Structural Economic Vulnerability and the Utilization of Unilateral Trade Preferences: Does Development Aid Matter?

This article has investigated the effect of structural economic vulnerability on the utilization of non-reciprocal trade preferences (NRTPs) offered by the 'Quadrilaterals' and whether development aid flows alter this effect. It considers two major blocks of NRTPs, namely the Generalized System of Preferences (GSP) programs and 'other trade preferences programs'. The analysis uses a panel dataset of 84 beneficiary countries of both NRTPs and development aid, over the period of 2002-2019. Results reveal that a rise in the level of structural economic vulnerability reduces the utilization rates of both GSP programs and other trade preference programs. At the same time, when the level of structural economic vulnerability falls, countries tend to use both blocks of NRTPs in a complementarity way. While development aid inflows foster the utilization of the two blocks of NRTPs, the increase of these resource inflows in the context of greater structural economic vulnerability leads beneficiary countries to strengthen the utilization of other trade preferences programs at the expense of the utilization of GSP programs. The implications of these results are discussed in the conclusion section of the article.

Voter and Legislator Responses to Localized Trade Shocks from China in Brazil

This paper examines whether localized trade shocks from China influence Brazilians’ views on integration with the country. We test the following hypotheses: (1) as trade shocks are localized, views on trade should form at the local, rather than at the individual level, and (2) as localized trade shocks affect both workers and companies in a same region, they should also influence legislators’ views on China. Our analyses find support for both claims, but only among losers from Chinese trade. Residents and legislators from localities hurt by import shocks tend to hold negative views about economic ties with China, whereas neither residents nor legislators from localities benefitted by export shocks exhibit more positive views about the country. Our paper contributes to the literature on the politics of trade by incorporating meso-level theories of trade preference formation and by establishing the conditions under which the interests of constituencies should shape legislators’ views on international trade.

Has China’s Belt and Road Initiative Intensified Bilateral Trade Links between China and the Involved Countries?

The Belt and Road Initiative (BRI) is designed to intensify reciprocal trade preferentiality between China and the Belt-Road countries. However, there has been little research empirically examining the policy effects on the trade links between China and the involved countries. This paper attempts to evaluate the BRI effects quantitatively by constructing a new bilateral revealed trade preference index to measure the bilateral trade preferentiality between China and its 114 trading partners. Using a difference in differences model, we show that the trade of China with the Belt-Road countries has become more preferentially linked since the implementation of the BRI. In particular, the bilateral revealed trade preference index between China and the Belt-Road countries has grown approximately 8% faster than has that with the non-Belt-Road countries. We further show that the BRI effects are heterogeneous across different regions. The bilateral trade links have been more significantly intensified in the regions of the China–Indochina Peninsula Economic Corridor, the China–Pakistan Economic Corridor, the China–Central Asia–West Asia Economic Corridor and the Bangladesh–China–India–Myanmar Economic Corridor. The findings strongly indicate that BRI has been acting as a catalyst for intensifying bilateral trade preferentiality between China and the Belt-Road countries.

Transforming Regions of Conflict through Trade Preferential Agreements: Israel, Jordan and the QIZ Initiative

The Qualified Industrial Zone (QIZ) model of border-located, duty and quota-free industrial regions is a policy tool designed to capitalize on cross-border cooperation to facilitate post-conflict normalization. Using mixed methods, this study presents and evaluates the implementation of the 1996 US initiated Israel-Jordan QIZ agreement and its social, economic and political impact, contributing to broader debates regarding the potential and limitations of post-conflict normalization through trade preference agreements. The Israel-Jordan QIZ framework no longer functions due to multiple circumstances. Yet there are lessons to be gained from the mechanisms of the QIZ implementation which contributed to the only minimal realization of its anticipated potential. We found that economic brokerage fostering trade and industry cross-border cooperation can serve one-sided economic interests while minimizing spillover to political or social realms, contrary to original intentions. The QIZ experience demonstrates the importance of self-motivation of each of the parties regarding specific cooperative ventures in realizing the potential of cross-border cooperation.

Protecting Workers Abroad and Industries at Home: Rights-based Conditionality in Trade Preference Programs

A growing number of developed country governments link good governance, including human rights, to developing countries’ access to aid, trade, and investment. We consider whether governments enforce these conditions sincerely, in response to rights violations, or whether such conditions might instead be used as a veil for protectionist policies, motivated by domestic concerns about import competition. We do so via an examination of the world’s most important unilateral trade preference program, the US Generalized System of Preferences (GSP), which includes worker rights as one criterion for program access. We argue that the two-tiered structure of the GSP privileges some domestic interests at one level, while disadvantaging them at the other. Using a new data set on all US GSP beneficiary countries and sanctioning measures from 1986 to 2013, we demonstrate that labor rights outcomes play a role in the maintenance of country-level trade benefits and that import competition does not condition the application of rights-based criteria at this level. At the same, however, the US government does not consider worker rights in the elements (at the country-product level) of the program that have the greatest material impact. The result is a situation in which the US government talks somewhat sincerely at the country level in its rights-based conditionality, but its behavior at the country-product level cheapens this talk.

Community and Trade Preferences

This chapter describes the impact on trade preference of two aspects of a community that, according to the model of preference formation proposed, influence individuals’ information-gathering costs: the concentration of import-competing jobs and residential turnover. Chapters 5 argues that the extent and effectiveness of this incorporation of sociotropic considerations depends greatly on how easily individuals can tap into community concerns. In our post-NAFTA economy, diminished concentrations of import-competing industries and increased community turnover have muddied traditional sources of local information about economic impacts and increased the difficulty of individuals’ determining what is best for their community. Using three decades of survey data, chapter 5 shows the strong impact of high residential turnover and low import-competing employment concentration on increased uncertainty about benefits of trade at the regional level and lower levels of support for trade protection. Analysis of voters’ knowledge of roll call (recorded) vote during the 109th Congress finds that these community factors relate to the political salience of trade policy in communities. The chapter concludes with illustrations from Texas and New York about how politicians in low information districts are able to take stances regarding trade in opposition to the majority of their constituents.

A Prima Facie Evidence on the Impact of Export Diversification on Relative Trade Preferential Margin

This paper assesses the impact of export diversification in developing countries and particularly Least developed countries (LDCs) on the relative preferential margin that they enjoy in accessing preference-granters’ market. The analysis is carried out in a gravity-type model comprising 19 developed countries and 54 beneficiaries of non-reciprocal trade preferences from these developed countries, over the period 2002–2007. The empirical analysis suggests a non-linear relationship between the degree of export diversification in developing countries and the relative preferential margin that they benefit from developed preference-granting countries. However, it appears that the latter encourage LDCs to diversify their export products by providing them with higher trade preference advantages compared to their competitors in their markets.