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The Empirical Landscape of Trade Policy Chad P. Bown and Meredith A. - - PowerPoint PPT Presentation

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The Empirical Landscape of Trade Policy Chad P. Bown and Meredith A. Crowley World Bank & CEPR and Cambridge May 2015 CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 1 / 44 What do

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The Empirical Landscape of Trade Policy

Chad P. Bown∗ and Meredith A. Crowley†

∗World Bank & CEPR and †Cambridge

May 2015

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 1 / 44

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What do we know about trade policy in the 21st Century?

Three broad themes

  • 1. Heterogeneity in the form and restrictiveness of border barriers across

countries and industrial sectors.

  • 2. History repeats itself

Border restrictions on imports target

the same class of problem (macroeconomic difficulty, adjustment to entry of new countries, etc.) or the same industries.

  • 3. Local preferences over domestic policy sometimes clash with commitments to

free/freer trade.

Substitution of domestic policy measures for border barriers to restrict trade versus the optimal choice of local policies to satisfy local preferences.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 2 / 44

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Outline of our chapter

Document the extensive heterogeneity in ad valorem import tariffs.

Applied MFN rates across countries and products (cross-sectional). WTO tariff binding rates across countries and products(cross-sectional). Inter-temporal variation in applied rates on products. Cross-sectional variation due to Preferential Trade Agreements.

Document the usage of other border barriers.

Specific tariffs. Temporary tariff barriers (antidumping, safeguards, etc). Quotas (quotas, price undertakings, VERs).

Describe the challenges that behind the border (domestic) policies pose to the world trading system.

Case study discussions of policy conflicts (domestic subsidies, consumer policies, supply-side policies).

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 3 / 44

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Empirical Literature using MFN tariffs

Absence of the WTO - i.e., optimal tariffs: Broda, Lim˜ ao and Weinstein (2008) Impact of GATT/WTO accession negotiations or multilateral rounds: Bagwell and Staiger (2011), Ludema and Mayda (2013) Impact of preceding preferential liberalization: Lim˜ ao (2006, 2007), Karacaovali and Lim˜ ao (2008), Estevaderordal, Freund and Ornelas (2008) Impact of real exchange rates, business cycles, and other aggregate-level shocks: Irwin (2012), for the Great Recession, see Kee, Neagu and Nicita (2013), Rose (2013), Gawande, Hoekman and Cui (2015), and Foletti, Fugazza, Nicita and Olarreaga (2011) “Exogenous” unilateral liberalization (India): Topalova and Khandelwal (2010), Bown and Tovar (2011) Aggregation and trade restrictiveness: Anderson and Neary (1992, 1994, 1996), Kee, Nicita and Olarreaga (2008, 2009), Feenstra (1995) Applied MFN rates, binding rates, and water: Beshkar, Bond and Rho (forthcoming), Nicita, Olarreaga, and Silva (2014), Handley (2014) Quantification: Ossa (2014)

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 4 / 44

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Fig 1: Geographic Coverage of the Empirical Exercise

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 5 / 44

The sample consists of: 31 countries: The G20 economies and developing countries with populations > 40 million In 2013 these economies comprise: 83% of the world’s population, 91% of world GDP, 80% of world imports, and 79% of world exports.

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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 6 / 44

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Table 1a: MFN Ad Valorem Import Tariffs, 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 7 / 44

Country/territory MFN applied rate, simple aver- age WTO bind- ing rate, simple aver- age Bind- ing cover- age Cover- age

  • f

applied duties > 15% Cover- age

  • f

binding rates > 15% Max- imum MFN applied rate Coef- ficient

  • f vari-

ation (ap- plied) (1) (2) (3) (4) (5) (6) (7) G20 High-income Australia 2.7 10.0 97.0 0.1 13.4 140.0 151 Canada 4.2 6.8 99.7 6.8 7.3 484.0 470 European Union 5.5 5.2 100.0 5.1 4.8 511.0 172 Japan 4.9 4.7 99.6 3.7 3.7 736.0 400 Saudi Arabia 4.8 11.2 100.0 0.2 1.1 298.0 172 South Korea 13.3 16.6 94.6 10.4 20.5 887.0 402 United States 3.4 3.5 100.0 2.7 2.7 350.0 266

Columns (1), (2), and (6) are ad valorem rates, and columns (3), (4), and (5) are shares of import products. Coefficient of variation in column (7) defined as standard deviation of tariff line duty rates divided by the simple tariff line level average of all duty rates.

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Table 1b: MFN Ad Valorem Import Tariffs, 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 8 / 44

Country/territory MFN applied rate, simple aver- age WTO bind- ing rate, simple aver- age Bind- ing cover- age Cover- age

  • f

applied duties > 15% Cover- age

  • f

binding rates > 15% Max- imum MFN applied rate Coef- ficient

  • f vari-

ation (ap- plied) (1) (2) (3) (4) (5) (6) (7) G20 Emerging Argentina 13.4 31.9 100.0 36.0 97.8 35.0 71 Brazil 13.5 31.4 100.0 36.2 96.4 55.0 73 China 9.9 10.0 100.0 15.6 16.4 65.0 77 India 13.5 48.6 74.4 19.0 71.5 150.0 125 Indonesia 6.9 37.1 96.6 1.7 90.7 150.0 139 Mexico 7.9 36.2 100.0 15.7 98.7 210.0 211 Russia 9.7 7.7 100.0 10.1 2.1 441.0 113 South Africa 7.6 19.0 96.1 20.7 39.6 >1000 207 Turkey 10.8 28.6 50.3 13.6 28.9 225.0 220

Columns (1), (2), and (6) are ad valorem rates, and columns (3), (4), and (5) are shares of import products. Coefficient of variation in column (7) defined as standard deviation of tariff line duty rates divided by the simple tariff line level average of all duty rates.

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Table 1c: MFN Ad Valorem Import Tariffs, 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 9 / 44

Country/territory MFN applied rate WTO bind- ing rate Bind- ing cover- age Cov- erage applied duties > 15% Cov- erage binding rates > 15% Max MFN applied rate Coef- ficient

  • f vari-

ation (1) (2) (3) (4) (5) (6) (7) Devel., other* Bangladesh 13.9 169.2 15.5 41.2 15.1 25.0 67 Burma 5.6 84.1 17.8 5.0 14.6 40.0 120 Colombia 8.8 42.1 100.0 2.1 98.0 98.0 89 DR Congo 11.0 96.2 100.0 28.5 98.9 20.0 54 Egypt 16.8 36.9 99.3 19.2 70.7 >1000 850 Ethiopia† 17.3 ** ** 50.8 ** 35.0 68 Iran† 26.6 ** ** 45.7 ** 400.0 106 Kenya 12.7 95.1 14.8 41.4 14.8 100.0 94 Nigeria 11.7 118.3 19.1 39.0 19.1 35.0 68 Pakistan 13.5 60.0 98.7 36.0 94.9 100.0 83 Philippines 6.3 25.7 67.0 3.2 56.0 65.0 107 Tanzania 12.8 120.0 13.3 41.8 13.3 100.0 94 Thailand 11.4 27.8 75.0 25.5 66.0 226.0 143 Ukraine 4.5 5.8 100.0 2.7 3.8 59.0 114 Vietnam 9.5 11.5 100.0 24.8 27.7 135.0 120

DR of the Congo (2010); Egypt (2012); Ethiopia† (2012); Iran† (2011)

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  • Fig. 2: Avg. Applied MFN Tariffs and Tariff Bindings

by industry and country group in 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 10 / 44

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  • Fig. 3: Applied MFN Tariff Peaks in 2013

by industry and country group

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 11 / 44

Notes: A tariff peak is defined as an HS-06 product with an applied MFN tariff greater than 15 percent.

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Figure 4: Tariff Escalation: Applied MFN Tariffs in 2013

by End Use Categories, Industry and Country Group

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 12 / 44

Notes: End use categories for each HS06 product taken from the BEC, with mixed use goods dropped.

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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors. Inter-temporal variation in border barriers.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 13 / 44

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Table 2a: MFN Ad Valorem Import Tariffs

Selected Economies in 1993, 2003 and 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 14 / 44

GATT WTO Simple average applied membership membership MFN tariff for year year 1993 2003 2013 G20 High-income Australia 1948 1995 8.8 4.2 2.7 Canada 1948 1995 9.0 5.1 3.7 European Union ** 1995 7.0 4.4 4.4 Japan 1955 1995 4.4 3.2 3.0 Saudi Arabia NM 2005 12.1* 6.0 4.6 South Korea 1967 1995 11.7* 11.6 12.2 United States 1948 1995 5.6 3.7 3.5

Notes: *data for that year not available and so chosen as the closest available year. **Different European Union member states became GATT Contracting Parties in different years. Ad valorem equivalent rates of tariffs applied as specific duties are omitted from the calculations.

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Table 2b: MFN Ad Valorem Import Tariffs

Selected Economies in 1993, 2003 and 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 15 / 44

GATT WTO Simple average applied membership membership MFN tariff for year year 1993 2003 2013 G20 Emerging Argentina 1967 1995 11.2 14.2 13.4 Brazil 1948 1995 14.0 13.5 13.5 China NM 2001 39.1 11.4 9.6* India 1948 1995 56.3* 26.5 13.3 Indonesia 1950 1995 17.9 6.9 6.7 Mexico 1986 1995 13.7* 18.0 7.7* Russia NM 2012 7.8 10.7* 8.9 South Africa 1948 1995 16.0 5.6 7.4 Turkey 1951 1995 9.3 10.0 10.8

Notes: *data for that year not available and so chosen as the closest available year. NM indicates GATT or WTO non-member. Ad valorem equivalent rates of tariffs applied as specific duties are omitted from the calculations.

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Table 2c: MFN Ad Valorem Import Tariffs

Selected Economies in 1993, 2003 and 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 16 / 44

GATT WTO Simple average applied membership membership MFN tariff for year year 1993 2003 2013 Developing, other* Bangladesh 1972 1995 82.8* 19.5 14.0 Burma 1948 1995 – 5.5 5.6* Colombia 1981 1995 12.3* 12.3 6.8 DR of the Congo NM 1997 – 12.0 11.0* Egypt 1970 1995 34.6* 26.9 16.8* Ethiopia NM NM 28.9* 18.8* 17.3* Iran NM NM – 27.3 26.6* Kenya 1964 1995 35.2* 15.2* 12.8 Nigeria 1960 1995 34.4* 28.6 11.7 Pakistan 1948 1995 50.8* 17.1 13.5 Philippines 1979 1995 22.9 4.7 6.3 Tanzania 1961 1995 20.3 13.6 12.8 Thailand 1982 1995 45.7 15.4 10.4 Ukraine NM 2008 7.0* 7.0* 4.5 Vietnam NM 2007 14.1* 16.8 9.4

Notes: *data for that year not available and so chosen as the closest available year.

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Figure 5: Annual Changes in Applied MFN Tariffs

1996-2013, by Country Group

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 17 / 44

Notes: The simple average over HS06 products of the annual difference in MFN applied tariffs from the prior year.

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  • Fig. 6: Imp. Products with change in Applied MFN Tariffs

greater than 5 percentage points per annum, 1996-2013, by country group

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 18 / 44

Notes: The share of HS06 products for which the absolute value of the annual difference in MFN applied tariffs from the prior year was larger than 5 percentage

  • points. Outliers are omitted.
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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors. Inter-temporal variation in border barriers. Preferential Trade Agreements.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 19 / 44

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Preferential Trade Agreements

Various forms of preferential trading arrangements in existence Reciprocal Preferential Trade Agreements (PTAs) - free trade agreements, customs unions, and the Enabling Clause Unilateral preferences (GSP, AGOA, EBA, etc.) Other forms of preferential arrangements (plurilaterals, critical mass agreements, etc.)

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 20 / 44

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Preferential Trade Agreements

Stylized facts from WTO (2011) study on PTAs Share of intra-PTA trade in world trade has nearly doubled from 18 percent in 1990 to 35 percent in 2008 (including intra-EU trade raises this: from 28 percent in 1990 to 51 percent in 2008) However, in a study of PTAs involving 85 countries and 90 percent of world trade in 2007, 66 percent of tariff lines with MFN tariff peaks (MFN rates ¿ 15 percent) have not been reduced at all through PTAs Between 49 percent (including intra-EU trade) and 65 percent (excluding intra-EU trade) of world trade takes place between countries that are not part of a common PTA. Excluding (including) intra-EU flows, only 16 percent (30 percent) of global trade is eligible for any preferential tariffs; less than 2 percent (4 percent) of global trade is eligible to receive preferences with margins above 10 percentage points. Excluding (including) intra-EU trade, 84 percent (70 percent) of world merchandise trade still takes place on an MFN basis.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 21 / 44

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Empirical Literature using MFN tariffs

Absence of the WTO - i.e., optimal tariffs: Broda, Lim˜ ao and Weinstein (2008) Impact of GATT/WTO accession negotiations or multilateral rounds: Bagwell and Staiger (2011), Ludema and Mayda (2013) Impact of preceding preferential liberalization: Lim˜ ao (2006, 2007), Karacaovali and Lim˜ ao (2008), Estevaderordal, Freund and Ornelas (2008) Impact of real exchange rates, business cycles, and other aggregate-level shocks: Irwin (2012), for the Great Recession, see Kee, Neagu and Nicita (2013), Rose (2013), Gawande, Hoekman and Cui (2015), and Foletti, Fugazza, Nicita and Olarreaga (2011) “Exogenous” unilateral liberalization (India): Topalova and Khandelwal (2010), Bown and Tovar (2011) Aggregation and trade restrictiveness: Anderson and Neary (1992, 1994, 1996), Kee, Nicita and Olarreaga (2008, 2009), Feenstra (1995) Applied MFN rates, binding rates, and water: Beshkar, Bond and Rho (forthcoming), Nicita, Olarreaga, and Silva (2014), Handley (2014) Quantification: Ossa (2014)

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 22 / 44

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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors. Inter-temporal variation in border barriers. Preferential Trade Agreements.

  • 2. Heterogeneity in the form of border barriers.

Specific duties.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 23 / 44

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Figure 7: Import Products with Specific Duties

in 2013, by country

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 24 / 44

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Figure 8: Import Products with Specific Duties

2013, by industry and country group

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 25 / 44

Notes: Includes all countries, even those with zero MFN tariffs applied as specific duties.

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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors. Inter-temporal variation in border barriers. Preferential Trade Agreements.

  • 2. Heterogeneity in the form of border barriers.

Specific duties. Temporary trade barriers.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 26 / 44

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Table 3a: TTB Import Product Coverage

1995-2013, by country and policy

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 27 / 44

Cumulative coverage by TTB ever in effect during 1995-2013 AD law/ All AD CVD SG CSG initiation TTBs

  • nly
  • nly
  • nly
  • nly

G20 High-income Australia 1906/na 2.5 2.5 0.5 0.0 0.0 Canada 1904/na 3.4 3.4 1.5 0.0 0.0 European Union 1968/1968-69 8.1 6.6 1.4 1.6 0.0 Japan 1920/1982 0.3 0.1 0.1 0.0 0.0 South Korea 1963/1986 1.6 1.4 0.0 0.1 0.0 United States 1916/1922 10.3 9.0 5.1 2.8 0.0 G20 Emerging Argentina 1972/na 4.8 4.6 0.1 0.5 0.0 Brazil 1987/1988 2.8 2.4 0.2 0.3 0.0 China 1997/1997 3.1 2.1 0.2 1.3 0.0 India 1985/1992 8.0 7.6 0.0 0.9 0.3 Indonesia 1995/1996 2.1 1.1 0.0 1.1 0.0 Mexico 1986/1987 22.9 22.8 0.6 0.0 0.0 South Africa 1914/1921 2.1 2.1 0.1 0.0 0.0 Turkey 1989/1989 4.2 2.5 0.0 1.6 0.1 Developing, other Colombia 1990/1991 2.3 1.2 0.0 0.1 1.5 Pakistan 1983/2002 0.4 0.4 0.0 0.0 0.0 Philippines 1994/1994 0.5 0.3 0.0 0.2 0.0 Thailand 1994/1994 0.6 0.6 0.0 0.1 0.0 Notes: Saudia Arabia, Russia, Egypt and Ukraine omitted for poor/unavailable data.

Table 3b

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  • Fig. 9: Import Products Subject to New TTBs, 1990-2013

TTB Investigations and Imposed Import Restrictions for Selected Economies

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 28 / 44

Notes: Share of HS06 import protects subject to TTBs (antidumping, countervailing duties, global safeguards and China-specific transitional safeguards).

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Figure 10: Import Products with an Imposed TTB in Effect

1995-2013, by policy-imposing economy and industry

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 29 / 44

Notes: TTBs include antidumping, countervailing duties, global safeguards and China- specific transitional safeguards.

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Table 4a: Exporters impacted by Temp Trade Barriers

ranked by exports restricted by TTBs in 2013

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 30 / 44

TTB-affected TTB-affected share of 2013 value of 2013 exports to G20 exports to G20 Exporter (percent) Exporter (billions of 2013 dollars) 1. Latvia 17.7 1. China 100.3 2. China 7.1 2. South Korea 14.0 3. Ukraine 5.7 3. United States 12.6 4. Kuwait 5.1 4. Japan 4.4 5. South Korea 3.9 5. India 3.5 6. Argentina 3.8 6. Thailand 3.5 7. Moldova 3.7 7. Indonesia 2.9 8. Indonesia 3.1 8. Russia 2.5 9. India 2.7 9. Mexico 2.5 10. Russia 2.3 10. Germany 2.5 11. Slovenia 2.3 11. Argentina 1.9 12. Thailand 2.3 12. Ukraine 1.7 13. Macedonia 2.1 13. Malaysia 1.6 14.

  • Trin. & Tobago

2.1 14. Vietnam 1.3 15. U.A.E. 1.6 15. Brazil 0.8 16. Oman 1.6 16. Italy 0.8 17. Poland 1.6 17. Canada 0.6 18. Kenya 1.5 18. U.A.E. 0.6 19. Vietnam 1.3 19. France 0.6 20. United States 1.3 20. Singapore 0.5

Table 4b

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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors. Inter-temporal variation in border barriers. Preferential Trade Agreements.

  • 2. Heterogeneity in the form of border barriers.

Specific duties. Temporary trade barriers. Quotas, price undertakings, voluntary export restraints.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 31 / 44

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Table 5: Implementation of EU Antidumping Measures

Form of the Import Restriction (percentage)

Export Origin All G20 High G20 Developing countries income Emerging Tariffs Ad valorem duty 65.0 75.3 68.2 56.5 Specific duty 9.6 9.6 12.0 6.2 Price undertakings Price undertaking 13.2 6.8 6.6 24.9 Price undertaking/Ad val. duty 4.9 2.7 2.5 9.6 Duty if min. price breached 2.2 4.1 2.5 6.2

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 32 / 44

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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors. Inter-temporal variation in border barriers. Preferential Trade Agreements.

  • 2. Heterogeneity in the form of border barriers.

Specific duties. Temporary trade barriers. Quotas, price undertakings, voluntary export restraints.

Theme 2: History repeats itself Adjustment to new competition Macroeconomic stress. Same sector with a different policy tool.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 33 / 44

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Figure 11: Art. XXVIII Actions, by sector, 1950-1959

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 34 / 44

2 4 6 Tariff renegotiations (count)

A N I V E G F O O D M I N F U E L C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

G20 High income countries Developing countries

Notes: Constructed by the authors from the L: reports from 1950-59 in the GATT digital archive.

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Figure 12: Art. XIX and Agreement on Safeguards

share of SG investigations in sector, by decade

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 35 / 44 .2 .4 .6 .8 1 share of SG in sector

A N I V E G F O O D M I N C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

United States

.2 .4 .6 .8 share of SG in sector

A N I V E G F O O D M I N F U E L C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

European Core/European Union

.2 .4 .6 .8 share of SG in sector

A N I V E G F O O D M I N F U E L C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

G20 High Income Countries

.2 .4 .6 .8 share of SG in sector

A N I V E G F O O D M I N F U E L C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

G20 Emerging Countries

1950−1959 1990−1999 2000−2009

Notes: The share is the count of SG investigations by HS06 product and exporter within a sector divided by the count of SG investigations summed over all industrial sectors.

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Figure 13: Article XII (BOP Actions), 1950-1959

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 36 / 44

4 8 12 BOP actions 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 G20 High income countries G20 Emerging economies Developing countries

Source: Constructed by the authors from the L: reports from 1950-59 in the GATT digital archive.

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Figure 14: Art. VII and Agreement on Antidumping

share of antidumping investigations in sector, by decade

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 37 / 44 .2 .4 .6 .8 share of AD in sector

A N I V E G F O O D M I N C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

United States

.2 .4 .6 share of AD in sector

A N I V E G F O O D M I N F U E L C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

EEC/European Union

.2 .4 .6 share of AD in sector

A N I V E G F O O D M I N F U E L C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

G20 High Income Countries

.1 .2 .3 share of AD in sector

A N I V E G F O O D M I N F U E L C H E M P L A S H I D E W O O D T E X T S H O E S T O N M E T A L M A C H T R A N M I S C

G20 Emerging Countries

1970−1979 1990−1999 2000−2009

Notes: The share is the count of AD investigations by HS06 product and exporter within a sector divided by the count of AD investigations summed over all sectors.

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Roadmap of the talk

Theme 1: Heterogeneity

  • 1. Heterogeneity in the restrictiveness of border barriers

Cross-sectional variation across countries and sectors. Inter-temporal variation in border barriers. Preferential Trade Agreements.

  • 2. Heterogeneity in the form of border barriers.

Specific duties. Temporary trade barriers. Quotas, price undertakings, voluntary export restraints.

Theme 2: History repeats itself Adjustment to new competition Macroeconomic stress. Same sector with a different policy tool. Theme 3: Domestic policy preferences sometimes clash with commitments to free/freer trade.

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 38 / 44

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Case study: subsidies and import tariffs for solar panels

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 39 / 44

Market development

1999+: EU consump. subsidies 2012: Chinese have 80% MS in EU 2013: EU import restrictions 2013: Chinese consump. subs. 2015: US imp. restrictions against China

Output of Yingli Solar (MW)

Policy Event Date Description German subsidies 1999-2003 loans to install panels German feed-in tariff 2000, 2004, 2009 consumption subsidy EU AD Petition 24 July 2012 German PV firm filed petition for AD EU AD Ruling 4 Jun. 2013 Provisional AD duty announced

  • Devel. Guideline

15 Jul. 2013 Efficiency regulations announced by the State Council of China NDRC Subsidy 30 Aug. 2013 National Development and Reform Commission

  • f China announced consumption subsidies

EU AD final ruling 2 Dec. 2013 Application of price floor and import tariffs US AD petition 31 Dec. 2013 German PV firm filed petition for AD US AD final ruling

  • Feb. 2015

US AD against Chinese PV

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Case study: consumer labeling for canned tuna

How should the world trading system approach domestic regulations that serve local societal objectives, but have a negative impact on trade? In 2008, Mexico complained to the WTO about a US law that created a private, voluntary label for canned tuna. If various documentary evidence were produced, tuna could be marketed in the US as “dolphin-safe.” The US law prohibited the use of other third-party labeling schemes with weaker dophin protection. Mexico objected that the US law was discriminatory and excessively trade-restricting. The WTO AB concluded that the measure satisfied a legitimate regulatory

  • bjective but lacked “even-handedness.”

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 40 / 44

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Summary

A large empirical literature has used MFN tariffs to study numerous questions, but we still do not know why there is cross-country heterogeneity in trade policy (both in restrictiveness and in form of instrument). The broad patters of changes into new policy tools could be used to help us understand the role of policy in longer term analysis of development, product cycles and changing locations of production. Domestic policy is not simply a substitute for import tariffs as the focus is

  • ften a legitimate social goal, but conflicts seem likely to rise as economies

become more integrated. How should the world trading system address this?

CPB & MAC (WB, CEPR & Cambridge ) The Empirical Landscape of Trade Policy May 2015 41 / 44

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Appendix Table: Industry Classification

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HS02 Acronym Industry Sections ANIM Animal products, live animals 01-05 VEGE Vegetable products 06-15 FOOD Prepared foodstuffs, beverages, tobacco products, etc. 16-24 MINE Mineral products 25-26 FUEL Mineral fuels 27 CHEM Chemicals 28-38 PLAS Plastics and rubber 39-40 HIDE Hides, skins, leather, etc 41-43 WOOD Wood and articles of wood, pulp and paper 44-49 TEXT Textiles, fibres, apparel, etc 50-63 FOOT Footwear, headgear, umbrellas, feathers, etc 64-67 STON Stone, cement, plaster, ceramics, glassware, pearls, etc 68-71 META Base metals and articles of base metal 72-83 MACH Machinery, mechanical appliances, electrical equipment 84-85 TRAN Transportation: vehicles, aircraft, vessels 86-89 MISC Miscellaneous 90-97

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Table 3b: TTB Import Product Coverage

1995-2013, by country and policy

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Annual coverage by TTB Annual coverage by new in effect 1995-2013 TTB investigation 1995-2013 St. St. Mean Dev. Min. Max. Mean Dev. Min. Max. G20 High-income Australia 0.8 0.2 0.4 1.2 0.2 0.1 0.1 0.4 Canada 1.6 0.3 1.2 2.2 0.3 0.3 0.0 1.1 European Union 2.8 0.5 2.1 3.6 0.6 0.5 0.1 2.2 Japan 0.1 0.1 0.0 0.2 0.0 0.0 0.0 0.1 South Korea 0.6 0.2 0.2 0.8 0.1 0.2 0.0 0.6 United States 4.9 1.1 3.3 6.8 0.9 0.8 0.1 3.9 G20 Emerging Argentina 2.2 0.6 1.2 3.2 0.5 0.4 0.0 1.3 Brazil 1.2 0.4 0.4 1.9 0.3 0.2 0.0 0.6 China 1.1 0.7 0.0 2.0 0.2 0.4 0.0 1.8 India 3.4 2.2 0.2 6.6 0.9 0.7 0.1 2.4 Indonesia 0.6 0.6 0.0 1.8 0.2 0.3 0.0 1.2 Mexico 17.5 10.0 1.0 23.7 0.2 0.1 0.0 0.4 South Africa 1.0 0.4 0.3 1.7 0.1 0.1 0.0 0.6 Turkey 2.9 2.0 0.6 5.9 0.4 0.5 0.0 1.8 Developing, other Colombia 0.6 0.5 0.1 1.9 0.2 0.4 0.0 1.8 Pakistan 0.2 0.1 0.0 0.3 0.1 0.1 0.0 0.3 Philippines 0.2 0.1 0.1 0.7 0.1 0.1 0.0 0.4 Thailand 0.3 0.2 0.0 0.7 0.4 0.5 0.0 1.0 Notes: Saudia Arabia, Russia, Egypt and Ukraine omitted for poor/unavailable data.

Table 3a

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Table 4b: Exporters impacted by Temp Trade Barriers

ranked by exports restricted by TTBs in 1995

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TTB-affected TTB-affected share of 1995 value of 1995 exports to G4 exports to G4 Exporter (percent) Exporter (billions of 2013 dollars) 1. South Korea 7.6 1. Japan 7.7 2. Venezuela 6.2 2. South Korea 4.6 3. Ukraine 5.7 3. China 3.3 4. Lithuania 4.4 4. United States 1.8 5. China 2.9 5. Thailand 0.9 6. Thailand 2.8 6. Brazil 0.7 7. Japan 2.6 7. Malaysia 0.6 8. Brazil 2.2 8. Canada 0.6 9. Turkey 1.9 9. Hong Kong 0.5 10. Russia 1.8 10. Germany 0.5 11. Egypt 1.6 11. Russia 0.4 12. Hong Kong 1.5 12. Turkey 0.4 13. Malaysia 1.4 13. Singapore 0.4 14. Saudi Arabia 0.9 14. Netherlands 0.2 15. Poland 0.8 15. United Kingdom 0.2 16. Singapore 0.8 16. Italy 0.2 17. Australia 0.5 17. Venezuela 0.2 18. United States 0.5 18. Poland 0.2 19. Argentina 0.5 19. France 0.2 20. South Africa 0.5 20. Ukraine 0.2

Table 4a