Trade policy through 2013: Signs of improvement but new policy concerns
Chad P Bown 27 June 2014
Temporary trade barriers have become more than an important bellwether for contemporary protectionism; with persistent tariff levels, they are now a primary obstacle to free trade. The World Bank’s newly updated Temporary Trade Barriers Database suggests that the Great Recession-era increases in import protection may be levelling off. Now policymakers begin to face the daunting task of dismantling all of those temporary barriers they imposed during the early phase of the crisis.
How countries apply their trade policies has been of heightened interest since the early days of the Great Recession (Baldwin and Evenett 2009). While applied import tariffs have proven resilient to change, the temporary trade barriers of antidumping, safeguards, and countervailing duties have become important to understanding the year-to-year churning that arises under modern commercial policy. Here we summarise evidence from the World Bank’s Temporary Trade Barriers Database – that has been newly updated with data through 2013 – for more than 25 major economies.
G20, protectionism, Trade barriers, Great Recession, TTBs
Do falling trade costs benefit all countries equally?
Dennis Novy 11 October 2012
Trade barriers such as transportation costs and tariffs reduce international trade. But when these trade barriers come down, do they increase international trade equally among countries? This column presents evidence from OECD countries that trade costs have a differential impact depending on the trade intensity of the countries involved. When they already trade a lot, country pairs hardly benefit. But bilateral trade grows faster when the initial trade relationship was thin.
When the Great Recession hit in 2008, many countries experienced a collapse of their exports and imports. For example, US exports went down by around 25% between 2008 and 2009, and Japanese exports declined by a staggering 40%. This Great Trade Collapse has attracted a lot of attention (see Baldwin 2009). Leading explanations include a sharp drop in demand and a trade-credit crunch.
Gravity, trade costs, Trade barriers
Supply chains and behind-the-border trade barriers: Implications for developing nations
Michael J Ferrantino 11 February 2012
As tariffs have declined steadily since the 1940s, government interventions to restrict imports have increasingly taken non-tariff forms. This column argues these add many trade costs along the supply chain and, in a world where production is fragmented across countries, they are associated with development traps. Regional initiatives and a focus on logistics measures can help bring supply chains to new parts of the world.
In recent decades, it has become increasingly common to produce goods in a number of geographically dispersed stages linked by international trade. At the same time, there is an increasing interest among policymakers in addressing barriers to trade other than tariffs, known as non-tariff measures (see eg Cernat and Madsden 2011 and Baldwin and Evenett 2009 on this site).
supply chains, Trade barriers, non-tariff measures
Is faster trade more trade? Evidence from EU enlargement
Cecília Hornok 09 July 2011
Trade barriers that delay transactions are like sand in the wheels of a global economy in which firms trade frequently and international production is fragmented. This column presents evidence showing how the elimination of border controls and customs procedures within the EU has contributed to faster trade, lower trade costs, and larger cross-country trade.
Costs of international trade are still large and come in a variety of flavours. Total trade costs for a developed country are around 170% of the traded value (Anderson and Van Wincoop 2004), of which only a minor share are due to trade-policy instruments like tariffs or quotas. The focus of trade economists and policymakers has shifted recently towards the indirect costs of trade, such as those related to the quality of the transport infrastructure or the regulatory and administrative environment.
EU policies International trade
free trade, protectionism, Trade barriers
Tear down this wall: On the persistence of borders in trade
Nikolaus Wolf, Volker Nitsch 09 November 2009
The fall of the Berlin Wall 20 years ago created a number of "natural experiments" that economists have exploited to advance our understanding of fundamental issues. This column reviews the use of German data to examine the surprisingly large impact that international borders have in geographically dampening buying and selling patterns. Its results show that the biggest barriers to trade stem from economic fundamentals rather than technological and political barriers. Infrastructure and tariffs can come done quickly; it takes at least a generation to tear down the wall in our minds.
Twenty years ago, the German economy experienced a massive “integration shock” (Siebert, 1992) that caught most economic agents by surprise. While the reaction to the shock in terms of movements of capital and labour has attracted considerable attention by economists (Akerlof et al 1991, Burda 2006, Hunt 2006 among many others), the nature of the shock itself – a sudden and complete removal of barriers to trade and mobility between East and West – was taken for granted.
Berlin Wall, Trade barriers, Border effect