is still small, being threatened not only by international competition, but also by their dependence on a unique market. Brazil has consolidated participation in a few chains, showing a more diversified North–South trade pattern. Argentina has attained insertion in the automotive chain of production, whereas its participation in other ones seems still quite limited. The country has a more South-South trade pattern, which exposes it to a certain degree of dependence.

The evolution of the world’s production fragmentation : 2000 – 2014, a network analysis

We employ network analysis to characterise the evolution of the world’s trade in value-added between 2000 and 2014. Relatively to previous studies, more recent time points are included, consolidating some of their conclusions. A small number of countries occupy central positions in the international production chains and concentration rules, along a few main production regions. Without Germany, Europe loses its pumping engine; the same for Asia without China and, in 2014, for the whole world, without the US. Will China eventually either absorb or dominate the other hubs, becoming the new central node of the World Trade Network?info:eu-repo/semantics/publishedVersio

Regional Competitiveness Policies for Deeper Integration in MERCOSUL

In this paper, the authors discuss the deepening of MERCOSUL's integration in the context of enhancing regional competitiveness. The paper focuses on regional policies related to the trade flows, creating a united area for investment and common competitiveness policies, and regional cohesion funds for MERCOSUL. The authors argue that the road to a common market appears appears only after abiding by a strong comprehensive strategy and implementation

The Entrance to the European Union of 10 New Countries: Consequences for the Relations with MERCOSUR

The impact of the May 2004 enlargement is not, in overall terms, something to worry MERCOSUR decision makers and economic agents. However, this globally non-menacing picture raises, at a closer look, a few concerns demanding pre-emptive policy measures. We shall separate the concerns into five categories, close to the project¿s main questions: concerning the impact of the enlargement on the European (15) market; concerning MERCOSUR gains in the enlarged European market; concerning the new entrants gains in the MERCOSUR market; concerning the effects on the "agricultural knot"; the enlargement and distorting effects of the EU-MERCOSUR agreement