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1. Enhancing Korea’s Services Trade Statistics: Policy Recommendations

Author:
Jongduk Kim
Publication Date:
05-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study revisits the definition of trade in services, explores the translation of service statistics into the Korean Standard Industry Classification (KSIC), proposes a method to estimate Korea's services trade by mode of service supply under the WTO trade agreement, and seeks ways to collect data on digital trade in services. It classifies the objectives pertaining to the enhancement of Korea's service trade statistics into short-term, medium-term, and long-term agendas.
Topic:
Economics, Trade, WTO, and Service Delivery
Political Geography:
Asia and South Korea

2. The Challenges of Adapting Trade Policies to the Digital Era

Author:
Kyu Yub Lee, Won Seok Choi, Ji Hyun Park, Min Ji Kang, and Unjung Whang
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study provides evidence on barriers to digital trade and the economic effect of digital trade, based on surveys of domestic firms in Korea and data collected from random sampling. After briefly examining the prospects of e-commerce talks at the WTO and characterizing digital trade rules at the FTA level, the study concludes by providing suggestions for major policy tasks and mid- to long-term directions of Korea’s digital trade policy.
Topic:
Digital Economy, Trade Policy, and WTO
Political Geography:
Asia and South Korea

3. The Sino-Lithuanian Crisis: Going beyond the Taiwanese Representative Office Issue

Author:
Konstantinas Andrijauskas
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The year 2021 marked the 30th anniversary of the establishment of diplomatic relations between China and Lithuania. Instead of commemorative events and customary lofty rhetoric, the bilateral relationship rapidly plunged to a level rarely seen in either country’s foreign policies since the end of the Cold War. Sino-Lithuanian relations remain de facto downgraded to the level of chargé d’affaires, Lithuania’s physical embassy in Beijing is empty, while the southernmost Baltic state continues to withstand China’s multidimensional campaign of diplomatic, discursive and, most importantly, economic pressure. The principal cause behind this diplomatic crisis was the opening of the Taiwanese Representative Office in the Lithuanian capital of Vilnius in mid-November 2021. This Briefing will argue, however, that there were other important reasons behind the current state of affairs that had been accumulating over the course of two years. The opening of the Taiwanese Representative Office in the Lithuanian capital of Vilnius in mid-November 2021 triggered an unprecedented diplomatic crisis between the People’s Republic of China and Lithuania. China resorted to massive economic coercion measures to pressure Vilnius, such as the freezing of bilateral trade. European multinational companies also reported that Beijing blocked their exports because of Lithuanian components in their products. In late January 2022, the European Union (EU) launched a case at the World Trade Organization against China over discriminatory trade practices against Lithuania. The current crisis must be understood in the broader context of the degradation of the relations between China and Lithuania, but also the EU, since 2019. As such, this crisis is symptomatic of the developing trend in the relationship between the EU and China.
Topic:
Foreign Policy, Diplomacy, Bilateral Relations, European Union, and WTO
Political Geography:
China, Europe, Taiwan, Asia, and Lithuania

4. Curbing State-Driven Trade Policies: How to Craft New & Effective Approaches to Counter Distortive Practices

Author:
Wendy Cutler
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Asia Society
Abstract:
Much attention has been focused on China’s unfair intellectual property practices and the imbalance in the U.S.-China trade relationship, but equally troubling are large-scale Chinese industrial subsidies, the behavior of state-owned enterprises (SOEs), and in general, the oversized and opaque role of the Chinese state in the economy. While the U.S-China phase one trade deal tackled some important sources of bilateral tension and aimed to boost Chinese purchases of U.S. goods and services, it was silent on industrial subsidies and related matters, leaving them for the next phase of negotiations, the fate of which is now in question. U.S. concerns on these matters are shared by other trading partners including the European Union (EU) and Japan. Yet despite widespread disapproval of such practices, building new global rules to combat subsidies has proven challenging. This is due to several factors, ranging from gridlock at the WTO, differences of views among like-minded countries on the required level of ambition, and uncertainty as to how best to approach the enormous complexities in China’s subsidies and related policies. The Organization for Economic Cooperation and Development (OECD) has sought to unpack this complexity, conducting recent studies of Chinese subsidies in two key sectors: aluminum and semiconductors. Both studies illustrate how Chinese subsidies are not simple cash handouts from the state to protected firms so that they can sell at favorable and distorting prices. The OECD finds subsidies can take various forms, including downstream or upstream help that trickles up or down to the firm that’s intended to benefit. They can take the form of favorable equity or debt purchases or bonds provided at below-market rates. And with interconnected global value chains, subsidies can effectively be granted covertly, intended to benefit one firm that might be several links away along the chain. In China, the problem is compounded by an opaque “party-state” structure that obscures not only the recipients of subsidies, but also the source. According to Mark Wu, a Harvard Law School professor who previously served as the Director for Intellectual Property in the Office of the U.S. Trade Representative, subsidies not only flow directly from government bodies in Beijing, but also indirectly through informal responses to directives — sometimes even left unsaid, but understood — from the Chinese Communist Party. Against this backdrop, the Asia Society Policy Institute (ASPI) convened two roundtables in the fall of 2019 and the spring of 2020 to discuss how best to build a new rules-based infrastructure that might combat such subsidies and prevent trade-distorting results such as unfair competition, market access barriers, and, above all, overcapacity in global markets. Experts from the private sector, think tanks, governments, and academia weighed in with possible solutions, which included: Negotiating new rules in the WTO; Using the WTO dispute settlement system, despite its often-discussed flaws; Forming ad hoc rules-based approaches, where possible, like the U.S-EU-Japan trilateral initiative; Plurilateral negotiations conducted on a sector-by-sector basis; Forming coalitions of like-minded trading partners to establish an alternative model, much in the way that the Trans-Pacific Partnership (TPP) was framed. During the roundtables, most experts agreed that there is no silver bullet that solves the subsidy and related issues on its own. And most agree that, left unaddressed, the problem is likely to deepen. The COVID-19 pandemic might even exacerbate it by leading to more state involvement in economies around the world and making it hard to discipline Beijing’s practices. Recognizing all of these real challenges that the international trade community faces, the roundtables reached the following key conclusions: Transparency on the scope, level, and nature of industrial subsidies is vital; Efforts to publicize the ongoing work in these areas, particularly that being done by the OECD, should accelerate; Turning research into tangible new policies is a key step; and Persuading China to agree to updated rules will be necessary, given that China is a singular contributor to overcapacity.
Topic:
International Trade and Finance, Treaties and Agreements, Trade, Industry, and WTO
Political Geography:
China, Asia, North America, and United States of America

5. WTO accession, trade expansion, and air pollution: Evidence from China’s county-level panel data

Author:
Shuai Chen, Faqin Lin, Xi Yao, and Peng Zhang
Publication Date:
07-2020
Content Type:
Working Paper
Abstract:
This study provides evidence that trade expansion has contributed to the degradation of air pollution in China. On the basis of different responses of counties’ trade to China’s World Trade Organization accession at the end of 2001, we exploit air pollution data from NASA to construct a difference-in-differences predicted trade as an instrument for our identification. We document statistically significant and robust evidence on trade expansion, which accounts for approximately 60% and 20% for the increase of PM2.5 and SO2, respectively, in China. Findings on trade pollution relation are robust to various tests. Deterioration in the environment is mainly driven by scale and trade in polluting sectors.
Topic:
Trade, Pollution, and WTO
Political Geography:
China and Asia

6. Trade in Trouble: How the Asia Pacific Can Step Up and Lead Reforms

Author:
Wendy Cutler, Peter Grey, Kim Jong-Hoon, Mari Pangestu, Yoichi Sozuki, and Tu Xinquan
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
The U.S.-China trade dispute has dominated headlines over the past year, disrupting trade and investment flows and increasing uncertainty at a time when the global economy is already facing headwinds. The conflict has left many countries in the Asia Pacific feeling caught in the crossfire seeking to navigate the tensions without alienating either country. While the World Trade Organization (WTO) would ideally help reduce the frictions, it has not been up to the task. The paralysis at the WTO points to a deeper problem: it’s inability to keep up with the pace of change or address the challenges of new developments in advanced technologies and the digital economy. Simply put, the trade regime is in trouble and in need of reform. At this dynamic and uncertain time in trade, the Asia Society Policy Institute (ASPI) convened a group of leading trade experts and former trade officials from across the Asia Pacific, led by ASPI Vice President Wendy Cutler. In this issue paper, the authors examine the major developments in the international trading system, including the U.S.-China trade dispute, FTA activity in the Asia Pacific, and efforts to reform the WTO. In this challenging environment, the authors find that the Asia Pacific is uniquely well-positioned to lead reforms to get the system back on track. This paper is the latest product of the ASPI initiative, “Building a High Standard and Inclusive Asia-Pacific Trade Architecture.” It builds on the work of two previous reports published in March 2017 and January 2018.
Topic:
Economy, Trade Wars, Trade, and WTO
Political Geography:
China, Asia, North America, and United States of America

7. The Drums of Trade War

Author:
Yu Yongding
Publication Date:
04-2018
Content Type:
Policy Brief
Abstract:
With Chinese President Xi Jinping willing to make some concessions to the US, the world may yet avoid a trade war. But the reason Sino-American relations have soured is the Trump administration's worldview, not external balances. BEIJING – Last month, US President Donald Trump’s administration fired the opening salvo in what is quickly shaping up to become a full-blown trade war. While trade friction has long been an issue in the Sino-American relationship, few expected such an escalation, not least because economists widely view trade wars as damaging to all parties. So how did we get to this point, and can we turn back before it’s too late? ...... According to the USTR report, the problem is that the policy tools the Chinese government is using to achieve the goals of Made in China 2025 “are largely unprecedented, as other WTO members do not use them.” Moreover, they “include a wide array of state intervention and support designed to promote the development of Chinese industry in large part by restricting, taking advantage of, discriminating against, or otherwise creating disadvantages for foreign enterprises and their technologies, products, and services.” Yet the report fails to identify those interventions, which is not surprising, given that the State Council has not yet specified the policy tools it will use. And while America’s grievances regarding IPR issues are understandable, they could be addressed through the WTO. The fact that the Trump administration has taken the approach it has suggests that it does not merely want to ensure that China complies with existing rules; it wants to prevent China from catching up to the US technologically. This is obviously not acceptable to China.
Topic:
International Relations, Trade Wars, and WTO
Political Geography:
China, Asia, North America, and United States of America