Signalling in an international cournot model

We consider a trade policy model, where the costs of the home firm are private information but can be signaled through the output levels of the firm to a foreign competitor and a home policymaker. We study the influences of the non-homogeneity of the goods and of the uncertainty on the production costs of the home firm in the signalling strategies by the home firm. We show that some results obtained for homogeneous goods are not robust under non-homogeneity.

Divergent Reactions to Globalization: Labor Unions and the Nafta and the EU Enlargement Process

The 1990s witnessed the launching of two ambitious trade regionalization plans, the Nafta and EU enlargement to Central and Eastern Europe. In contrast to previous projects for the creation or expansion of regional trade blocs, these two projects concerned states at dramatically different levels of economic development: The Nafta involved the very wealthy economies of Canada and the USA and the significantly poorer economy of Mexico, whereas EU enlargement involved the very wealthy economy of the 15 member-state European Union and the significantly poorer economies of former Communist states in Central and Eastern Europe. Ultimately, the Nafta and EU enlargement are responses to the challenges of globalization. Paradoxically, however, they have been met with radically different societal reactions in the wealthy partners that participated in the launching of these processes. This paper focuses on the reaction by labor unions on both sides of the Atlantic. I conclude that while labor relations and welfare institutions constrained the trade policy choices made by labor unions in the United States and Europe, they do not tell the whole story. It would seem that United States labor unions were more sensitive to the potential risks for workers associated to the liberalization of trade than were their European counterparts.

Dairy Markets in Asia: An Overview of Recent Findings and Implications, September 2005

This paper is an overview of important findings regarding the ongoing evolution of Asian dairy markets based on a series of new economic investigations. These investigations provide systematic empirical foundations for assessing Asian dairy markets with their new consumption patterns, changing industries, and trade prospects under different domestic and trade policy regimes. The findings are drawn from four case studies (China, India, Japan, and Korea), as well as a prospective analysis of future regional patterns of consumption and a policy analysis of trade liberalization of Asian dairy markets. The overview distills the findings of these new investigations and integrates them in the earlier economic literature; it draws policy implications and identifies lessons for countries outside of Asia, especially for emerging exporters in Latin America.

Global Prospects for Dairy in Argentina and Chile: Evidence from Field Visits and Model Simulations, August 2006

We assess the international competitiveness of the dairy industries in Argentina and Chile, combining recent market intelligence gathered from field visits with quantitative simulations of global policy reform scenarios. Both countries exhibit strong potential for export growth but face significant internal and external barriers to expanding their dairy industries. Global policy reforms would resolve some of the international obstacles to their expansion. Argentina has great potential, but it is handicapped by its current macroeconomic policies, trade policy distortions, and the uncertainty associated with policy implementation. Chile is more limited in terms of natural capacity for expansion, but it has a positive trade and investment environment.

Rules of origin : from analysis to reform

General Introduction This thesis can be divided into two main parts :the first one, corresponding to the first three chapters, studies Rules of Origin (RoOs) in Preferential Trade Agreements (PTAs); the second part -the fourth chapter- is concerned with Anti-Dumping (AD) measures. Despite wide-ranging preferential access granted to developing countries by industrial ones under North-South Trade Agreements -whether reciprocal, like the Europe Agreements (EAs) or NAFTA, or not, such as the GSP, AGOA, or EBA-, it has been claimed that the benefits from improved market access keep falling short of the full potential benefits. RoOs are largely regarded as a primary cause of the under-utilization of improved market access of PTAs. RoOs are the rules that determine the eligibility of goods to preferential treatment. Their economic justification is to prevent trade deflection, i.e. to prevent non-preferred exporters from using the tariff preferences. However, they are complex, cost raising and cumbersome, and can be manipulated by organised special interest groups. As a result, RoOs can restrain trade beyond what it is needed to prevent trade deflection and hence restrict market access in a statistically significant and quantitatively large proportion. Part l In order to further our understanding of the effects of RoOs in PTAs, the first chapter, written with Pr. Olivier Cadot, Celine Carrère and Pr. Jaime de Melo, describes and evaluates the RoOs governing EU and US PTAs. It draws on utilization-rate data for Mexican exports to the US in 2001 and on similar data for ACP exports to the EU in 2002. The paper makes two contributions. First, we construct an R-index of restrictiveness of RoOs along the lines first proposed by Estevadeordal (2000) for NAFTA, modifying it and extending it for the EU's single-list (SL). This synthetic R-index is then used to compare Roos under NAFTA and PANEURO. The two main findings of the chapter are as follows. First, it shows, in the case of PANEURO, that the R-index is useful to summarize how countries are differently affected by the same set of RoOs because of their different export baskets to the EU. Second, it is shown that the Rindex is a relatively reliable statistic in the sense that, subject to caveats, after controlling for the extent of tariff preference at the tariff-line level, it accounts for differences in utilization rates at the tariff line level. Finally, together with utilization rates, the index can be used to estimate total compliance costs of RoOs. The second chapter proposes a reform of preferential Roos with the aim of making them more transparent and less discriminatory. Such a reform would make preferential blocs more "cross-compatible" and would therefore facilitate cumulation. It would also contribute to move regionalism toward more openness and hence to make it more compatible with the multilateral trading system. It focuses on NAFTA, one of the most restrictive FTAs (see Estevadeordal and Suominen 2006), and proposes a way forward that is close in spirit to what the EU Commission is considering for the PANEURO system. In a nutshell, the idea is to replace the current array of RoOs by a single instrument- Maximum Foreign Content (MFC). An MFC is a conceptually clear and transparent instrument, like a tariff. Therefore changing all instruments into an MFC would bring improved transparency pretty much like the "tariffication" of NTBs. The methodology for this exercise is as follows: In step 1, I estimate the relationship between utilization rates, tariff preferences and RoOs. In step 2, I retrieve the estimates and invert the relationship to get a simulated MFC that gives, line by line, the same utilization rate as the old array of Roos. In step 3, I calculate the trade-weighted average of the simulated MFC across all lines to get an overall equivalent of the current system and explore the possibility of setting this unique instrument at a uniform rate across lines. This would have two advantages. First, like a uniform tariff, a uniform MFC would make it difficult for lobbies to manipulate the instrument at the margin. This argument is standard in the political-economy literature and has been used time and again in support of reductions in the variance of tariffs (together with standard welfare considerations). Second, uniformity across lines is the only way to eliminate the indirect source of discrimination alluded to earlier. Only if two countries face uniform RoOs and tariff preference will they face uniform incentives irrespective of their initial export structure. The result of this exercise is striking: the average simulated MFC is 25% of good value, a very low (i.e. restrictive) level, confirming Estevadeordal and Suominen's critical assessment of NAFTA's RoOs. Adopting a uniform MFC would imply a relaxation from the benchmark level for sectors like chemicals or textiles & apparel, and a stiffening for wood products, papers and base metals. Overall, however, the changes are not drastic, suggesting perhaps only moderate resistance to change from special interests. The third chapter of the thesis considers whether Europe Agreements of the EU, with the current sets of RoOs, could be the potential model for future EU-centered PTAs. First, I have studied and coded at the six-digit level of the Harmonised System (HS) .both the old RoOs -used before 1997- and the "Single list" Roos -used since 1997. Second, using a Constant Elasticity Transformation function where CEEC exporters smoothly mix sales between the EU and the rest of the world by comparing producer prices on each market, I have estimated the trade effects of the EU RoOs. The estimates suggest that much of the market access conferred by the EAs -outside sensitive sectors- was undone by the cost-raising effects of RoOs. The chapter also contains an analysis of the evolution of the CEECs' trade with the EU from post-communism to accession. Part II The last chapter of the thesis is concerned with anti-dumping, another trade-policy instrument having the effect of reducing market access. In 1995, the Uruguay Round introduced in the Anti-Dumping Agreement (ADA) a mandatory "sunset-review" clause (Article 11.3 ADA) under which anti-dumping measures should be reviewed no later than five years from their imposition and terminated unless there was a serious risk of resumption of injurious dumping. The last chapter, written with Pr. Olivier Cadot and Pr. Jaime de Melo, uses a new database on Anti-Dumping (AD) measures worldwide to assess whether the sunset-review agreement had any effect. The question we address is whether the WTO Agreement succeeded in imposing the discipline of a five-year cycle on AD measures and, ultimately, in curbing their length. Two methods are used; count data analysis and survival analysis. First, using Poisson and Negative Binomial regressions, the count of AD measures' revocations is regressed on (inter alia) the count of "initiations" lagged five years. The analysis yields a coefficient on measures' initiations lagged five years that is larger and more precisely estimated after the agreement than before, suggesting some effect. However the coefficient estimate is nowhere near the value that would give a one-for-one relationship between initiations and revocations after five years. We also find that (i) if the agreement affected EU AD practices, the effect went the wrong way, the five-year cycle being quantitatively weaker after the agreement than before; (ii) the agreement had no visible effect on the United States except for aone-time peak in 2000, suggesting a mopping-up of old cases. Second, the survival analysis of AD measures around the world suggests a shortening of their expected lifetime after the agreement, and this shortening effect (a downward shift in the survival function postagreement) was larger and more significant for measures targeted at WTO members than for those targeted at non-members (for which WTO disciplines do not bind), suggesting that compliance was de jure. A difference-in-differences Cox regression confirms this diagnosis: controlling for the countries imposing the measures, for the investigated countries and for the products' sector, we find a larger increase in the hazard rate of AD measures covered by the Agreement than for other measures.

Globalization and risk sharing

We study the effects of globalization on risk sharing and welfare. Like previous literature, weassume that countries cannot commit to repay their debts. Unlike previous literature, we assumethat countries cannot discriminate between domestic and foreign creditors when repaying theirdebts. This creates novel interactions between domestic and international trade in assets. (i)Increases in domestic trade raise the bene.ts of enforcement and facilitate international trade.In fact, in our setup countries can obtain international risk sharing even in the absence of defaultpenalties. (ii) Increases in foreign trade .i.e. globalization.raise the costs of enforcement andhamper domestic trade. As a result, globalization may worsen domestic risk sharing and lowerwelfare. We show how these e¤ects depend on various characteristics of tradable goods andexplore the roles of borrowing limits, debt renegotiations, and trade policy.

Las relaciones comerciales de la Unión Europea con sus vecinos: ¿europeización, internacionalización o coordinación?

[spa] La política de Vecindad de la Unión Europea se acostumbra a interpretar como un instrumento de europeización forzada. Gracias a su fuerza de negociación, la Unión Europea impondría a sus vecinos su modelo económico y hasta político y social. Esta sin embargo no es la evidencia que se obtiene en el ámbito del comercio. En consonancia con el modelo teórico de relaciones exteriores desarrollado por varios investigadores bajo la dirección de Esther Barbé, observamos como, en el ámbito comercial, el modelo de relaciones entre la Unión Europea y cuatro países de la política de Vecindad puede ser tanto de europeización como también de internacionalización o de coordinación. El tipo de modelo aplicado viene condicionado, como asevera el marco teórico, por el cumplimiento de las condiciones necesarias que se requieren para que Europa imponga sus normas: legitimidad, incentivos y coherencia interna. Estas condiciones varían en función tanto del tema tratado como del país vecino.

Las relaciones comerciales de la Unión Europea con sus vecinos: ¿europeización, internacionalización o coordinación?

[spa] La política de Vecindad de la Unión Europea se acostumbra a interpretar como un instrumento de europeización forzada. Gracias a su fuerza de negociación, la Unión Europea impondría a sus vecinos su modelo económico y hasta político y social. Esta sin embargo no es la evidencia que se obtiene en el ámbito del comercio. En consonancia con el modelo teórico de relaciones exteriores desarrollado por varios investigadores bajo la dirección de Esther Barbé, observamos como, en el ámbito comercial, el modelo de relaciones entre la Unión Europea y cuatro países de la política de Vecindad puede ser tanto de europeización como también de internacionalización o de coordinación. El tipo de modelo aplicado viene condicionado, como asevera el marco teórico, por el cumplimiento de las condiciones necesarias que se requieren para que Europa imponga sus normas: legitimidad, incentivos y coherencia interna. Estas condiciones varían en función tanto del tema tratado como del país vecino.

Integraation vaikutus Euroopan unionin jäsenmaiden ulkomaankauppavirtoihin

Työn tavoitteena on selvittää Euroopan unionin integraation vaikutusta jäsenmaiden ulkomaankauppaan vuosien 1995 ja 2001 välillä. Pääpaino on unionin sisäkaupan tutkimuksessa, Euroopan unionin ulkopuolisiin maihin suuntautuvan kaupan tarkastelussa tutkitaan kauppaa muiden teollistuneiden maiden ja kehitysmaiden kanssa. Työ on jakautunut teoreettiseen osaan ja empiiriseen osaan. Teoreettisessa osassa esitellään ulkomaankaupan taloustieteellinen perusta sekä kauppapolitiikan vaikutus kaupankäyntiin. Empiirisessä osassa tutkitaan tilastollisin menetelmin Euroopan unionin jäsenmaiden ulkomaankauppavirtoja. Johtopäätöksissä empiirisiä tuloksia verrataan muodostettuihin hypoteeseihin. Tutkimustulosten perusteella Euroopan unionin integraatiolla ei näytä olevan suurta vaikutusta unionin sisäkauppaan. Muun maailman kaupassa kehitys on ollut huomattavasti suurempaa. Parhaiten unionin sisäkauppaa selittää gravitaatiomalli eli kauppa riippuu voimakkaasti maiden taloudellisista vetovoimista ja niiden maantieteellisestä ja kulttuurillisesta etäisyydestä. Myös ydin-periferiamallin merkitys näyttää kasvaneen. Ulkokaupassa kauppapolitiikan rajoittava vaikutus on vähentynyt erityisesti kehitysmaiden kanssa käydyssä kaupassa.

Ulkomaisen pk-yrityksen teollisuusinvestointi Suomeen, Case Pariwood Case Pariwood.

Kuukauden kuluttua tästä päivästä voidaan sanoa: 'Viime vuosisadalla maapallo kutistui merkittävästi, kulkuyhteydet paransivat ihmisten ja tavaroiden liikkuvuutta, mutta ennen kaikkea tietoliikenteessä tapahtui valtava kehitys.' Rahamarkkinoiden integroituessa pääomien transaktiokustannukset lähentyvät vähitellen nollaa, jolloin voidaan puhua suprajohtavasta kapitalismista (Kasvio et al.1999). Tässä tutkimuksessa osoitan, että myös pienet ja keskisuuret yritykset voivat tehdä onnistuneita suoria sijoituksia ulkomaille, Pariwoodin tapauksessa Suomeen. Suomen hyvät kuusitukkivarat, puun laatu ja saatavuus, ovat päätekijöitä tähän investointiin. Kun yrittäjien motivaatio on riittävän korkea ja heillä on aikaa ja sitkeyttä ideansa toteuttamiseen, tulos on onnistunut. Edullinen taloussuhdanne Euroopassa Pariwoodin markkina-alueella on edistänyt hanketta. Kuntien harjoittamalla elinkeinopolitiikalla on merkitystä ja kunnat ja valtiovalta voivat hankekohtaisella aktiivisuudellaan edesauttaa tätä kehitystä. Kyse on myös luottamuksesta. Pariwoodin tapauksessa itävaltalaiset omistajat perustelivat investointipäätöstä myös Suomen infrastruktuurilla ja viranomaisten kanssa hyvin sujuneella yhteistyöllä. Sijoitusten allokoinnissa on myös kyse työstä, työpaikkojen syntymisestä tai pysymisestä siellä, missä kustannukset ovat edulliset tai työntekijöiden ammattitaito täyttää investoijien vaatimukset. Ulkomaisissa suorissa sijoituksissa Suomeen tulee paitsi rahaa, myös uudenlaista teollisuutta ja osaamista. Korkean teknologian tuotantoa on myös puualalla. Ulkomaiset omistajat edustavat usein erilaista johtamiskulttuuria, kuin mihin Suomessa ollaan totuttu. Pariwoodin tapauksessa suuria ongelmia ei esiintynyt. Suomen EU-jäsenyydellä on ollut tätäkin hanketta edistävä vaikutus. Rahoitus on järjestynyt samoin periaattein kuin kansallisissa hankkeissa. Rahoitusneuvottelut kestivät hieman pidempään, noin vuoden. Lopputulokseen ovat tyytyväisiä omistajat, Parikkalan kunnan edustajat, työntekijät ja luotonantajat. Pariwood käy esimerkistä onnistuneesta ulkomaisesta teollisuusinvestoinnista Suomeen.

Estudo da complementaridade do comércio entre o Brasil e o Japão com vistas a um acordo de livre comércio

Complementarity of trade between Brazil and Japan with a view to a free trade agreement. Japan has signed free trade agreements as trade policy since 2002 and three countries have already signed in Latin American. Considering the intention to carry out an agreement with Mercosur, this article aims to analyze the complementarities between Brazil and Japan trade structure by revealed comparative advantages indexes, with World Bank data for the period between 2006 and 2008. The results show a comparative advantage in primary commodities to Brazil and in industrial products to Japan, as well as indicating sectors that may oppose to trade liberalization.

A política industrial chinesa como determinante de sua estratégia going global

China has experienced not only high rates of economic growth as well as an unprecedented competitive international insertion since the turn of the century. This process was not guided solely by market forces or influenced by Government intervention in the economy. Although much has been argued that China's "going global" strategy is rooted in state action, and especially its policy of exchange rate depreciation and trade policy incentives for exports and investments abroad, we argue that the major determinant of this strategy, which established the basic conditions for industrial competitiveness, was its industrial policy. The focus of this article is on the changes in China's industrial structure, emphasizing that Chinese industrial policy is a central determinant of its international insertion strategy.

Les politiques commerciales, industrielles, régionales, et d'adaptation dans le Rapport de la Commission MacDonald: un Commentaire

The effect of long discussions between commissioners with divergent views on certain issues is obvious in the report: it is more oriented towards the short term than expected. Undue attention was paid to trade liberalization with the U.S., a region of the world which the report describes as one in relative decline. The report does not deal with a scenario wherein trade liberalization with the U.S.A. is seen as a necessary transitory measure leading towards diversification of Canada's trade relation away from North America. Such an examination would point to a different approach to the U.S.A. in the short term. The report does not deal with services, information and te telecommunication which are fundamental to the economic development of Canada. There is also overemphasis on commercial policy and relative neglect on the use of domestic policies, among them industrial policy, in the pursuit of Canada's objectives. The report notes the interdependence between commercial and domestic policies and rightly recommend that provinces must, as a consequence, be involved in trade liberalization discussions. It is argued that the report underestimates the pressures for extra- territorial application of U.S. policies to Canada and the pressure for harmonization of policies which would follow trade liberalization. The report pays no attention to the implications of offshore investment going primarily to the U.S.A. and does not pay adequate attention to the role of investment to deal with adjustment problems. Available studies would have allowed the commissioners to clarify the determinants of investment decisions by Canadian head offices who have established subsidiaries in the U.S.A. but they were not examined. Little attention was paid to the role of transnationals and intrafirm trade in examining the implications of trade liberalization. The importance given to the reduction of regional disparities in earned incomes is welcome. However, the recommandation to leave regional development to provinces and municipalities denies the importance of national policies in the attainment of regionalization job equilization the impact of new CAD-CAM-telecommunications technologies on location decisions for the production of goods and services was not examined. Nor were the extent of and changes in interregional (i.e. interprovincial and more particularly province-state) trade flows examined. Knowledge of these patterns is essential in the formulation of industrial and adjustment policies in light of trade liberalization. The report recommends passive industrial adjustment policies focussed on the U.S., a reflection of the concern of the commissioners for the short term and the U.S.A. The implementation of the report's recommendations would lead to a centralization of economic power at the nationallevel, hence the need to establish a renewed senate to favour the formulation of regionally sensitive national policies.

Industrial Adjustment: Context, Causes, Impacts and Methods for Analysis

Adjustement is an ongoing process by which factors of reallocated to equalize their returns in different uses. Adjustment occurs though market mechanisms or intrafirm reallocation of resources as a result of changes in terms of trade, government policies, resource availability, technological change, etc. These changes alter production opportunities and production, transaction and information costs, and consequently modify production functions, organizational design, etc. In this paper we define adjustment (section 2); review empirical estimates of the extent of adjustment in Canada and abroad (section 3); review selected features of the trade policy and adjustment context of relevance for policy formulation among which: slow growth, a shift to services, a shift to the Pacific Rim, the internationalization of production, investment distribution communications the growing use of NTB's, changes in foreign direct investment patterns, intrafirm and intraindustry trade, interregional trade flows, differences in micro economic adjustment processes of adjustment as between subsidiaries and Canadian companies (section 4); examine methodologies and results of studies of the impact of trade liberalization on jobs (section 5); and review the R. Harris general equilibrium model (section 6). Our conclusion emphasizes the importance of harmonizing commercial and domestic policies dealing with adjustment (section 7). We close with a bibliography of relevant publications.