Smaller preferential trade agreements, or PTAs, has been a promising development towards bolstering international trade. Most new PTAs also include non-trade provisions that delve into other policy areas, including some indirectly linked to trade, such as labor protections and environmental policy. Do these provisions work?
How Deep Trade Agreements Shape Non-Trade Outcomes: A new eBook
Trade agreements increasingly include disciplines aimed at achieving non-trade objectives: promoting foreign direct investment, technology transfers, and workers’ movement, but also improving labour conditions and environmental quality and achieving other broader social goals. This column introduces a new eBook that investigates whether these disciplines actually achieve their intended goals. The evidence shows some successes, such as in the area of FDI, technology transfers, and the environment, but also the limits of regulating non-trade policy areas in trade agreements, especially with regards to social outcomes such as child labour.
Trade Drives Gender Equality and Development
International trade can benefit women, especially in developing economies, but the rewards depend on determined policy action.
One year after Ukraine invasion, food export curbs have subsided, but concerns remain
One year after Russia’s invasion of Ukraine, the surge in global food prices that the war triggered has subsided. But there are still reasons for worry: Prices remain elevated, and new shocks could send them soaring again.
Using Machine Learning to Assess the Impact of Deep Trade Agreements
Modern preferential trade agreements contain a host of provisions that go beyond tariff liberalisation. By adapting techniques from the machine learning literature, this column develops data-driven methods for selecting the most trade-increasing provisions and quantifying their impact on trade. The results suggest that provisions related to technical barriers to trade, anti-dumping, trade facilitation, subsidies, and competition policy are associated with enhancing the trade-increasing effect of preferential trade agreements. Based on these findings, the effects of individual agreements can be estimated.
How export restrictions are impacting global food prices
Food markets have been wildly disrupted by the war in Ukraine (Ruta, 2022; Espitia et al. 2022). Export restrictions have made a bad situation worse, contributing to food scarcity and higher food prices. For key staples such as wheat, rice and soybean oil, these measures have pushed prices up by 9 percent or more. Continuing down the path of uncooperative trade policies would magnify the shock and worsen global food price inflation. This blog provides information on current policies and their price effects.
Strengthening pandemic defenses will require deeper cooperation on trade
The COVID-19 pandemic has exposed the upsides and downsides of international trade in medical goods and services. Although global trade was a critical component in addressing the pandemic, it fell short in important ways . A new joint report from the World Bank and World Trade Organization draws lessons from the pandemic experience and proposes steps to better prepare for the next emergency.
Widespread Food Insecurity is not Inevitable: Avoid Escalating Food Export Curbs
Ukraine and Russia play an outsized role in global markets for key crops. Disruption to food prices and supplies arising from the conflict is being felt thousands of miles away, and not only in net food-importing countries. This column shows that governments are exacerbating matters through unilateral resort to export curbs. Bans on wheat exports alone are responsible for a 7 percentage point increase in world wheat prices (roughly one-sixth of the observed price surge) and risk igniting a multiplier effect. Assurances of adequate food supply must be provided by other suppliers.
The Economics of Deep Trade Agreements: A new eBook
While multilateral trade negotiations have stagnated and tensions between major players have surged, bilateral and regional agreements seem to have run away with the trade agenda. There are over 300 agreements today, up from 50 in 1990. Most importantly, many of these agreements have extended their reach well beyond tariffs, aiming to achieve integration beyond trade, or ‘deep’ integration. This column introduces a new eBook from CEPR and the World Bank that focuses on the determinants of deep trade agreements, how they affect trade and non-trade outcomes, and how they might shape trade relations in a post-COVID-19 world.
Trade and COVID-19: Lessons from the First Wave
As COVID-19 spread across countries, many saw global value chains as transmitters of shocks. Using disaggregated export data for multiple countries, this column shows that participation in global value chains increased exporters’ vulnerability to foreign shocks, but it also reduced vulnerability to domestic shocks. Sourcing inputs from abroad is an example of beneficial diversification through trade when domestic production is disrupted. This evidence corroborates the view that nationalising value chains is not the way to improve resilience.
Trade policy responses to the COVID-19 pandemic: Evidence from a new dataset
One of the instruments many governments resorted to in responding to the COVID-19 pandemic was trade policy. This column introduces a new high frequency dataset on trade policy changes targeting medical and food products since the beginning of the pandemic, documenting how countries used such instruments on a week-by-week basis. While there was a burst in trade policy activism in February and March 2020 in tandem with the rise in COVID-19 cases, there was significant variation across governments in their resort to trade policy, the types of measures used, and the duration of interventions.
COVID-19 and Food Protectionism
Although initial conditions in global food markets in the face of COVID-19 pandemic are good, disruptions across countries most affected could reduce global supplies of key staples. This column shows that escalating export restrictions would multiply the initial shock by a factor of three, with world food prices rising by up to 18% on average. Import food dependent countries, which are in large majority developing and least developed countries, would be most affected. Uncooperative trade policies could risk turning a health crisis into a food crisis.
Trade and the COVID-19 Crisis in Developing Countries
The COVID-19 pandemic is increasingly a concern for developing countries. This column shows that most developing countries rely heavily on imports to meet their needs of medical supplies essential to combat COVID-19. Recently imposed export restrictions by leading producing countries could thus cause significant disruptions in supplies for developing countries and might further contribute to price increases of medical supplies. Taking multiplier effects into account, prices for medical supplies are estimated to rise by up to 23% on average. Tariffs and other restrictions to imports further impair the flow of critical products to developing countries.
Assessing the Preferences in Preferential Trade
Preferential trade agreements cover more than half of world trade. This column argues that while the 280 preferential trade agreements in existence have substantially widened the scope of free trade and reduced average applied tariffs, they have struggled against traditional bastions of protection in poorer countries and have not been able to eliminate the high levels of protection for a handful of sensitive products. While preference margins offered to partners in such agreements seem large, their significance shrinks when competition from both preferential and non-preferential sources is considered.
Hurry up! How the Belt and Road Initiative changes trade times and trade
When it comes to trade, speed is of the essence. This is especially true for developing countries integrating with global markets. When goods and inputs are time sensitive, delays can be particularly costly. For this reason, the time it takes to get goods from one place to another – trading times – is a key variable determining how successful a country will be in global markets.
How the Belt and Road Initiative could reduce trade costs
The Belt and Road Initiative, proposed by China in 2013, consists primarily of a series of infrastructure projects aimed at improving connectivity on a trans-continental scale. This column presents new evidence on the potential impact of the initiative on trade costs. It shows that through a reduction in shipment times, the initiative could substantially reduce trade costs for participating countries, with positive spillover effects on the rest of the world.
Trade Agreements and Global Production
The making and unmaking of trade agreements affects global production. This column reveals how deeper agreements have boosted countries’ participation in global value chains and helped them integrate in industries with higher levels of value added. Investment and competition now drive global value chain participation in North-South relationships, while removing traditional barriers remains important for South-South relationships.
Export Policy and Food Price Escalation
International food prices are on the rise and becoming increasing volatile, reaching crisis levels in recent years. This column argues that one overlooked reason for this is the rise in protectionist policies aimed at restricting food exports.
Trade agreements and 21st century trade: A new Policy Insight
What is the relationship between deep preferential trade agreements and international production-sharing? This column introduces a new CEPR Policy Insight providing new evidence on the effects of deep integration on production networks trade and on the impact that production networks trade has on the likelihood of signing deeper agreements.