‘New Age’ Preferential Trade Agreements and Global Value Chains: A Comparative Sectoral Analysis

The past three decades witnessed a simultaneous proliferation in the number of preferential trade agreements (PTAs) and the network of global value chains (GVCs). The rise in the number of PTAs has been accompanied by inclusion of ‘deeper’ provisions such as services, competition, intellectual property rights (IPR), etc. This study aims to explain the differential impact PTA ‘depth’ on trade in value added as well as the heterogeneous results observed across industries based on their distinctive characteristics. For this purpose, an augmented gravity equation with three-way fixed effects is estimated, using a relatively newer dataset for the time period 2000-2015 for 64 countries. The results conclude that the PTA ‘depth’ determined by nontariff and ‘behind-the-border’ provisions leads to greater participation of member countries in GVCs. Furthermore, it is shown that value added trade for a sector like automotive, which has higher product differentiation, intra-industry trade, IPR and FDI linkages is most impacted by the PTA ‘depth’.

Political–Economic Determinants of External Import Protection under a Preferential Trade Agreement

The stalling of WTO multilateralism and the proliferation of preferential trade agreements in recent decades have drawn substantial attention to the impacts of preferential liberalization. A critical question is how they affect the trade barriers imposed against outsiders. I examine the relationship between preferential trade liberalization and protection against non-member countries by testing the predictions of a political–economy model based on the previous literature. Focusing on a specific model allows me to uncover the mechanisms via which preferential liberalization affects external import protection, whereas most of the existing literature has focused on establishing the sign of the effect only. Furthermore, I focus on not only tariffs, as most studies do, but also on the temporary trade barriers of antidumping and safeguards. I test the predictions for Latin America and obtain results that provide solid evidence supporting two mechanisms from the theory, which lead to lower protection against non-members of a preferential trade agreement. First, a lower preferential import protection level means that the increase in preferential imports from increasing the external tariff creates a smaller increase in tariff revenue. Second, as preferential import protection is cut, there is a decrease in the markup and sales of domestic firms, and thus raising the external import protection generates less profit. Moreover, this second effect is present when the political motivation of the government is sufficiently strong.

The Struggle for Imperial Preferential Trade, 1887-1917, with Particular Reference to New Zealand

<p>The years 1887-1917 were years of continuous efforts to reconcile seeming irreconcilables in the economic sphere of relations between Great Britain and those of her self-governing colonies who were rapidly attaining to nationhood: Canada, the Australian and South African colonies, and New Zealand. Simply stated the problem on the one side was how the Mother Country could satisfy the demands of these colonies for some preference to their exports, when to do so would involve her in a fiscal revolution. She stood firmly, with almost religious fervour by the tenets of free trade, and to advocate any radical change would be a policy of political suicide for any party which adopted it as its platform. At the time she was the leader of the world's commerce, a fact that she attributed to the very free trade policy which the colonies would overthrow. From the colonial point of view, the problem was to meet what appeared to them, a growing threat to their own exports by those foreign powers, mainly Germany and America, who through a policy of protection were keeping British products out of their own markets, and who through subsidies and differential rates were able to undersell the colonies on the Home market. These same foreign powers, in spite of colonial protective tariffs, were able to compete with the small local industries, and in many cases could undersell the the produce of the Mother Country in the colonies. The answer which the colonies seized eagerly upon and fought so long and strenuously for, was an imperial preferential trade. Immediately, however, they were faced with the fact that the portion of the Empire most concerned, namely Britain, refused to change her fiscal system for a policy which she considered unnecessary and inimical to her own interests.</p>

The Struggle for Imperial Preferential Trade, 1887-1917, with Particular Reference to New Zealand

<p>The years 1887-1917 were years of continuous efforts to reconcile seeming irreconcilables in the economic sphere of relations between Great Britain and those of her self-governing colonies who were rapidly attaining to nationhood: Canada, the Australian and South African colonies, and New Zealand. Simply stated the problem on the one side was how the Mother Country could satisfy the demands of these colonies for some preference to their exports, when to do so would involve her in a fiscal revolution. She stood firmly, with almost religious fervour by the tenets of free trade, and to advocate any radical change would be a policy of political suicide for any party which adopted it as its platform. At the time she was the leader of the world's commerce, a fact that she attributed to the very free trade policy which the colonies would overthrow. From the colonial point of view, the problem was to meet what appeared to them, a growing threat to their own exports by those foreign powers, mainly Germany and America, who through a policy of protection were keeping British products out of their own markets, and who through subsidies and differential rates were able to undersell the colonies on the Home market. These same foreign powers, in spite of colonial protective tariffs, were able to compete with the small local industries, and in many cases could undersell the the produce of the Mother Country in the colonies. The answer which the colonies seized eagerly upon and fought so long and strenuously for, was an imperial preferential trade. Immediately, however, they were faced with the fact that the portion of the Empire most concerned, namely Britain, refused to change her fiscal system for a policy which she considered unnecessary and inimical to her own interests.</p>