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Begin New Search Topic International Trade and Finance Content Type Policy Brief Publishing Institution European Centre for International Political Economy (ECIPE) Publication Year within 25 Years Publication Year within 5 Years Publication Year within 10 Years

1. Has Globalisation Really Peaked for Europe?

Author:
Lucian Cernat
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This paper builds on the recent arguments put forward by Richard Baldwin and others debunking the myth that we enter a period of de-globalisation. The paper argues that globalisation is a complex phenomenon that requires detailed, firm-level indicators going beyond simple aggregate metrics. When using such indicators, the picture is much more nuanced and, in the case of Europe, the role of global trade is as important as ever for hundreds of thousands of companies and millions of jobs supported by global trade flows. A strong participation in the “new globalisation” is also key for the future EU competitiveness in technology-driven sectors.
Topic:
Globalization, International Trade and Finance, Science and Technology, European Union, and Trade
Political Geography:
Europe

2. Mirror, Mirror on the Wall, Who Has the Fairest Clauses of Us All? Stress-testing the Application of Mirror Clauses to Pesticides

Author:
Emily Rees
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
In less than six months, ‘mirror clauses’ have taken EU trade policy by storm. To inject ‘reciprocity’ in trading terms, the French Presidency of the Council is proposing that imported food and feed be produced under the exact same sanitary, phytosanitary, welfare and environmental standards as those imposed on domestic products within the European Union. The international trade rulebook is both complex and yet relatively straightforward in ensuring that process and production methods applied to imports respond to legitimate justifications and do not result in a disguised barrier to trade. The European Union may learn from the United States’ playbook to ensure that mirror clauses are negotiated with trading partners bilaterally, rather than imposed on them unilaterally. As part of its Farm to Fork strategy, the European Commission has announced two pesticides reduction targets to be attained by 2030, and it is in this framework that questions relating to plant health and international trade have been gaining traction. With pesticides targets set to raise costs for European farmers and productivity levels likely compromised, there are genuine concerns that domestic products will be competitively undercut by imports produced ‘less sustainably’. To grasp the complexity of mirror clauses applied to the phytosanitary sphere, understanding how the European Food Safety Agency authorises and bans active molecules and bio solutions is vital. Appreciating the daily efforts of national customs agents in checking imports for pesticides residues, and coordinating efforts of Member States on rejected food and feed imports that do not meet EU requirements, is also paramount. There are warranted societal justifications to impose measures to protect humans, animals, plants and ecosystems. To remain legitimate under international law however, mirror clauses should be ‘stress-tested’ to avoid being applied as a means to gain competitiveness. Countries are unequal when it comes to the risk of pests and climate change is already intensifying their distribution with potentially dramatic impact for global food security. When it comes to protecting plant health, regional conditions must be considered to not only avoid inconsistency with WTO rules but also to ensure that mirror clauses do not result in a practical ban on imports from developing countries impacting livelihoods worldwide.
Topic:
Agriculture, International Trade and Finance, Treaties and Agreements, European Union, Mercosur, and Pesticides
Political Geography:
Europe

3. Should the EU Pursue a Strategic Ginseng Policy? Trade Dependency in the Brave New World of Geopolitics

Author:
Oscar Guinea and Vanika Sharma
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Political leaders all over the world are calling for strategic autonomy. The removal of critical trade dependencies has become a guiding principle in most policy proposals, including the EU’s new industrial strategy. In making these decisions, it is important for policymakers to understand the reasons behind why shortages of critical goods and technologies have emerged in the first place. The instruments that new policies cerate should respond to real problems, not invented ones. For instance, if shortages are due to temporary mismatches of supply and demand, most of them will be fixed without the need of any policy intervention. On the other hand, shortages can also be engineered by countries using their dominance in the production of certain goods to coerce other countries. As the EU experienced first-hand after the Russian war on Ukraine in 2022, the concentration of market power in the production of any product carries geopolitical risks. For that purpose, it is crucial to understand the nature of trade dependencies. This policy brief presents indicators and a conceptual framework to measure trade dependency. The framework consists of two indicators: the first measures the share of EU imports from outside the EU over EU production proxied as the sum of imports and exports, while the second indicator considers the market concentration using the Herfindahl-Hirschman index (HHI). It then applies this framework to EU trade with the rest of the world in 2020 and elaborates on the product categories and partner countries behind these dependencies. From a total of more than 9,000 product categories, there were only 233 products that could be classified as dependent within our framework. In terms of values, they represented 1.5% of EU total imports or €50 billion. The major suppliers of these products to the EU were China, United States, Russia, and the United Kingdom. Imports of hydrocarbons from Russia are part of this list of trade dependencies, but so are many other goods which are not of strategic importance. A policy intervention should be tailored to the specific product and the specific export country. Given the small size of the EU imports in which the EU can be considered dependent, it is not advisable to base Europe’s new industrial policy on a general fear of dependency and apply new policies in many sectors. Many of these products are easy to substitute and the economy can function without them. For the select few products where dependency is an economic concern, our paper explores different measures that the EU can put in place to lower trade dependency and how this dependency can be reduced through international trade.
Topic:
International Trade and Finance, Treaties and Agreements, European Union, Geopolitics, and Imports
Political Geography:
Europe

4. The Good, the Bad and the Ugly: Taking Stock of Europe’s New Trade Policy Strategy

Author:
Fredrik Erixon
Publication Date:
04-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This Policy Brief takes stock of the EU Trade Policy Review – the Commission’s proposed strategy for trade. Despite appearances, the Review doesn’t come close to its billing as a strategy for the new geopolitics of trade. In fact, the Review is weak on key geopolitical developments and rather gives the impression that the EU doesn’t have an ambition to shape outcomes. Obviously, the Review is anchored in Europe’s general economic climate: defensiveness on globalization, competition and digitalization. It follows that Europe is getting increasingly detached from world developments. There are several good parts in the Review. The Commission wants to revive and reform the World Trade Organisation, and it’s clear about what factors that have made the Geneva-based trade body dysfunctional. The Review also acknowledges that the EU will seek a closer alliance with the United States and use that for constructive purposes. Finally, it is welcome that the Commission proposes some new instruments for dealing with market distortions caused by foreign subsidies and protectionism in government procurement. All these initiatives can achieve good outcomes. However, they all require that Europe makes changes in its own policies and positions. The bad parts in the Review are Europe’s weak agenda for getting better market access in the growth regions in the world and its continued passivity on matters related to China. Europe’s main trade-policy challenge in the next decade is to ensure that businesses and consumers in Europe get better integrated with a world-market dynamism that predominantly will come from the Asian region. Absent a realistic and medium-term strategy for dealing with challenges connected to the rise of China, Europe will have difficulties getting the EU-China Comprehensive Agreement on Investment approved. Europe needs an actionable agenda for addressing bilateral frictions with China and problems that occur outside bilateral trade. Finally, the ugly part of the trade strategy are all the commercial policies in the EU – with strong effects on trade – that aren’t recognized or only casually mentioned in the Review. The latter category includes the ambition to introduce an autonomous carbon border tax on imports. Such a policy comes at a high political and economic cost, and the measure’s effect on reducing global carbon emissions is at best very negligible.
Topic:
Globalization, International Political Economy, International Trade and Finance, Treaties and Agreements, European Union, Geopolitics, Digital Economy, and Trade
Political Geography:
Europe

5. Global Trade Today is Global Value Chains

Author:
David Henig
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
In the last 25 years global value chains have come to dominate global trade in a way surprisingly little discussed or understood. To meet the policy challenges of today and the future we need to understand the key characteristics of this new global trade and how they came about. The OECD estimate around 70% of total trade takes place in global value chains. Using their definition as where “the different stages of the production process are located across different countries”, and considering both goods and services inputs, this may be an understatement. The example most commonly used is the automotive sector, with 30,000 parts and associated services like satellite navigation going into one car. However there are many others. Modern primary commodity production is optimised by technology developed in other countries, diverse services and goods are frequently combined to create new product offerings, and most international business to consumer transactions are facilitated by leading global platforms. Positively this new globalization has provided consumers with an unprecedented choice of products at affordable prices. More challengingly it has seen governments struggle with the question of how they can best influence modern trade, amid signs of a backlash and simple demands for ‘more domestic manufacturing’. The popular global narrative that feeds such demands is one that has a traditional view of trade as a set of simple primary or manufactured goods transactions. Policymakers must move on from this narrative, making their choices, and explaining them clearly, on the basis of global value chains.
Topic:
International Political Economy, International Trade and Finance, Trade, and Global Value Chains
Political Geography:
Global Focus

6. Work for Others, not Yourself: Globalization, Protectionism and Europe’s Quest for Strategic Autonomy

Author:
Fredrik Erixon
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Protectionism and mercantilism are yet again at the centre of global economic policy. “America First” is the guiding ethos in a good part of US international economic policy. Beijing is taking a larger stake in China’s economy and hand out privileges to domestic firms. Europe is increasingly occupied by achieving “strategic autonomy” and to create European champions at the expense of competition. Old and disreputed economic doctrines are getting a new lease on life. Behind this new orientation in international economic policy stands the old idea that a strong economy is an economy not dependent on others. Human prosperity – our story of rags to riches – tells a very different story. Prosperity is generated when people collaborate and improve our collective intelligence. Open economies are much better at creating wealth because they operate by the principle that people should work for others, not themselves. They specialize – and in the process, they get far more dependent on others. Dependency is a factor of success; economic sovereignty is a sure way of depriving people of opportunity and prosperity.
Topic:
International Political Economy, International Trade and Finance, Global Markets, and Strategic Competition
Political Geography:
United States, China, and Europe

7. Globalization Isn’t in Decline: It’s Changing

Author:
Erik van der Marel
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
Globalization isn’t in decline; it is simply changing. Although the COVID-19 crisis has seen a dramatic decline in goods trade, investments and the movement of people, a new type of globalization is emerging. This “new globalization” is based on digital services, research and development, data, ideas, and other intangibles. This development has been going on for a while and has evolved more rapidly after the previous global financial crisis (GFC) in 2008-9. For instance, the GFC caused digital services trade to significantly “de-link” from goods-related services trade. This pattern illustrates that the COVID-19 crisis will likely mark another break in trade patterns and that future growth in globalization will depend crucially on digital trade and cross-border exchange in intangibles.
Topic:
Globalization, International Political Economy, International Trade and Finance, Digital Economy, R&D, Data, and COVID-19
Political Geography:
Global Focus

8. Ambition on Unstable Foundations: The UK Trade Policy Readiness Assessment 2020

Author:
David Henig
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The UK’s road to an independent trade policy has reached a critical moment. Within the next six months Free Trade Agreements (FTAs) containing long term arrangements and rules could be finalised with the United States and / or European Union, who between them constitute around 65% of UK trade. Talks have also started with Japan, Australia, and New Zealand. Our updated Trade Policy Readiness Assessment suggests that the UK government is not fully ready for this activity. On a scale where 1 suggests no work being undertaken, 3 a stable position to begin talks, and 5 successful delivery, we find problems in seeking consensus, expanding priorities beyond the traditional tariff reduction, and putting in place a realistic implementation plan.
Topic:
International Political Economy, International Trade and Finance, Treaties and Agreements, Free Trade, and Trade
Political Geography:
United Kingdom

9. Discrimination, Exclusion and Environmental Harm: Why EU Lawmakers Need to Ban Freight Transport Restrictions to Save the Single Market

Author:
Matthias Bauer
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU’s Mobility Package 1 legislative proposal was once intended to improve the working conditions of truck and small-van drivers in the EU. Initially, the European Commission also aimed at securing a smooth and non-discriminatory functioning of the Single Market. Some provisions of the current package may indeed have a positive impact on drivers’ working conditions, e.g. limits on working time and obligatory rest periods. However, over the past three years, the legislative procedure towards the current draft of the Mobility Package 1 was hijacked by the protectionist agenda of Western Europe’s haulage and logistics businesses. Spearheaded by the French government, some national governments and Members of the European Parliament called for tighter freight cabotage and return-to-home provisions to shield Western European transport markets against competition from other EU Member States. The proposed restrictions to cross-border trade in the European Single Market are up for a vote in the European Parliament in mid-2020. Learnings from the Covid-19 situation in the Single Market: In its response to Covid-19 border measures, the European Commission called on EU governments “to act immediately to temporarily suspend all types of road access restrictions in place in their territory (weekend bans, night bans, sectoral bans, etc.) for road freight transport and for the necessary free movement of transport workers.” These actions are step in the right direction and should continue even once the Covid-19 crisis is over, yet they are the exception not the rule in the EU. The rise of protectionist measures to Member States’ national transport markets vividly demonstrates the need to abolish freight cabotage restrictions in defence of the Single Market. For the sake of a greener, more inclusive and better functioning of the European Single Market, lawmakers need to abandon all existing restrictions on freight cabotage services in the EU27 and vote against new restrictions such as cooling-off periods and return-to-home policies. Maintaining legal restrictions on the freedom to provide transport services in the EU’s Single Market would increase tensions between economically less-developed countries in Central and Eastern Europe and more developed Western European countries – economically, mentally and politically. Discrimination on the basis of EU passport: Cabotage restrictions infringe upon the fundamental values stipulated in the Lisbon Treaty. Furthermore, data on transport flows and employment demonstrate that cabotage regulations disproportionately discriminate against Eastern European companies and citizens. Available data shows that Polish (4,574 enterprises), Romanian (1,864), Lithuanian (519), Hungarian (398), Slovakian (347), and Dutch (309) haulage companies are disproportionately affected by current EU-imposed cabotage restrictions. By contrast, only a very small number of French freight transport companies (an estimated number of 70 enterprises) directly depend on intra-EU cabotage services. In France, only about 800 workers employed in road freight transport services are directly affected by the restrictions. The numbers are substantially higher for other, particularly Central and Eastern European, countries: 20,100 persons in Poland, 9,800 in Romania, 6,300 in Lithuania, 3,400 in the Netherlands, 2,300 in Portugal, 2,200 in Hungary, and 2,100 in Germany. Exclusion from economic opportunity: Freight cabotage restrictions increase the administrative burden for internationally operating haulage companies across the EU. Industry assessments indicate that additional limitations on international freight transport services within Europe’s Single Market would raise the prices of transporting goods in Western Europe. Negative impacts are estimated for employment, wage growth and the process of economic convergence in Central and Eastern Europe. In addition to the EU’s existing freight cabotage restrictions, new limits on cross-border freight transport in the EU – such as EU law-imposed return-to-home trips and EU-mandated cooling-off periods – would deprive many Eastern European households of economic opportunities and impede the process of economic convergence and converging standards of living in the EU. Environmental harm: The return-to-home policies proposed in the latest Mobility Package 1 would require companies to send drivers back to operational centres or the driver’s place of residence. Return-to-home provisions would substantially increase the number of empty trailers on European roads. Accordingly, and adding to the adverse environmental impacts caused by existing freight cabotage restrictions, new EU-imposed return-to-home obligations would deteriorate Member States’ carbon emission footprints. The highest increases would take place in the EU’s major transit countries such as Germany, the Netherlands, Belgium and France. While this is recognised by the European Commission, the majority of the European Parliament’s Transport Committee is still pushing for such policies to be implemented as the EU law. How to save the EU’s fundamental values and the freedoms of the Single Market – lessons from aviation: In 1993, the EU completed the EU’s internal aviation market for passenger cabotage. Guided by the European Commission, EU lawmakers should follow the same rationale for freight cabotage services to render the Single Market more single and less discriminatory. In the process towards a real, more inclusive Single Market, EU lawmakers must abstain from catering Western European companies’ vested commercial interests, which stifle economic opportunity across the EU and stand in opposition to the EU’s fundamental principles for international trade and a competitive and social market economy.
Topic:
International Political Economy, International Trade and Finance, Law, European Union, Global Markets, Legislation, Shipping, and Protectionism
Political Geography:
Europe

10. The Economic Losses from Ending the WTO Moratorium on Electronic Transmissions

Author:
Hosuk Lee-Makiyama and Badri Narayanan Gopalakrishnan
Publication Date:
08-2019
Content Type:
Policy Brief
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
This paper is co-authored with Badri Narayanan, PhD, Associate Professor at University of Washington, Consultant at McKinsey Global Institute, UN ESCWA, FAO, Commonwealth Secretariat and GTAP Research Centre. Since 1998, the WTO Members have applied a moratorium against tariffs on international electronic transmissions (commonly referred to as the WTO ‘E-Commerce’ Moratorium). However, some WTO Members have recently debated whether the moratorium remains in their economic interest, given the potential revenues that might be generated by imposing tariffs on electronic transmissions. The study examines the impact on India, Indonesia, South Africa and China (and the general case for developing countries) and concludes that imposing such tariffs would be fiscally counter-productive. Putting aside any legal questions, a country that opted out of the moratorium may apply tariffs affecting a wide range of cross-border business activities. Our research shows that if countries ceased to uphold the moratorium and levied import duties on digital goods and services, they would suffer negative economic consequences in the form of higher prices and reduced consumption, which would in turn slow GDP growth and shrink tax revenues. Yet our research indicates that the payoff in tariff revenues would ultimately be minimal relative to the scale of economic damage that would result from import duties on electronic transmissions.
Topic:
Globalization, International Political Economy, International Trade and Finance, Digital Economy, Tariffs, Trade, and WTO
Political Geography:
Europe and Global Focus