William Krist's Blog, page 32

The Trade and Climate Change Nexus : The Urgency and Opportunities for Developing Countries

While trade exacerbates climate change, it is also a central part of the solution because it has the potential to enhance mitigation and adaptation. This timely report explores the different ways in which trade and climate change intersect. Trade contributes to the emissions that cause global warming and is itself also affected by climate change through changing comparative advantages. The report also confronts several myths concerning trade and climate change. The report focuses on the impacts of, and adjustments to, climate change in developing countries and on how future trade opportunities will be affected by both the changing climate and the policy responses to address it. The report discusses how trade can provide the goods and services that drive mitigation and adaptation. It also addresses how climate change creates immense challenges for developing countries, but also new opportunities to promote trade diversification in the transition to a low-carbon world. Suitable trade and environmental policies can offer effective economic incentives to attain both sustainable growth and poverty reduction.
 
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To read the full report from the World Bank Group, please click here.

Toward CPTPP 2.0

into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members’ trade and investment flows after the agreement was signed. It has also sought to explore through business surveys and econometric work how the CPTPP may have impacted those flows. This series has been particularly interested in the impacts of the CPTPP’s perhaps most groundbreaking aspect—its e-commerce chapter—and sought to shed light on an unexplored question: Do e-commerce provisions add value in international trade? The main findings are as follows:

Trade in the CPTPP region has largely paralleled the members’ trade flows with the rest of the world. The main beneficiary appears to be Vietnam—at least in the sense that after it ratified the CPTPP, Vietnam has notably expanded its trade in goods, and its inbound investment has been solid, despite the Covid-19 pandemic. This can be a positive signal to other Southeast Asian countries that are considering CPTPP membership, such as the Philippines, Indonesia, and Thailand. Japan and Singapore have led the region’s trade in digitally deliverable services, also a key sector for potential CPTPP members and services export superstars such as the Philippines, South Korea, and the United Kingdom.


The CPTPP matters for its users: member country firms that export to the CPTPP region find the CPTPP’s market access, services liberalization, and e-commerce provisions beneficial to their businesses. E-commerce provisions are facilitating online sellers: of micro and small online seller-exporters, 73 percent find the provisions of the CPTPP that ensure free data transfer across borders as somewhat or very beneficial, some 66 percent find the CPTPP’s ban on server localization to be beneficial, and 61 percent find the agreement’s liberalizing trade in services to be important. The benefits are even greater for midsize and large firms. Firms also highlight as beneficial the CPTPP’s provisions that commit members to protecting the consumer against unwanted spam and shielding consumers’ privacy.


The CPTPP has garnered interest and formal applications from several non-members seeking to join an agreement that includes high-quality e-commerce provisions with some of their main trading partners. Especially for some of the Southeast Asian countries, accession to the CPTPP could also help kick-start and lock in domestic digital regulatory reforms. As a major development, both China and Taiwan formally applied to the CPTPP in September.


Preliminary econometric evidence shows that trade agreements, such as the CPTPP, that have robust and binding e-commerce chapters in addition to goods and services chapters indeed have value in promoting trade in goods and services, as well as digitally deliverable services, among the member countries. Of course, as the number of comprehensive agreements with e-commerce chapters is still small and these agreements are nascent, further research will be needed in the next two to three years to further dissect the value added of digital trade provisions in trade agreements.


The CPTPP is nascent, and much of its life has been marred by the Covid-19 crisis. At the same time, the agreement could not be timelier, precisely because high-quality e‑commerce provisions help promote small business recovery through e-commerce; surveys time and again show that over the course of the Covid-19 pandemic, firms that sell online have outperformed firms that do not sell online.

CPTPP members certainly appear to agree that the agreement’s e-commerce provisions create new value in their trade relations. In its August 2021 meeting, the CPTPP Commission decided to form a Committee on Electronic Commerce to facilitate continued discussion on the implementation and operation of the e-commerce chapter. The new committee is tasked to “position the CPTPP to play a central role in global rulemaking in this field.” The members agreed to assess the CPTPP’s impacts on themselves.

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To read the full report from the Center for Strategic and International Studies, please click here.

An Uneven Global Rebound Will Challenge Emerging-Market and Developing Economies

As the US economy rebounds amid elevated inflationary pressures and Europe grows at a rapid clip, an uneven global rebound looms. Although emerging-market and developing economies (EMDEs) generally retain good access to global capital markets for now, their relatively slow pace of COVID-19 vaccination will continue to hamper their economic recoveries and strain their public finances—already stretched owing to the fiscal pressures of the pandemic over the past year and a half. Higher interest rates in the rich countries, particularly the United States, could tip EMDEs into liquidity and even solvency crises. The likelihood of crises is higher if advanced-economy central banks move abruptly, surprising markets. Global policymakers should prepare now by enhancing mechanisms for providing liquidity to EMDEs and, in cases of insolvency, for restructuring their sovereign debts. Perhaps even more important, the scope for uneven recovery can be limited if rich countries make an all-out effort to deliver vaccines globally and enhance less prosperous countries’ infrastructures for getting shots into arms.

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To read the full report from the Peterson Institute for International Economics, please click here.

Recovery During a Pandemic: Health Concerns, Supply Disruptions, and Price Pressures

Global recovery continues, but the momentum has weakened and uncertainty has increased

The global economic recovery is continuing, even as the pandemic resurges. The fault lines opened up by COVID-19 are looking more persistent—near-term divergences are expected to leave lasting imprints on medium-term performance. Vaccine access and early policy support are the principal drivers of the gaps. 

The global economy is projected to grow 5.9 percent in 2021 and 4.9 percent in 2022, 0.1 percentage point lower for 2021 than in the July forecast. The downward revision for 2021 reflects a downgrade for advanced economies—in part due to supply disruptions—and for low-income developing countries, largely due to worsening pandemic dynamics. This is partially offset by stronger near-term prospects among some commodity-exporting emerging market and developing economies. Rapid spread of Delta and the threat of new variants have increased uncertainty about how quickly the pandemic can be overcome. Policy choices have become more difficult, with limited room to maneuver. 

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To read the full report from the International Monetary Fund, please click here.

Do Not Blame Trade for the Decline in Manufacturing Jobs

Manufacturing jobs are prized because many people think that economics is about producing goods and because manufacturing companies often provide well-paying jobs for workers without a college degree. Further, large manufacturing plants have been the anchor for many communities by bringing many dollars into the region that are spent locally by their employees.

High pay for manual manufacturing jobs followed the union organizing successes in the 1930s, which was followed by strong economic growth after World War II. The 30 years after World War II were economically strong across all high-income countries—the French called this the “30 glorious years.”

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To read the full report from the Center for Strategic & International Studies, please click here.

Connecting People with International Trade – October 2021

The dynamics of the U.S. economy are continuing to evolve as a result of technological advances and continued globalization. The 70-year political consensus in the United States that open trade and investment policies would provide the most benefit to the country and its people is now frayed. Some have benefitted greatly from these past policies and others have not. At present, there is no publicly-supported consensus on what U.S. trade and investment policy should look like. A new consensus on the elements of U.S. trade and investment policy that will benefit Americans and secure the nation’s future must be built and take into account input from the public and reflect the economic development objectives of our cities and regions.

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To read the full report from Listening for America, please click here.

Digital Sovereignty: Protectionism or Autonomy?

Regulatory regimes around the world are pushing to claim jurisdiction over data. Informed by “data sovereignty,” governments are coming to see data as a commodity like any other – one that needs to be owned, controlled, and protected. Such an approach to regulation can complicate and fragment the global digital economy, in which data freely crosses borders for processing or storage. The spread of digital or data sovereignty as a perceived virtue may radically alter the future digital trends that appear to be unstoppable.

The vigor with which major economies – including Europe, India, China, and beyond – are pursuing data sovereignty policies is concerning, particularly as research on the issue is still emerging. Policymakers are proposing regulations without understanding their inevitable effect – an internet with borders that threatens to reverse trends in growth and equity. A world wherein data cannot cross borders is one where international trade is more difficult, communication is more inconvenient, and opportunities shrink.

This paper by Dr. Deborah Elms of Asian Trade Centre discusses the potential consequences of data sovereignty regulation in Asia and the Pacific. Policies seeking to achieve digital sovereignty are fraught with risks, with small economies and businesses bearing the brunt.

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To read the full report from the Hinrich Foundation, please click here.

Key Issues for Reforming the World Trade Organization

The members of the Global Trade & Innovation Policy Alliance (GTIPA), a network of over 40 think tanks in 26 nations, have come together to articulate a positive vision that trade, globalization, and innovation—if conducted on private enterprise-led, market-based, rules-governed terms—can maximize welfare for the world’s citizens (GTIPA, 2017). The members of the GTIPA believe the World Trade Organization (WTO) can play a critical role as a forum for the establishment of rules that enable global trade to occur in a free, fair, and market-oriented manner in accordance with the foundational principles of national treatment, nondiscrimination, transparency, and reciprocity and serves as a forum for the (ideally) impartial, rules-based, and timely adjudication of trade disputes among member nations. A well-functioning WTO is indispensable to a well-functioning international economy. Unfortunately, the WTO is an increasingly constrained organization: It has failed to deliver any new significant trade-liberalizing agreements since the original Information Technology Agreement (ITA) in 1996, progress on the Doha Round remains interminably stalled, and the Appellate Body (AB) system appears broken. Perhaps most worryingly, some nations, particularly China, have elected to embrace economic and trade strategies and policies that are fundamentally antithetical and inconsonant with their WTO commitments, with the WTO proving powerless to effectively intercede. This monograph—authored by a subset of GTIPA members—explores the leading challenges facing the WTO and offers a number of policy recommendations for how to address them.

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To read the full report from the Global Trade and Innovation Policy Alliance, please click here.

The Economic Impacts of the US-China Trade War

In 2018, the US launched a trade war with China, an abrupt departure from its historical leadership in integrating global markets. By late 2019, the US had tariffed roughly $350 billion of Chinese imports, and China had retaliated on $100 billion US exports. Economists have used a diversity of data and methods to assess the impacts of the trade war on the US, China and other countries. This article reviews what we have learned to date from this work.

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To read the full report from the National Bureau of Economic Research, please click here.

EU Trade Agreements. What Do They Mean for Polish Entrepreneurs?

Foreign trade has always been the driving force behind economic development. After World War II, the founders of the new international order recognised that multilateral economic cooperation between nations would help rebuild economies and improve relations between states. Trade stabilises the international order because countries that cooperate with each other in the economic field are less prone to conflicts and are more open to the partner’s values. Over time, a model has developed based on the increasingly complex specialisations of national economies and related value chains. These numerous ties and collaborations create a kind of a common global market, although not as integrated as the European one. There are many different barriers and protection measures in the global market as well as mechanisms of competition. According to economist Witold Orłowski, despite these disruptions, the growth rate of global trade before the pandemic was much higher than the growth of global GDP.

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To read the full report from the Global Trade and Innovation Policy Alliance, please click here.