International trade

Kent Jones, 30 November 2015

WTO members have somehow found it extremely difficult, in the 21st century, to reach a comprehensive multilateral agreement to expand mutual gains from trade. This column argues that success in expanding global trade will depend on major trading countries’ willingness to seek new institutional paths to multilateral agreements, through new negotiating modalities, openness to the expansion of regional agreements to new members, and in establishing reciprocity expectations for members according to their development status.  

Jayant Menon, 29 November 2015

After more than five years, negotiations surrounding the Trans-Pacific Partnership (TPP) have finally been concluded. Yet, there is a lot that needs to be done before the agreement comes into force, and there is no certainty that it will. This column examines what TPP has achieved so far, what it has still not achieved, and the next steps involved, including the likely fate of the agreement itself.

Pablo Fajgelbaum, Amit Khandelwal, 28 November 2015

Recent studies have established a causal link between trade and rising wage inequality. This column suggests there is also a pro-poor bias of trade. In moving from autarky to trade, the relative prices of goods consumed intensively by the poor, such as food, fall more. The gains from opening to trade are estimated at 63% for the 10th percentile of the income distribution and 28% for the 90th percentile. 

Laura Alfaro, Pol Antràs, Davin Chor, Paola Conconi, 14 November 2015

Trade in intermediate inputs now accounts for as much as two-thirds of international trade. Firms must decide which segments of their production processes to own and which to outsource. Using global plant-level data, this column empirically examines firms’ organisational choices along value chains. Decisions to integrate or outsource upstream and downstream functions are found to depend on demand elasticity relative to the substitutability of inputs. These results provide strong evidence that integration decisions are driven by contractual frictions.

Simon J Evenett, Johannes Fritz, 12 November 2015

The value of world trade is falling. This column, which introduces the 18th Global Trade Alert report, shows that the manufactures that account for a large share of the fall are those where G20 nations have imposed the most trade restrictions since 2014. G20 leaders should request that the Chinese G20 Presidency support initiatives to revive global trade and avoid more trade distortions.

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