This paper introduces a new data set and establishes a set of basic facts and patterns regarding the trade that countries fight about under World Trade Organization (WTO) dispute settlement.
... See More + The paper characterizes the scope of products, as well as the levels of and changes to the trade values, market shares, volumes, and prices for those goods that eventually become subject to WTO litigation. The first result is striking heterogeneity in the level of market access at stake across disputes: for example, 14 percent of cases over disputed import products feature bilateral trade that is less than $1 million per year and another 15 percent feature bilateral trade that is more than $1 billion per year. Nevertheless, some strong patterns emerge from a more detailed examination of the data. Both high- and low-income complainants tend to suffer important losses in foreign market access in the products that ultimately become subject to dispute. Furthermore, although the respondent's imposition of an allegedly WTO-inconsistent policy is associated with reductions, on average, in trade values, volumes, and exporter-received prices, there is some evidence of differences in the size of these changes across the different types of policies under dispute and the potential exporter country litigants. Finally, these different types of policies under dispute can have dissimilar trade effects for the complainant relative to other (non-complainant) exporters of the disputed product and this is likely to affect the litigation allegiance of third countries.
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Policy Research Working Paper WPS6979 JUL 01, 2014
Informal trade supports the livelihood of hundreds of thousands of households in Africa, reaches markets and clients that are underserved by formal channels, and contributes to regional food security.
... See More + Despite numerous benefits, conducting cross-border transactions remains expensive for small traders in Africa. For example, small traders in Malawi and Zambia pay 62 percent more in per unit terms for border costs than large formal traders. While there are systems in place to facilitate cross-border trade such as the current Simplified Trade Regime (STR) that eases certain customs processes, a host of registration and other requirements remain in place and increase small traders' costs to uncompetitive levels. This note presents an overview of key challenges faced by small traders across Africa, and proposes the charter for cross-border traders as a potential solution to address them. Special attention is given to the case of Malawi and Zambia, where the Charter is currently being piloted by the World Bank in collaboration with the respective Governments, Traders' Associations, and border officials as part of the first joint policy action emerging from the Diagnostics Trade Integration Studies (DTIS) carried out in the two countries.
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The political and economic events since January 2011 have contributed to change the context in which Tunisia is shaping its own global integration agenda.
... See More + This changing landscape presents new challenges but also opportunities to advance integration in a rapidly globalizing world trade environment. Tunisia's past integration policies brought important economic benefits to the country. The EU remains the preferred partner for Tunisia and the EU market likely to generate the largest gains from deeper integration. This study attempts to present a sequence of reforms to prioritize in the context of the European Neighborhood Policy, focusing on areas in which legal and regulatory reforms can be achieved with contained costs and, together with institutional reforms, can significantly contribute to improve Tunisia's competitiveness and accelerate growth and job creation. To reach this objective, this study provides: (i) a diagnostic of the legal and regulatory framework and institutional capacity in some of the most relevant areas of interest for Tunisia, namely in services liberalization, competition policy and procurement; (ii) a qualitative assessment of the distance of the Tunisian framework from the EUs and the impact of some of the reforms covered by the Deep and Comprehensive Free Trade Agreement; and (iii) a quantitative assessment of selected key integration options. The report then presents a roadmap of the necessary steps to be taken to fill such gaps, by focusing specifically on: a) key regulatory reforms to remove barriers to trade and investment in services in Tunisia; b) competition policy and reforms options in the context of deeper integration with the EU; and c) an analysis of the current context and perspectives for opening Tunisian Public Procurement to International Markets.
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Two of the most important trade policy developments to take place since the 1980s are the expansion of preferential trade agreements and temporary trade barriers, such as antidumping, safeguards, and countervailing duties.
... See More + Despite the empirical importance of preferential trade agreements and temporary trade barriers and the common feature that each can independently have quite discriminatory elements, relatively little is known about the nature of any relationships between them. This paper surveys the literature on some of the political-economic issues that can arise at the intersection of preferential trade agreements and temporary trade barriers and uses four case studies to illustrate variation in how countries apply the World Trade Organization's global safeguards policy instrument. The four examples include recent policies applied by a variety of types of countries and under different agreements: large and small countries, high-income and emerging economies, and free trade areas and customs unions. The analysis reveals important measurement and identification challenges for research that seeks to find evidence of systematic relationships between the formation of preferential trade agreements, the political-economic implications of their implementation, and the use of subsequent temporary trade barriers.
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Policy Research Working Paper WPS6898 JUN 01, 2014
Bown, Chad P.; Karacaovali, Baybars; Tovar, Patricia
This paper examines how policy governing the liner shipping sector affects maritime transport costs and seaborne trade flows. The paper uses a novel data set and finds that restrictions, particularly on foreign investment, increase maritime transport costs, strongly but unevenly.
... See More + The cost-inflating effect ranges from 24 to 50 percent and trade on some routes may be inhibited altogether. Distance increases maritime transport costs, but also attenuates the cost impact of policy barriers. Overall, policy restrictions may lower trade flows on specific routes by up to 46 percent and therefore deserve greater attention in national reform programs and international trade negotiations.
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Policy Research Working Paper WPS6921 JUN 01, 2014
Many developing countries display remarkably high degrees of urban concentration that are incommensurate with their levels of urbanization. The cost of excessively high levels of urban concentration can be very high in terms of overpopulation, congestion, and productivity growth.
... See More + One strand of the theoretical literature suggests that such high levels of concentration may be the result of restrictive trade policies that trigger forces of agglomeration. Another strand of the literature, however, points out that trade liberalization itself may exacerbate urban concentration by favoring the further growth of those large urban centers that have better access to international markets. The empirical basis for judging this question has been weak so far; in the existing literature, trade policies are poorly measured (or are not measured, as when trade volumes are used spuriously). Here, new disaggregated tariff measures are used to empirically test the hypothesis. A treatment-and-control analysis of pre- versus post-liberalization performance of the cities is also employed in liberalizing and non-liberalizing countries. It is found that (controlling for the largest cities that have ports and, thus, have better access to external markets) liberalizing trade leads to a reduction in urban concentration.
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Policy Research Working Paper WPS6913 JUN 01, 2014
The common external tariff (CET) for Economic Community of West African States (ECOWAS) was adopted at a Heads of State Summit in October 2013 in Dakar.
... See More + This paper assesses the potential impact on Nigeria of implementing the new ECOWAS CET. It uses the World Bank's tariff reform impact simulation tool (TRIST) to simulate three scenarios: (i) keeping in place current import bans and levies which are charged in addition to tariffs, while implementing the CET tariff rate on non-banned products, (ii) removing the import bans and implementing the CET rate on all products, but keeping the additional import levies in place, and (iii) fully implementing the CET on all products and completely removing import bans and levies. The paper suggests that implementing the CET will have significant and largely positive effects on Nigerian consumers and producers. This note is intended to enrich the debate by presenting projections on the likely effects of CET implementation. To the extent possible with the limited available data, it gives a comprehensive overview of the effects to be expected on government revenue, the welfare of consumers, and the performance of Nigerian firms. It also discusses new opportunities for Nigerian firms to benefit from the regional market that are likely to arise if the CET is implemented. The note is organized as follows: section one gives introduction. Section two describes Nigeria's current trade profile with a particular focus on trade with the ECOWAS region. Section three makes use of the World Bank's TRIST to analyze the impact of implementing the CET in Nigeria in terms of changes in the level of protection by industry, government revenue from taxes levied at the border, consumer welfare, and the competitiveness of Nigerian firms. Section four shifts the focus beyond Nigeria's borders to look at the regional market within ECOWAS.
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Working Paper (Numbered Series) 88843 JUN 01, 2014
This policy note is based on the seven chapters of the Caribbean trade report, The New Trade Environment and Shared Prosperity in the Caribbean, prepared by the World Bank for the Caribbean Growth Forum.
... See More + Despite fairly respectable economic growth over the decades and a degree of high trade openness, unemployment rates remain very high in the Caribbean, averaging 10 percent for the region between 2002 and 2009, and poverty reduction has been slow. The purpose of this note is to provide background information on the role of trade in the unemployment and poverty reduction in the Caribbean and, based on recent World Bank analysis, to suggest areas where greater policy attention could promote trade and thus reduce poverty. The report begins with a profile of employment in the Caribbean, and discusses the impact of trade on employment during the global financial crisis. Evidence is reviewed on the role of trade in employment and development over the long term, and whether the poor in the Caribbean benefit from export activities. Then the report presents a discussion how addressing constraints on exports and reducing tariff levels will enhance growth and reduce poverty. The conclusion summarizes the main issues of addressing constraints on exports and promoting broad-based benefits of trade. The report's analysis shows that international trade plays a major role in terms of job creation and poverty reduction in the Caribbean, more so, on average, than in the other developing countries. However, in general, poor Caribbean households have not benefited fully from the employment opportunities created by trade. There is a role for policy in alleviating poverty by helping promote the shared benefits of trade. Considering the variety of issues involved in this area, it will likely require a multi-pronged approach involving the following measures: 1) promoting quality education for all; 2) strengthening links to the value chain among small enterprises; and 3) addressing key impediments to trade performances shows that acting to remove some key trade impediments may also directly help the poor.
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Caribbean countries face a rapidly changing trade environment, which presents both opportunities and challenges for economies highly dependent on external markets.
... See More + The features of the new trade environment include: i) redefinition of relations with their main trading partners, including the United States, where Caribbean exports continue to enjoy preferential access under the Caribbean Basin Initiative, and the European Union, through the recently signed Economic Partnership Agreement; ii) the increasing economic influence of the new growth poles1 (Brazil, Russia, India, Indonesia, China and Korea) ; iii) and the redesign of the CARICOM regional trade agreement in order to implement the Caribbean Single Market Economy (CSME) as well as a number of preferential trade agreements within the region. These changes are likely to change the trading structure of the Caribbean countries and, through this restructuring, to have implications for the welfare of these economies. Understanding these implications is critical in terms of designing appropriate policy response to the trade changes but also in terms of eventually re-shaping trade agreements and policies.
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The Dominican Republic - Central America United States Free Trade Agreement (CAFTA-DR) has been fundamental in creating a stable framework for Costa Ricas trade with the United States.
... See More + On August 5, 2004, the U.S. entered into a free-trade agreement with the Dominican Republic and five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua). Following a national referendum in 2007, with 51.6 percent of voters approving, Costa Rica ratified the treaty, which came into force on January 1, 2009. The agreement consolidated benefits that had previously been unilaterally extended under the Caribbean Basin Initiative (CBI) into a multilateral FTA, providing a much more stable environment for trade relationships, although with limited changes to overall market access relative to the CBI. For Costa Rica, CAFTA-DR is more than a trade agreement. Besides eliminating tariffs and reducing non-tariff barriers between member countries, CAFTA-DR also introduced major changes to the legal framework of member countries, reducing barriers to services, promoting transparency, and ensuring a secure and predictable environment for investors. The most substantial transformation was breaking down government monopolies in the telecommunications and insurance sectors. Legal changes increased the attractiveness of member countries to foreign investors. The agreement provides protection for all forms of investment, including enterprises, debt, concessions, contracts and intellectual property. CAFTA-DR also meets the labor objectives set out by the U.S. Congress and grants workers improved access to procedures that protect their rights. Moreover, CAFTA-DR led to the modernization of key norms and procedures in areas such as government procurement and intellectual property rights.
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This paper proposes methods to incorporate firm heterogeneity in the standard input-output table-based approach to portray the domestic segment of global value chains in a country.
... See More + The analysis uses Chinese firm census data for the manufacturing and service sectors, along with constrained optimization techniques. The conventional input-output table is split into sub-accounts, which are used to estimate direct and indirect domestic value added in exports of different types of firms. The analysis finds that in China, state-owned enterprises and small and medium domestic private enterprises have much higher shares of indirect exports and ratios of value-added exports to gross exports compared with foreign-invested and large domestic private firms. Based on input-output tables for 2007 and 2010, the paper finds increasing value-added export ratios for all firm types, particularly for state-owned enterprises. It also finds that state-owned enterprises are consistently more upstream while small and medium domestic private enterprises are consistently more downstream within industries. These findings suggest that state-owned enterprises still play an important role in shaping China's exports.
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Policy Research Working Paper WPS6960 JUN 01, 2014
The rapid economic rise of China over the last twenty years has sustained high global demand and prices for primary commodities such as oil and minerals, greatly benefitting Sub-Saharan (SSA) African countries.
... See More + China now represents more than 20 percent of SSA's trade, up from just 2.3 percent in 1985. West Africa's share in China's trade is still quite low, 0.6 percent in 2012, but it is rising rapidly. Exports to China - oil, iron, phosphates, gold, cotton, cocoa and cashew nuts, have grown fast. However, they have not grown as rapidly as imports, resulting in a large trade deficit with China (13 percent of West Africa's GDP over 2009-2012). Reasons include a strong consumption demand for inexpensive Chinese products as well as the import-content requirements in development assistance agreements. Looking at the impact of China on West Africa, it appears that West African producers do not compete with China on third markets; by and large their products are complementary. However, West African producers are finding difficult to compete with China in their own domestic as well as in regional markets. The paper's main messages are as follows: Chinese demand for primary commodities is likely to continue in the near future, potentially benefitting West Africa. To maximize these benefits, West African countries need to maintain macroeconomic stability and to design appropriate policies to manage the volatility of commodity prices while raising the competitiveness of the economy. The current stagnation of the agricultural and manufacturing sectors in many West African countries is a sign of Dutch disease effects that should not be underestimated and need to be readdressed; and while the specific reforms needed vary from country to country, they should be comprehensive enough to generate a shift in the policy stance aimed at increasing productivity and encouraging diversification in the tradable sector. Examples of such reforms include the removal of trade restrictions among West African countries, the dismantling of formal and informal trade barriers to regional processing activities and the improvement of trade logistics.
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Working Paper (Numbered Series) 88349 MAY 23, 2014
Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) daily economics and financial market commentary newsletter are as follows: financial markets; high-income economies; and developing economies in East Asia and Pacific.
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Turkish exporters substantially broadened market reach, exporting to 137 countries at present, up from 90 in 2000. Turkey's global market share rose substantially from 0.55 percent of global imports in 2002 to 0.82 percent in 2012.
... See More + Turkey aims to become one of the ten largest economies in the world by 2023, with per-capita gross domestic product (GDP) rising to United States (U.S.) $25,000 and exports to U.S. 500 billion dollars. This report focuses on Turkey's competitiveness from the supply side, but it is important to note that ensuring a more balanced mix of financing for the required investment through measures to boost domestic savings is equally important if Turkey's progress is to be sustained. Achieving Turkey's export target is possible and it will likely require a larger global market share. The relatively low level of foreign direct investment (FDI) in Turkish manufacturing has been a constraint to export growth and quality improvements. Raising export growth to levels that help meet Turkey's development goals will require a policy agenda that targets sustained further improvements in Turkey's physical, human, and institutional capital. This report prioritizes broader policies that are fundamental for Turkey to export its way out of middle-income. Chief among these are policies that: (i) link the country further with international markets, including by helping bring larger inflows of FDI, particularly into the manufacturing sector; (ii) promote innovation, including by encouraging a large role for private companies in research and development (R and D); (iii) upgrade the skills both of the existing work force and new entrants; and (iv) improve access to finance, particularly long-term, with a view to unlock the potential of the dynamic small and medium enterprise (SME) sector.
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This is a statement by Mr. Xiaozhun Yi, Deputy Director-General of the World Trade Organization (WTO) at the eighty-ninth meeting of the Development Committee held on April 12, 2014.
... See More + The WTO forecasts world merchandise trade to grow by some 4.7 percent in 2014, developing (including emerging) economies' trade flows still outpacing that of developing countries'. With their imports growing faster than their exports since the financial crisis, developing countries pull the developed countries' recovery, and contribute to reduce global imbalances.
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The diagnostic trade integration study (DTIS) update identifies the trade related constraints holding back Malawi from diversifying and deepening its production base, and increasing trade.
... See More + The DTIS update identifies and quantifies specific trade costs that determine the availability and price of inputs and the ability of producers to get their products to regional and international markets. The report focuses on tariff policies, regulatory issues impacting on trade, trade facilitation and logistics, and policies affecting agricultural trade and trade in services. Recognizing that the (enhanced) integrated framework and the DTIS (including the 2003 DTIS for Malawi) have not been effective in addressing many of the broader issues requiring large-scale physical investments in most countries, this DTIS update focuses on specific trade related policy and regulatory issues within the mandate and policy space of the ministry of trade and the national implementation unit or similar implementation mechanisms. In this context, the report is structured as follows: chapter one gives introduction. Chapter two outlines the current macroeconomic position and the level of trade openness, summarizes the status of the business enabling environment. Chapter three describes Malawi's current trade policy with a detailed review of the existing tariff schedules. Chapter four addresses a range of the key regulatory issues that raise costs for all producers in Malawi. Chapter five looks in depth at how the trade and regulatory policies within the agricultural sector impact on competitiveness. Finally, chapter six addresses the important issues of trade in services through focusing on professional services such as engineering, accounting, and law.
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Some of the headings included in this issue of the Development Economics Prospects Group (DECPG) daily economics and financial market commentary newsletter are as follows: financial markets; high-income economies; and developing economies in East Asia and Pacific, Latin America and the Caribbean, and South Asia.
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The combination of an increasing trade imbalance, concerns about deindustrialization after several years of booming commodity prices, and rising imports of intermediate inputs and capital goods over the last decade has triggered new restrictive trade measures that have been gaining ground in Indonesia.
... See More + The Indonesian government is concerned about the impacts that an increased reliance on imported inputs may have on domestic jobs and value added. In addition to use of imported intermediates by firms involved in global production networks, firms use these intermediates for various reasons, including value, variety, and quality. Drawing on the findings of recent research, this note examines the characteristics of firms that rely on imported intermediates, and the role of these foreign intermediates on product quality upgrading and product diversification in Indonesia during 1998-2009. After a careful examination of sector, and firm-level data from Indonesian manufacturing, analysis uncovered three important findings: first, that users of imported inputs in Indonesia are exceptional performers. These firms grow faster in terms of output, value added and employment; they are more productive; and they pay higher wages. Second, both the use and the availability of imported inputs have contributed to improved product quality in Indonesian manufacturing. Third, firms' product diversification processes have been boosted by lower tariffs on inputs and by increased usage of imported versions. In light of these results, this note argues that facilitating imports of intermediate inputs is crucial to the performance of the most dynamic firms and that these intermediate imports diversify the Indonesian manufacturing sector while helping firms climb up the value chain.
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Real growth in global trade has decelerated significantly since its sharp recovery in 2010. Year-on-year growth in global real trade1 decelerated from 13.3 percent at the end of the first quarter of 2010, to 9.9, 3.1, and 0.5 percent at the end of the first quarters of 2011, 2012, and 2013, respectively, while picking back up to 3.9 percent in the year leading up to the fourth quarter of 2013.
... See More + This aggregate deceleration in global trade includes absolute declines in real trade for many product categories and regions. In the wake of the great trade collapse of 2008-9, understanding of the behavior of trade in slowdowns has improved. Among the many explanations offered for the great trade collapse, including explanations related to uncertainty, trade financing, and new protectionist measures by governments, there has been a significant focus on whether the emergence of global value chains (GVCs) in international trade, and their behavior, are a contributing factor in trade slowdowns.
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This paper aims at assessing the impact of migration on export performance and more particularly the effect of African migrants on African trade.
... See More + Relying on a new data set on international bilateral migration recently released by the World Bank spanning from 1980 to 2010, the authors estimate a gravity model that deals satisfactorily with endogeneity. The results first indicate that the pro-trade effect of migration is higher for African countries, a finding that can be partly explained by the substitution between migrants and institutions (the existence of migrant networks compensating for weak contract enforcement, for instance). This positive association is particularly important for the exports of differentiated products, suggesting that migrants also play an important role in reducing information costs. Moreover, focusing on intra-African trade, the pro-trade effect of African migrants is larger when migrants are established in a more geographically and ethnically distant country. All these findings highlight the ability of African migrants to help overcome some of the main barriers to African trade: the weakness of institutions, information costs, cultural differences, and lack of trust.
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Policy Research Working Paper WPS6739 JAN 01, 2014
Ehrhart, Helene; Le Goff, Maelan; Rocher?, Emmanuel; Singh, Raju Jan