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Begin New Search Topic International Trade and Finance Author Chad P. Bown

1. Global value chains and the removal of trade protection

Author:
Chad P. Bown, Aksel Erbahar, and Maurizio Zanardi
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper examines how trade protection is affected by changes in the value-added content of production arising through global value chains (GVCs). Exploiting a new set of World Trade Organization (WTO) rules adopted in 1995 that impose an exogenously timed requirement for countries to reevaluate their previously imposed trade protection, the authors adopt an instrumental variables strategy and identify the causal effect of GVC integration on the likelihood that a trade barrier is removed. Using a newly constructed dataset of protection removal decisions involving 10 countries, 41 trading partners, and 18 industries over 1995–2013, they find that bilateral industry-specific domestic value-added growth in foreign production significantly raises the probability of removing a duty. The results are not limited to imports from China but are only found for the protection decisions of high-income countries. Back-of-the-envelope calculations indicate that rapid GVC growth in the 2000s freed almost a third of the trade flows subject to the most common temporary restrictions (i.e., antidumping) applied by high-income countries in 2006.
Topic:
Economics, International Trade and Finance, Global Markets, Finance, and Trade
Political Geography:
Global Focus

2. The 2018 US-China Trade Conflict after 40 Years of Special Protection

Author:
Chad P. Bown
Publication Date:
04-2019
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In 2018, the United States suddenly increased tariffs on nearly 50 percent of its imports from China. China immediately retaliated with tariffs on more than 70 percent of imports from the United States. This paper assesses what happened in 2018 and attempts to explain why. It first constructs a new measure of special tariff protection to put the sheer scope and coverage of the 2018 actions into historical context. It then uses the lens provided by the 2018 special tariffs to explain the key sources of economic and policy friction between the two countries. This includes whether China’s state-owned enterprises and industrial subsidies, as well as China’s development strategy and system of forcibly acquiring foreign technology, were imposing increasingly large costs on trading partners. Finally, it also examines whether the US strategy to provoke a crisis—which may result in a severely weakened World Trade Organization—was deliberate and out of frustration with the institution itself.
Topic:
Economics, International Trade and Finance, World Trade Organization, Bilateral Relations, Trade Wars, Donald Trump, and Imports
Political Geography:
China, Asia, North America, and United States of America

3. Developing Countries, Dispute Settlement, and the Advisory Centre on WTO Law

Author:
Rachel McCulloch and Chad P. Bown
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Critical appraisals of the current and potential benefits from developing country engagement in the WTO focus mainly on the Doha Round of negotiations. This paper examines a different aspect of developing country participation in the WTO: use of the WTO dispute settlement system to enforce foreign market access rights already negotiated in earlier rounds of multilateral negotiations. We examine data on developing country use from 1995 through 2008 of the WTO Dispute Settlement Understanding (DSU) to enforce foreign market access. The data reveal three notable trends: developing countries' sustained rate of self-enforcement actions despite declining use of the DSU by developed countries, developing countries' increased use of the DSU to self-enforce their access to the markets of developing as well as developed country markets, and the prevalence of disputes targeting highly observable causes of lost foreign market access, such as antidumping, countervailing duties, and safeguards. The paper also examines how introduction of the Advisory Centre on WTO Law (ACWL) into the WTO system in 2001 has affected developing countries' use of the DSU to self-enforce their foreign market access rights. A first pass at the data indicates that developing country use of the ACWL mirrors their use of the DSU more broadly; the ACWL has had little effect in terms of introducing new countries to DSU self-enforcement. A closer look at the data reveals evidence on at least three channels through which the ACWL may be enhancing developing countries' ability to self-enforce foreign market access: increased initiation of sole-complainant cases, more extensive pursuit of the DSU legal process for any given case, and initiation of disputes over smaller values of lost trade.
Topic:
Development, Economics, International Trade and Finance, and Markets

4. U.S. Trade Policy Toward China: Discrimination and its Implications

Author:
Rachel McCulloch and Chad P. Bown
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The bilateral relationship with China has become a major focus of U.S. trade policy. This paper examines recent U.S. policy toward imports from China, highlighting important explicitly and implicitly discriminatory elements. Discriminatory restrictions on U.S. trade with China protect competing domestic industries as well as non-Chinese foreign suppliers with an established presence in the U.S. market. Unlike discriminatory U.S. treatment of Japan in the 1980s, in which "gray-area" measures like voluntary export restraints were prominent, most U.S. actions toward China are fully consistent with current WTO rules, including the special terms of China's 2001 WTO accession. However, as with earlier discriminatory actions directed primarily at Japan, U.S. trade policy toward China is likely to have complex effects on global trade flows and may produce outcomes far different from those intended.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, China, and Asia