William Krist's Blog, page 33

From SMEs to Unicorns: What Role for Trade, Standards and New Tech?

The global economy has been shaped by important, disruptive technological changes in recent years. Many of these technologies have been instrumental in our global COVID-19 response and will become the new normal. Some of these technologies have been introduced by small firms, which grew spectacularly to become ‘unicorns’, with very high market value and global reach, setting new technological standards in their sectors. The future competitiveness of the EU economy depends on the interplay between firm size, technological progress and ability to use the opportunities offered by global markets. This paper looks at the role of trade policy in influencing this complex interplay and offers a few tentative conclusions and recommendations.

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To read the full report from the European Centre for International Political Economy, please click here.

Noneconomic Aspects of a US-Taiwan Free Trade Agreement: Insights with a New Tool

Economic considerations for bilateral or regional trade agreements are relatively straightforward, even given the challenge of measuring nontariff barriers. Noneconomic considerations, however, can be notoriously difficult to measure. In the case of US-Taiwan relations, one common factor defines the two countries’ security alliance: China. In this policy brief, we discuss a new metric we recently developed that uses Chinese propaganda as a gauge of noneconomic factors underlying the interest in closer bilateral trade ties between the United States and Taiwan. We find increasingly antagonistic and aggressive rhetoric in Chinese propaganda toward the US-Taiwan alliance at key points in time (such as official visits between the United States and Taiwan) that reflect movement toward closer bilateral ties. These findings, though not unanticipated, indicate a closer security alliance between the United States and Taiwan.

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To read the full report from the Mercatus Center, please click here.

Electoral Violence and Supply Chain Disruptions in Kenya’s Floriculture Industry

Violent conflicts, particularly at election times in Africa, are a common cause of instability and economic disruption. This paper studies how firms react to electoral violence using the case of Kenyan flower exporters during the 2008 post-election violence as an example. The violence induced a large negative supply shock that reduced exports primarily through workers’ absence and had heterogeneous effects: larger firms and those with direct contractual relationships in export markets suffered smaller production and losses of workers. On the demand side, global buyers were not able to shift sourcing to Kenyan exporters located in areas not directly affected by the violence nor to neighboring Ethiopian suppliers. Consistent with difficulties in insuring against supply-chain risk disruptions caused by electoral violence, firms in direct contractual relationships ramp up shipments just before the subsequent 2013 presidential election to mitigate risk.

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

 

Trade And Development Report 2021

At this writing, eighteen months have passed since the Covid-19 outbreak was declared a pandemic by WHO. It has tested the responsiveness of gov- ernments and the resilience of economic systems everywhere; it has changed social behaviour and personal habits in ways previously unthinkable. The dedication of essential workers has shone through dark times, while the scientific community has harnessed the power of collaborative research and public money to develop a vaccine at breakneck speed.

At the same time, the pandemic has exposed just how unprepared countries, including the wealthiest, are for unexpected shocks, a point underscored by a series of extreme weather events this year, and just how deeply divided the global economy has become. Four decades of eroding government services, heightened inequalities, unchecked financialization and impunity for financial and corporate elites have taken their toll.

On the economic front, the dramatic collapse of out- put, as countries locked down to contain the spread of the virus, was so dramatic as to trigger unprecedented responses. Massive Central Bank action in rich coun- tries stabilized financial markets and unparalleled (at least in recent times) government spending cushioned firms and households against the worst of the down- turn. A global recovery began in the second half of 2020, as countries adopted less draconian ways to manage the health risks, and is still unfolding, even as regional and country prospects vary widely amid disparities in fiscal space, new virus variants and uneven vaccination rates.

Global growth is expected to hit 5.3 per cent this year, the fastest in almost half a century, with some coun- tries restoring (or even surpassing) their output level of 2019 by the end of 2021. The global picture beyond 2021, however, remains shrouded in uncertainty.

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To read the full report by UNCTAD, please click here.

From hermit kingdom to miracle on the Han

In 1960, South Korea’s exports were about 1 percent of GDP, and the country’s ability to import depended almost entirely on US aid. After changing its foreign exchange and trade policies in the mid-1960s, Korea saw a surge in exports to more than 10 percent of GDP by the end of the decade. What factors account for the shift in policy that enabled this dramatic export growth to occur? The United States helped initiate the process by withholding financial assistance, pressuring Korea to devalue its currency and reform its foreign exchange regime. Initially, the Korean government resisted taking these steps, but in 1964 it became firmly committed to an export promotion strategy to boost foreign exchange earnings and end its dependence on American aid.

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

For, by, and from the Party: Defining the parameters of Dual Circulation

China’s Dual Circulation Strategy (DCS) does not necessarily mean the country is lurching to autarky. Instead, China is likely to move towards import substitution wherever possible in the pursuit of economic resilience. Such a move will come at a cost, and its ramifications for the global economy, the domestic private sector, and foreign companies in China could prove very far-reaching.

When the phrase “Dual Circulation Strategy” (DCS) entered the lexicon of China’s economic policy in May 2020 following the meeting of the Politburo standing committee, it was not clear what the strategy might entail. Consequently, substantive commentary about the potential impact of DCS on China’s growth or engagement with the outside world has been scarce.

A plethora of more recent policy announcements provide the world a better idea of what the DCS might mean, putting forward some fundamental questions: What is Dual Circulation Strategy? What are its objectives? What are the ramifications of its implementation for China and the rest of the world?

This paper by Hinrich Foundation Research Fellow Stewart Paterson attempts to answer these questions by placing the Chinese Communist Party’s (CCP) economic planning and policymaking process in the context of the country’s overall political and economic structure. The analysis briefly looked at China’s previous policy drives and slogans, and their impact on the direction of development. Finally, it examines the different directions DCS could take, as well as its likely impact on the country’s growth and its economic and political system.

Defining the parameters of Dual Circulation - Stewart Paterson - Hinrich Foundation - September 2021 (1)

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

EU-India trade relations: assessment and perspectives

Following the EU-India summit in May 2021, talks on both an EU-India trade and an investment agreement have resumed. This analysis provides background on where EU India economic relations stand and why it is important to maintain momentum following this breakthrough, despite a somewhat unpromising domestic political environment in India.

This new impetus largely reflects a transformed geopolitical landscape since the last round of EU-India talks were abandoned in 2013. The increased tension between India and China, as well as the EU’s intent to reduce its reliance on Chinese manufacturing have created the conditions for changes in policy by both parties. However, many of the issues that bedeviled the 2007-2013 negotiations remain unresolved. In this analysis, we provide an overview of EU-India trade and investment relations as well as the major topics in these negotiations. The impact of key global initiatives on climate change and WTO reform that will shape the negotiations is also briefly discussed.

Based on this analysis, we discuss three potential ways forward for EU-India trade and investment negotiations: a comprehensive agreement similar to that reached between the EU and Vietnam; a limited investment deal primarily focused on manufacturing; and a reinforced status quo with trade and investment relations growing organically under the existing multilateral umbrella.

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To read the full report from Brugel, please click here.

Testimony before the U.S.-China Economic and Security Review Commission Hearing on “U.S.-China Relations in 2021: Emerging Risks” Panel III: “Assessing Export Controls and Foreign Investment Review”

The Honorable Kevin J. Wolf

Former Assistant Secretary of Commerce for Export Administration (2010-2017) Partner, Akin Gump Strauss Hauer & Feld LLP

September 8, 2021

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Annual Report on the EU’s Anti-Dumping, Anti-Subsidy and Safeguard activities and the Use of Trade Defence Instruments by Third Countries targeting the EU in 2020

This 39th Report gives information on the EU’s anti-dumping, anti-subsidy and safeguard activities, as well as the trade defence activity of third countries against the EU in 2020, in line with the Commission’s reporting obligations.

The European Union is committed to open rules-based trade, supported by the tools to defend European industry against unfair trade practices. The Commission ensures that where industries are harmed because of unfair practices, such as dumped and subsidised imports, they can rely on the EU’s trade defence instruments to provide an effective response.

Ensuring fair trade conditions for European producers also means dealing with trade defence actions taken by third countries against the EU, which reached their highest level in 2020.

While 2020 presented new and unique challenges in global trade, the Commission adapted and responded to these challenges and those posed by existing and new unfair trade practices and continued its enforcement of the EU’s trade defence instruments.

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To read the full report from the European Commission, please click here.

Demand Shocks and Supply Chain Resilience: An Agent Based Modelling Approach and Application to the Potato Supply Chain

The food supply chain has experienced major disruptions from both demand and supply sides during the Covid-19 pandemic. While some consequences such as food waste are directly caused by the disruption due to supply chain inefficiency, others are indirectly caused by a change in consumer’s preferences. As a result, evaluating food supply chain resilience is a difficult task. With an attempt to understand impacts of demand on the food supply chain, we developed an agent-based model based on the case of Idaho’s potato supply chain. Results showed that not only the magnitude but also the timing of the demand shock will have different impacts on various stakeholders of the supply chain. Our contribution to the literature is two-fold. First, the model helps explain why food waste and shortages may occur with dramatic shifts in consumer demand. Second, this paper provides a new angle on evaluating the various mitigation strategies and policy responses to disruptions beyond Covid-19.

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