The trade of intermediates now accounts for a growing share of global trade. In this highly fragmented global production system, any change in tariff rates can generate a higher impact than that of initial direct tariffs. To assess the impact of tariffs on global value chain participation, this study uses value-added trade statistics and cumulative tariff rates for 12 sectors from 168 countries for the years 1990–2015. The visual inspection suggests that initial tariffs result in higher tariff rates (almost 14%) due to a knock-on impact along with supply chains. The main empirical finding is that both faced and imposed tariff rates have significant negative impacts on sectoral global value chain participation. The effect is also persistent in the analysis if we employ cumulative tariff rates. Apart from these policy determinants, sector- and country-level endowments, such as higher relative length, capital intensity, foreign direct investment stock, and human capital appear to be the major drivers for higher total, forward, and backward global value chains participation. Even if our main results are robust, there are also some distinctions in the effects of tariff rates depending on the country- and sector-level heterogeneities. In a policy-related debate, given the cascading impacts of these liberalization initiatives, autonomous, regional, and global liberalization efforts are critical for all sectors to reap the benefits from the global production system.

This article examines imports by Swedish firms and the utilization of the tariff preferences offered by the EU–South Korea Free Trade Agreement. To benefit from tariff preferences, the importer must make a formal request to use the preferences and also document the origin of the imported products (with a certificate of origin provided by the foreign exporter). This may be costly, and some importers choose to pay import tariffs even when tariff preferences are available. Hence, the preferences are not fully utilized. Using a detailed firm–transaction level data set on Swedish imports from South Korea, we analyse the determinants of preference utilization and how firms learn to use preferences. The results show that preference utilization is strongly correlated with potential duty savings, which depend on the preference margin and the size of the import transaction. From a learning perspective, we find that preference utilization is closely related to the number of import transactions undertaken by the firm, suggesting a learning-by-doing mechanism. The length of time the firm has been involved in importing activities plays a smaller role.

The exit of the United Kingdom from the European Union (EU) single market and customs union has adversely affected trade prospects of many developing economies that depended on the UK market for their exports. This paper investigates the impact of Brexit on African countries' exports to the UK. The comparison is based upon trade between the set of African countries which export most to the UK and the EU. It provides a quantitative assessment of the trade effect through the use of descriptive analysis and empirical estimations by employing the difference-in-difference (DID) estimation approach. The descriptive analysis finds that the share of African exports sent to the UK has declined since the Brexit announcement in 2016. The empirical estimations using the DID approach also demonstrate a drop of 20–30% in African countries exports to the UK relative to the EU-27 in this period. These results hold to a battery of robustness checks, including the use of an alternative estimation approach, varying sample size, and the use of alternative counterfactuals. We further show that the trade flows started to drop immediately after the announcement of the Brexit referendum in 2015 but the main drop came after the Brexit referendum results became evident. These findings imply the need for policy intervention and support for African countries to revitalize their trade flows and alleviate the unintended effects of this trade shock.

The global trend towards heightened protection for geographical indications (GIs) has been bolstered by the incorporation of anti-evocation provisions in various bilateral and regional trade agreements, primarily led by the European Union (EU). While these anti-evocation measures have raised GI protection to an unprecedented level, they also place limitations on the freedom of expression and competition for other market players. This article conducts a critical analysis of the necessity of those restrictions by evaluating the justifications for implementing anti-evocation protection. Specifically, the analysis centres on the formal justifications put forth by law enforcement authorities and their direct contribution to enforcement errors and inconsistencies. Furthermore, inherent limitations within these justifications are also identified. Clarifying the rationale for anti-evocation protection and establishing a clearly defined scope of protection, substantiated by sound justifications, could effectively mitigate errors and inconsistencies in law enforcement and minimize any undue impact on the public interest. Countries that have adopted or are considering adopting anti-evocation protection, following the EU's lead, should exercise caution to avoid similar pitfalls.

In the recent years, there has been an upsurge in the number of countries that are mainstreaming gender equality concerns in their trade and investment agreements. These recent developments challenge the long-standing assumption that trade, investment, and gender equality are not related. They also show that gender mainstreaming in trade and investment agreements is here to stay. However, very few countries – mostly developed countries – have led this mainstreaming approach and have made efforts to incentivize other countries to negotiate gender-responsive trade and investment agreements. The majority of developing countries are yet to take their first steps in negotiating such policy instruments with a gender lens, and their hesitation can be grounded in various reasons including fears of protectionism, lack of data, paucity of understanding and expertise, and, more broadly, constraints relating to their negotiation capacity. Moreover, the inclusion of gender-related concerns in the negotiation of such agreements has deepened and widened the negotiation capacity gap between developed and developing countries. In this article, the authors attempt to assess this widening negotiation capacity gap with the help of empirical research, and how this capacity gap can lead to disproportionate and negative repercussions for developing countries more than developed countries.

To avoid penalizing exporters that already paid carbon prices, the EU Carbon Border Adjustment Mechanism credits carbon taxes and Emissions Trading Schemes in third countries. By excluding instruments of traditional regulation (e.g. emission standards) and indirect carbon prices (e.g. fuel excise taxes) from this crediting mechanism, the EU is criticized for discriminating against countries that do not follow its climate model, in breach of international trade and climate law. This article seeks to nuance this criticism by arguing that the calculation of actual emissions (instead of default values) under the EU CBAM allows exporters to reflect compliance with foreign emission standards, and thus respects states' right to pursue emission reductions through traditional regulation. However, amendments of the CBAM Regulation are necessary to recognize the positive and negative impact of indirect carbon prices on decarbonization, and the role of carbon-crediting mechanisms in equalizing carbon costs in a more flexible and equitable way.

This article discusses and contextualizes the very recent advancements in digital trade regulation based on the insights provided by the Trade Agreement Provisions on Electronic-commerce and Data (TAPED) dataset. Within the time frame of January 2020 to November 2023 that we analyze, digital trade negotiations have increased in preferential trade agreements (PTAs) significantly, and there has been a sharp rise in the negotiation of new types of treaties, known as ‘Digital Economy Agreements’. Beyond the critical advances in substantive rulemaking, we observe non-traditional actors stepping into the gap left by the shifting interest of traditional rulemakers to craft rules that best fit their policy priorities. Additionally, we see a broadening of topics beyond conventional digital trade matters, underscored by commitments of limited legal enforceability. The TAPED dataset has been updated to reflect these recent developments, emphasizing the importance of regular reviews to stay current and accurately inform research and policymaking in the area of digital trade regulation.

What do the provisions on the non-discrimination principle (the principles) in digital trade mean under trade agreements, especially in the absence of a clear international consensus on the subject of the principles? To answer this question, this study first identifies the issues related to the application of the principles in digital trade and presents a theoretical framework to explain how the principles can affect digital trade despite such issues. Using various data sources, such as digital trade flows, the inclusion of the principles in digital trade agreements, and digital trade barriers, we empirically test the hypotheses constructed from our theoretical framework. We find that inclusion of the principles in the trade agreements is more likely to increase digital trade flows. Moreover, though digital trade barriers decrease digital trade flows, this negative effect can be mitigated when the principles are more clearly defined in the trade agreements.

Rulemaking in digital trade is proceeding apace. Many preferential trade agreements contain dedicated e-commerce or digital trade chapters and some states have entered into stand-alone digital economy agreements. This article seeks to establish whether, and to what extent, normative change is occurring in digital trade agreements, the nature of any changes, and identify which states are acting as norm entrepreneurs. We employ a new method of legal coding, systematically comparing the nature and prescriptiveness of digital provisions in 12 trade agreements concluded between 2019 and 2023. We find evidence of substantial policy innovation, and identify Singapore as the key norm entrepreneur. A new wave of ‘Singapore-led’ agreements substantially expands the scope of digital trade, to cover areas such as digital identities, e-invoicing and e-payments, the governance of AI, and regulation of new digital technologies. Commitments are typically couched as soft rather than hard law, reflecting the nascent stages of rulemaking. Norm entrepreneurship on the part of Singapore and its allies reflects a desire to position themselves as ‘digital hubs’ in the global economy, spur rulemaking in areas where innovation is ahead of regulation, and promote digital interconnectivity at time of regulatory divergence and geopolitical rivalry.

The inception of the African Continental Free Trade Agreement (AfCFTA) constitutes a major advancement in Africa's economic integration process. Diverging from what appears to be the norm in contemporary trade treaties, the agreement adopts a conditional Most Favoured Nation (MFN) clause hinged on the principle of reciprocity. Without the promise to reciprocate preferential treatment, the beneficiary state does not assume the right to demand MFN treatment. In broader discussions, this feature has been criticized for possessing the tendency to restrict trade. However, examining it in the context of Africa's trade paradigm, this paper argues that the non-automaticity of the AfCFTA's MFN clause is a cardinal feature safeguarding its existence.

The global trading system has reached an inflection point. The future of the liberalized, rules-based global world order is in doubt as countries that have for decades preached and practiced policies, which can loosely be defined as embodying the ‘Washington Consensus’, have started to backtrack. Free and fair trade is no longer the mantra as governments embrace industrial policy, protectionism, national security, risk management, and managed trade. Perhaps the most surprising adherent of the reversal is the US, whose embrace of what has been termed a ‘modern American industrial strategy’ runs counter to traditional American views and norms. While David Ricardo's theory of comparative advantage still holds true, it has certainly fallen out of fashion. Where it leads remains unknown – caveat emptor. This article analyses President Joe Biden's industrial policy and its implications as well as shifts that have occurred as a result of the pandemic, geopolitical competition, and other recent global events.

Bryan Mercurio's brief accurately describes the inflection point of the global trading system as world governments retreat from free and fair trade. Chief among them is the United States, whose recent reversal is sending shockwaves throughout the rules-based economic world order. The United States' conflation of trade policy vis-à-vis China and national security, as well as the use of trade policy to garner political support from voters disenfranchised by the global trading system, have given way to industrial subsidies and protectionist tendencies. This article aims to build upon Mercurio's points and identify the underlying causes and long-term consequences of the current US direction. In addition, this piece differs from Dr Mercurio's assertions on three critical aspects of today's trade landscape. Firstly, industrial policy and economic security measures were first undertaken by China, and the United States and allied nations only followed suit. Secondly, the current US economic policy regarding China is severely constrained by today's political landscape, and the Biden administration's approach is moderate given these confines. Lastly, despite challenges, low-income countries can gain from the diversification movement as production shifts away from China.

The TPP Agreement – now CPTPP (Comprehensive and Progressive Trans Pacific Partnership Agreement) – is, by any measure, a central part of the emerging global trade policy framework. To the author's surprise, it survived the decision of the United States to withdraw after USTR Mike Froman had signed the Agreement in Auckland 2015 on behalf of the US. Today, it incorporates 12 economies including leading G20 economies such as Japan, Mexico, Canada, Australia, and the UK, its most recent entrant. Six other economies, including most importantly, China, the world's second largest economy, are now applying for membership. What began between Singapore and New Zealand – a conscious strategic decision on their part to try to incentivize precisely this process of Asia-Pacific regional integration in 1999 – is now clearly a major part of the global geopolitical chessboard.