The contribution of trade policy to the openness of the Dutch economy

The last four decades, Dutch exports and imports grew annually about 7.5%, while re-exports rocketed in the last two decades. Using a gravity approach this paper finds that the increase in trade is largely caused by income developments. Trade policy, consisting of reductions in import tariffs and other trade barriers and the creation of the EU internal market, also has a significant impact on trade growth, although much smaller. Without any liberalisation of trade policy since 1970 the ratio of trade (excluding re-exports) to GDP would have been about 8%- points lower. By estimating the trade enhancing-effect of trade policy on GDP we conclude that trade policy has contributed 6% to 8% to the growth of national income in Netherlands since the 1970s. Foreign Direct Investments (FDI) experienced a massive but erratic growth, mostly in the last two decades. Income developments could explain half of that growth; deregulations of national capital markets explain only a small part of FDI growth.

Comparative Trade Policy

Current research has found ambiguous results with respect to the effects of the type of electoral regime on trade policy. The present paper proposes a solution to this indeterminacy. It is shown that the equilibrium level of trade protection can be relatively higher, as well as lower, under a majoritarian electoral rule compared to proportional representation. The equilibrium outcome is shown to depend on the number of voters in swing districts who own a factor specific to the exporting industry in relation to those who possess claims to the specific input employed by the import-competing sector. It is further argued that political rents are lower (higher) under majoritarian elections if there are more factor owners in the swing districts with stakes in the exporting (import-competing) industry.Endogenous Tariff Formation; Trade Policy; Electoral Rules

International Trade Education: Do We Need a New Model for the Global Market?

Professionals in the field of international trade policy tend to receive their knowledge on-the-job, often with a considerable component of mentoring. While this was a reasonable knowledge transfer mechanism in a period when interest in trade policy was confined to narrow constituencies and a limited range of trade policies, it may no long be appropriate in the era of globalization. In recent years both those with an interest in trade policy and the range of issues that come under the purview of trade policy have increased substantially, yet there is little formal education provided on trade policy. As a result, there is a shortage of trained professionals in the field of trade policy. While the shortage is widespread in developed countries, it is endemic in developing countries - leading to a major training effort by the World Trade Organization, regional trade organizations and through bilateral aid. These efforts are stopgap measures and solving the problem will require the incorporation of trade policy in academic curricula. The reasons for trade policy training retaining its traditional form are explored and suggestions regarding alternatives provided.developing countries, education, trade policy, International Relations/Trade,

The Rural Economy Research Centre

End of project report ENARPRIThe economic impact of trade policy reform receives less attention than the impact of trade policy on the environment. In part this may be due to the secondary importance attributed to environmental issues when economic consequences take centre stage. However, another consideration may be the difficulties of bringing together models which examine the economic impact of trade policy reform and models which can provide measures of environmental indicators. This study combines a partial equilibrium economic commodity model with a model for the estimation of agricultural input usage and GHG emissions. The paper examines one aspect of the relationship between trade policy and the environment, namely that between agricultural trade policy reform and indicators relating to emissions of Greenhouse Gases (GHG) from agriculture. The paper examines the impact of agricultural production levels and production practices on the level of GHG emissions from agriculture in Ireland under a Baseline of the recent reform of EU agricultural policy and an alternate scenario where trade policy reforms resulting from a future World Trade Organisation Doha Development Round agreement to reveal the extent to which there are significant environmental impacts which should be considered in addition to the conventional economic considerations.FAPRI-Ireland Partnershi

Increasing the Openness of the Trade Policy Process: Challenges and Implications

Trade policy – once a subset of foreign policy far removed from domestic concern, focused squarely on border issues and subject to the rules of international diplomacy – is now a central concern on the public policy agenda as trade issues have become increasingly entwined with traditionally domestic policy issues. Consequently, demands have been made for more openness in trade policy formation and, in response, many governments have undertaken openness initiatives. Despite these developments there has been only a little research into the increased openness of trade policy processes in general and no research aimed at developing a consistent framework for categorizing various openness initiatives and permitting a meaningful comparison of initiatives between trading partners. In this paper, the general issue of increasing the openness of trade policy is examined, an openness framework is proposed and the implications for trade policy are assessed.openness, openness framework, trade policy, transparency, International Relations/Trade,

New-New Trade Policy

When national competitiveness is invoked as a policy objective, trade experts have learned to retort that countries don`t trade, firms do. This focus on the importance of the firm in international trade is consistent with the most recent developments in trade theory, but policy needs to catch up. Recognizing the growing anomalies in observed trade patterns relative to traditional models of trade based on national comparative advantage, the "new trade theory" of the 1980s looked at industries not countries, leading Nobel prize-winner Paul Krugman, a pioneer in this literature, to suggest the need for a new trade policy. Recent work on what some call the "new-new trade theory" focuses on the trading behaviour of individual firms, making a tight link between trade and productivity. In this paper we demonstrate how focusing on firms should be the foundation for a new-new trade policy, one that creates exciting opportunities for trade and investment promotion strategies, along with the need for much more targeted consultation strategies. We also discuss the implications of the new-new theory for regulatory coordination, and on new ways to cooperate with interlocutors in developing countries on the evolution of 21st century trade policy.New-new Trade Theory, Trade Policy

Trade Policy, Openness, Institutions

This paper examines the importance of institutions vis-à-vis openness and trade policies in determining per capita income differences across countries. Recent literature has tried to demonstrate that more open economies grow faster. On the other hand, it has also been asserted that it is not openness per se but institutions and good governance that matter in promoting growth. This paper attempts to test this hypothesis across a crosssection of nations. Unlike other papers in the field, we have tested not only for the degree of openness but also for trade policy indicators, as well as a fuller set of six institutional variables. Our broad finding is that although institutions matter, trade policies are also relevant to promoting growth, whereas openness per se has little impact on growth.International Integration, Economic Development

Trade policy and leapfrogging.

The recent extensive study of vertical product differentiation models has allowed for the analysis of international trade issues in the presence of country asymmetries in terms of product qualities, technology, cost, market size and income. In the presence of such asymmetries, national industries will either be market leaders or lagging behind in the international market place in terms of their product qualities. The resulting asymmetry in profits creates powerful incentives for lagging industries as well as their national Governments to reverse this situation to their advantage, i.e., to induce "leapfrogging" in terms of product qualities. This paper presents an overview of existing research on leapfrogging as well as several new results and questions.Product qualities; International trade; Trade policy;

The post-Lisbon role of the European Parliament in the EU's Common Commercial Policy: Implications for bilateral trade negotiations. EU Diplomacy Paper 05/2012, July 2012

This paper sets out to conduct an empirical analysis of the post-Lisbon role of the European Parliament (EP) in the EU’s Common Commercial Policy through an examination of the ‘deep and comprehensive’ bilateral Free Trade Agreements (FTAs) currently negotiated as part of the EU’s Global Europe strategy. The EU-Korea and EU-India FTAs are used as case studies in order to determine the implications of the EP’s enhanced trade powers on the processes, actors and outcomes of EU bilateral trade policy. The EP is now endowed with the ‘hard power’ of consent in the ratification phase of FTAs, acting as a threat to strengthen its ‘soft power’ to influence negotiations. The EP is developing strategies to influence the mandate and now plays an important role in the implementation of FTAs. The entry of this new player on the Brussels trade policy field has brought about a shift in the institutional balance of power and opened up the EP as a new point of access for trade policy lobbyists. Finally, increased EP involvement in EU trade policy has brought about a politicisation of EU trade policy and greater normative outcomes of FTAs

Equity and Trade Policy

We develop a dual approach to analyzing general equilibrium relationships between trade policy and household (as distinct from functional) income distribution, highlighting how general equilibrium distributional aspects of social welfare related to import protection may be examined alongside corresponding efficiency aspects in a dual framework. This includes the introduction of a social welfare function into the dual GE system that is explicitly separable between mean income and income dispersion. This then follows through to the government ob jective function. For government, this is manifested not only in special interest politics, but also through the direct impact of inequality on a governmentÕs ob jective function. We find that equity considerations may serve to counter lobbying interests in both capital-rich and capital-poor countries, though with an opposite marginal impact on the final policy outcome. We also identify a protectionist bias on the part of welfare maximizing governments in capital-rich countries. Our dual framework also offers a possible empirical framework for decomposition of policy-induced price changes into household inequality for a broad class of models.Trade and inequality, Sen welfare functions, duality, political economy of equity