We exploit a unique event in human history, the exodus of the Vietnamese Boat People to the US, to provide evidence for the causal pro-trade effect of migrants. This episode represents an ideal ...natural experiment as the large immigration shock, the first wave of which comprised refugees exogenously allocated across the US, occurred over a 20-year period during which time the US imposed a complete trade embargo on Vietnam. Following the lifting of trade restrictions in 1994, US exports to Vietnam grew most in US states with larger Vietnamese populations, themselves the result of larger refugee inflows 20 years earlier.
In recent decades, China experienced the fastest economic growth by opening its economy and focussing on trade and is now the second largest economy surpassing Japan. The widening of the US trade ...deficit with China raised tensions between the two largest economies of the world. Although China is gradually opening, it is still protecting some of its industries and engaging in unfair trade practices. Trump administration argues that trade deficit hurts US manufacturing and promised to cut them. Previous administration used the WTO process to challenge China for abusing intellectual property rights, import restrictions, and subsidising its industries. Protectionism hurts both countries. USA is the largest trade partner of China and US tariffs can slow its growth. China’s tariffs on US goods also are raising prices for consumers. Moreover, studies indicate that unilateral measures of imposing tariffs neither reduce deficits nor create jobs.
Can simplifying customs procedures reduce tariff evasion? We measure tariff evasion as the mis-representation of import values in response to increasing tariffs. In a dataset covering 121 countries ...and the whole set of HS6 product categories in 2012, 2015, and 2017, we show that simplifying border procedures, that is trade facilitation, reduces tariff evasion. Holding tariff rate constant at its mean, improving a country’s overall trade facilitation performance from the 25th percentile to the median reduces tariff evasion by almost 20%. The moderating effect is especially due to improving the pre-shipment legal certainty of customs procedures. Among the potential mechanisms, improving trade facilitation performance is effective in reducing tariff evasion due to under-reporting of import prices, as well as in countries with weaker control of corruption. The results suggest that countries can gradually implement trade facilitation reforms to cost-effectively minimize tariff evasion.
•Simplifying customs procedures reduces mis-reporting of imports at higher tariffs.•Improving pre-shipment legal certainty is most effective at reducing tariff evasion.•Better trade facilitation reduces evasion due to under-reporting of import prices.•Better trade facilitation lowers evasion in countries with weaker corruption control.•Countries may steadily apply trade facilitation reforms to lower evasion efficiently.
The World Trade Organization -backbone of today's international commercial relations -requires member countries toself-enforceexporters' access to foreign markets. Its dispute settlement system is ...the crown jewel of the international trading system, but its benefits still fall disproportionately to wealthy nations. Could the system be doing more on behalf of developing countries? InSelf-Enforcing Trade, Chad P. Bown explains why the answer is an emphatic "yes."
Bown argues that as poor countries look to the benefits promised by globalization as part of their overall development strategy, they increasingly require access to the WTO dispute settlement process to protect their trading interests. Unfortunately, the practical realities of WTO dispute settlement as it currently stands create a number of hurdles that prevent developing countries from enjoying the trading system's full benefits. This book confronts these challenges.
Self-Enforcing Tradeexamines the WTO's "extended litigation process," highlighting the tangle of international economics, law, and politics that participants must master. He identifies the costs that prevent developing countries from disentangling the self-enforcement process and fully using the WTO system as part of their growth strategies. Bown assesses recent efforts to help developing countries overcome those costs, including the role of the Advisory Centre on WTO Law and development focused NGOs. Bown's proposed Institute for Assessing WTO Commitments tackles the largest remaining obstacle currently limiting developing country engagement in the WTO's selfenforcement process -a problematic lack of information, monitoring, and surveillance.
Preferential trade agreements offer members an alternative to dispute settlement at the World Trade Organization. This gives rise to forum shopping, in that complainants can file regionally, ...multilaterally, or not at all. What explains this choice of forum? I argue that complainants strategically discriminate among overlapping memberships: on a given measure(s), some prefer to set a precedent that bears only on a subset of their trade relations, others a precedent that bears on all their trade relations, while still others prefer not to set a precedent. Thus, the key to forum shopping is not simply which institution is likely to come closest to the complainant's ideal ruling against the defendant, but where the resulting precedent will be more useful in the future, enabling the complainant to bring litigation against other members, rather than helping other members bring litigation against the complainant. I consider disputes over Mexican brooms and Canadian periodicals.For comments, I thank Vinod Aggarwal, Raj Bhala, Jane Bradley, Bill Davey, Rob Howse, Miles Kahler, Simon Lester, Rod Ludema, Ed Mansfield, Lisa Martin, Petros C. Mavroidis, John Odell, Joost Pauwelyn, Amy Porges, Eric Reinhardt, Peter Rosendorff, Ken Scheve, Ed Schwartz, Christina Sevilla, Michael Simon, Jay Smith, Debra Steger, Joel Trachtman, Todd Weiler, seminar participants in the Program on International Politics, Economics, and Security (PIPES) at the University of Chicago, and two anonymous referees. All shortcomings are, of course, my own. For research support, I thank the Canadian Institute for Advanced Research and the Social Science and Humanities Research Council of Canada. For research assistance, I thank Alex Muggah, Krzysztof Pelc, and Scott Winter.
Towards a theory of trade finance Schmidt-Eisenlohr, Tim
Journal of international economics,
09/2013, Volume:
91, Issue:
1
Journal Article
Peer reviewed
Open access
Shipping goods internationally is risky and takes time. To allocate risk and to finance the time gap between production and sale, a range of payment contracts is utilized. I study the optimal choice ...between these payment contracts and their implications for trade. The equilibrium contract is determined by financial market characteristics and contracting environments in both the source and the destination country. Trade increases in enforcement probabilities and decreases in financing costs proportional to the time needed for trade. Empirical results from gravity regressions are in line with the model, highly significant and economically relevant. They suggest that importer finance is as important for trade as exporter finance.
•First theory model on international payment contract choice•Firms trade-off international differences in enforcement and financing costs•Effect of financing costs on trade increases in bilateral distance•Importer financial conditions as important as exporter financial conditions
How do regional trade agreements impact exporters in non-member countries? We revisit this long-standing trade policy question using firm-level data from Costa Rica and detailed information on the ...content of trade agreements. Differently from the conventional view on trade diversion, the analysis shows that “deep” regional trade agreements can have a positive spillover effect: they increase the probability of export and entry of third-country firms that previously exported to one of the member countries. This spillover effect is driven by provisions that are nondiscriminatory and address regulatory issues, as they make member countries more “similar”, thus allowing to reduce entry costs. Indeed, firms exporting regulation-intensive products benefit disproportionately more from deep trade agreements in destination markets.
The trade war between the US and China affects the fluctuation of RMB exchange rate. We collect news on China–US trade policies and talks from January 2017 to July 2020. Results show that China–US ...dialogue and tariff imposition have the greatest impact on the percentage of RMB appreciation and depreciation. Additionally, tariff relaxation and increasing enterprise restrictions can cause a sharp appreciation and depreciation. “Policies” events and trade news from the US influence RMB fluctuations the most significantly. Finally, positive events cannot significantly cause RMB appreciation, but negative events can significantly cause RMB devaluation.
Preferential Trade Agreements (PTAs) have become the most prevalent form of international trade liberalization in recent decades, even though it remains far from clear what their effects on economies ...and their key units, firms, are. This paper evaluates the distributional consequences of trade liberalization
within
industries differentiating two distinct aspects in which trade liberalization could result in higher trade flows: the intensive vs. the extensive margin of trade. In particular, we analyze whether trade liberalization leads to increased trade flows because either firms trade more volume in products they have already traded before (intensive margin) or because they start to trade products they have not traded previously (extensive margin), or both. We test these arguments for the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR) and exporting firms based in Costa Rica for the time-period 2008–2014. The results of our study suggest that the effects of CAFTA-DR depend not only on whether we analyze the extensive versus the intensive margin of trade but also whether the product in question is homogenous or differentiated and whether the exporting firm under analysis is small or large. In particular, we find support for the theoretical expectation that firms exporting heterogeneous products, such as textiles, gain from trade agreements, such as CAFTA-DR, in that they can export more varieties of their products. Yet at the same time, they tend to lose at the intensive margin by a reduction in their trade volume while the opposite pattern occurs for firms exporting homogenous products.
The agenda of trade negotiation in the agri‐food sector is characterized by an exponential increase of sanitary and phytosanitary (SPS) measures and of Regional Trade Agreements (RTAs). Their joint ...effect on trade is puzzling and still an open empirical question. Once assessed the trade effect of standards provided in SPS measures, the study evaluates how regulatory cooperation and commitments beyond World Trade Organization requirements affect trade between signatories of RTAs. Trade between signatories seems obstructed by non‐discriminatory (multilateral) SPS measures. However, SPS‐specific commitments negotiated in joint SPS committees within RTAs tend to create conditions to meet standards, contributing to boost trade.