Abstract
Based on a dataset of over 11,000 government announcements and measures implemented, it is shown that trade distortions faced by exporters from G-20 nations have grown markedly since November 2008. In terms of trade coverage, the largest trade distortions are export incentives. Research findings concerning the impact of these export incentives estimated using modern versions of the Ricardian model are discussed.
Note: This chapter is based on a transcription of the presentation given at the Conference “Celebrating 200 Years of Ricardian Trade Theory” on May 12, 2017, at the University of Basel, Switzerland. It also incorporates information from Chap. 4 of the latest (July 2017) report of the Global Trade Alert (Evenett & Fritz, 2017).
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Notes
- 1.
This data can be downloaded at http://www.globaltradealert.org/data_extraction
- 2.
This WTO database can be accessed at http://tmdb.wto.org/SearchMeasures.aspx?lang=en-US
- 3.
Some examples may be helpful. In the case of an import restriction being imposed by country A in product B, we use trade data to identify which foreign trading partners exported more than $1 million dollars of product B to country A in the year before the import restriction was implemented. In the case of an export subsidy offered by country C in product D, then we used trade data to identify the foreign trading partners (E,F,G….) where C exports more than $1 million of product D in the year before the subsidy was offered. Call those foreign trading partners’ markets the destination markets. Then we further consult trade data to see which other nations export (X,Y,Z etc.) more than $1 million of product D to those destination markets. We then identify nations X, Y, and Z as the trading partners affected by the export subsidy implemented by country C.
- 4.
Specifically, we changed from using four-digit to six-digit classification of products, according to the United Nations Harmonized System.
- 5.
Trade defence measures (antidumping and anti-subsidy duties) are even lower down the list. Despite the considerable attention given to these measures in the media and in the academic literature, they are simply not where the trade policy action is.
- 6.
China’s considerable contribution to the expansion in exports competing against subsidised rivals is documented and discussed in Evenett, Fritz, and Yang (2012).
- 7.
Had we kept working at the more aggregate four-digit product classification this percentage would be closer to 90%.
- 8.
See the data in row L, relating to non-export related subsidies, in Table 16.2.
- 9.
To be clear, the many bailouts of financial institutions during the crisis era do not count towards this estimate. Effectively, only subsidies to farmers and manufacturers will affect trade in goods and so the estimates presented here.
- 10.
Care is needed here. The general equilibrium effects of various trade distortions still need further work.
References
Eaton, J., & Kortum, S. (2002). Technology, geography, and trade. Econometrica, 70(5), 1741–1779.
Evenett, S. J., & Fritz, J. (2015, June 16). Throwing sand in the wheels: How foreign trade distortions slowed LDC export-led growth. London: CEPR.
Evenett, S. J., & Fritz, J. (2016). Europe fettered: The impact of crisis-era trade distortions on exports from the European Union. Prepared for the Sweden’s National Board of Trade.
Evenett, S. J., & Fritz, J. (2017). Will awe Trump rules? The 21st report of the global trade alert. London: CEPR Press.
Evenett, S. J., Fritz, J., & Jing, Y. C. (2012). Beyond dollar exchange-rate targeting: China’s crisis-era export management regime. Oxford Review of Economic Policy, 28(2), 284–300.
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Evenett, S. (2017). What Next for Ricardo? Incorporating More Trade Distortions. In: Jones, R., Weder, R. (eds) 200 Years of Ricardian Trade Theory. Springer, Cham. https://doi.org/10.1007/978-3-319-60606-4_16
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DOI: https://doi.org/10.1007/978-3-319-60606-4_16
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