jean monnet chair rethinking the eu trade policy for ... · trade is not only between producers and...

P. Montalbano - Sapienza Università di Roma

INTERNATIONAL ECONOMIC POLICY AND

DEVELOPMENTAA 2017-2018

DOCENTEPIERLUIGI MONTALBANO

[email protected]

JEAN MONNET CHAIR -

RETHINKING THE EU TRADE

POLICY FOR DEVELOPMENT/

REUTRADE


International Economic Policy and Development

AA 2017-2018 CFU 9

Teacher: Prof. Pierluigi Montalbano email: [email protected]

Website: https://sites.google.com/a/uniroma1.it/pierluigimontalbano-eng/

http://www.coris.uniroma1.it/corso/18930

JEAN MONNET CHAIR - RETHINKING THE EU TRADE POLICY FOR DEVELOPMENT/

REUTRADE

mailto:[email protected]

https://sites.google.com/a/uniroma1.it/pierluigimontalbano-eng/


Aims

Knowledge: to acquire knowledge on international economic policy, with a

focus on trade, economic performance, and living conditions in developing

countries.

Debates: to understand contemporary debates in development (e.g., trade

and poverty, trade and vulnerability, trade and GVCs; aid effectiveness,

etc.), the theoretical underpinnings of the different positions, and their

policy implications.

Tools: to be equipped with the tools necessary to practice as a working

economist, especially as they apply to the problems of low-income countries.

Data: to be able to collect and interpret data on developing countries.

Presentations: to be able to present arguments and information on the topic

in both written and verbal form.


Contents

The course is articulated in three different modules:

The first module (24h) is devoted to the basic notions of the most important

theoretical and technical background about trade policy.

The second module (24h) introduces the students to the EU trade policy for

development, such as: its evolution over time; multilateral negotiations; preferential

vs non preferential agreements; regional and intra-regional development agreements;

the Economic Partnership Agreeements; the Euro-Med free trade area; the European

Neighborhood Policy; the Everything but arms initiative, the EU Policy Coherence

for Development, etc..

The third module (24h) focuses on some selected challenges for the EU Trade and

development agenda, such as the new patterns of vertical integration and global

value chains; firms’ heterogeneity; the global imbalances and the role of emerging

economies; the preference erosion of developing countries; the stalemate of

multilateral and bilateral negotiations; climate change, poverty traps and

vulnerability to trade openness; trade policy and food and nutrition security;

inclusive growth and social innovation, etc..


Handouts

Tools: Lectures; readings; in-class presentations; open discussion.

Reference Books:

• Feenstra R.C., Taylor A.M., International Trade. Third or Fourth Ed., Worth

MacMIllan.

• Yannick Bineau and Pierluigi Montalbano Selected developmental aspects of

international trade and trade policies: a literature review, downloadable

open access from here:

http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149606.pdf

Additional teaching materials: articles, ppt presentations, reports, EC

communications, etc will be distributed to the students during classes.

All the material will be posted as open access on the Sapienza web chair

system of the MSc Program in Economics for Development:

http://www.coris.uniroma1.it/cattedra/17155

http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149606.pdf

http://www.coris.uniroma1.it/cattedra/17155


Master’s Dissertation

To foster additional research on the subject of the EU trade and development

agenda, REUTRADE strongly encourages students to carry out Master’s

dissertations on the topic and will provide mentoring and assistance.

Taking advantage of the existing MoU with FAO at

least one of the Master dissertation each year will be

dedicated to the topic of the relationship between trade

and food and nutrition security.

Taking advantage of the Erasmus+ agreement with the

UK Trade Policy Observatory at University of Sussex

(UK) at least one of the Master dissertation each year

will be dedicated to the topic of the consequences of

Brexit for EU trade policy.

Each of these dissertations will benefit for additional mentoring and co-supervision activities by one

member of FAO and/or UKTPO. This will enhance the quality of the research thanks to the concrete

interaction with scholars actively involved in carrying out policies and related research activities on

these topics.


Facts, changes and

history of globalization


8


The Network of World Trade in Goods, 2007

(major two export partners)

Source: De Benedictis, Nenci, Santoni, Tajoli, Vicarelli, GEJ, 2014


1860: a key date for International Trade

• Signature of the Cobden-Chevalier Treaty by France and UK

• Thanks to the MFN clause the CC Treaty determined a decisive shift toward a

«trade network» (i.e., about 50 PTAs)


The Treaty was announced by Napoleon III in a

letter published by Le Moniteur, on January 5.

1860.Le Moniteur (5 gennaio 1860)

P. Montalbano - Sapienza Università di RomaFonte: De Benedictis L. & Nenci S. (2014) su dati Accominotti & Flandreau (2008) e Phare (2008)


Fonte: De Benedictis L. & Nenci S. (2014) su dati Accominotti & Flandreau (2008) e Phare (2008)


Globalisation waves

Fonte: WB (2002)


The Volume of World Trade, 1850-2010

(in log scale)

Sources: Irwin & O’Rourke, 2011


% change (1850-2010)

Irwin & O’Rourke (2011)


What do we export today?

Source: WTO, 2013

The types of goods traded have changed drastically over the last decades


Figure 1.1 The Changing Face of U.S. Import and Export Industries, 1925–2009

Feenstra and Taylor: International Economics, Second EditionCopyright © 2011 by Worth Publishers

The Changing Face of U.S. Import and Export

IndustriesGoods category:

• foods, feeds, and

beverages;

• Industrial supplies and

materials (raw materials

and basic processed

ggods – steel, textiles,

etc)

• Capital goods (durable

goods, i.e.aircraft, cars,

computers, machinery,

etc)

• Finished consumer goods


World Trade Flows:

players and destinations

Figure 1.2 World Trade in Goods, 2006 ($ billions)


The amount of

trade is illustrated

by the width of the

lines

Main trends:

1. the leading role of Europe in world trade (31%); possible

reasons?

2. the large amount of trade flows at regional level (within

Europe, within the Americas (11%) and between Asian

countries);

3. a relevant trade link between the United States and Europe

(about 37%); why?

4. the important share of world trade coming from Asia; why?

5. the marginal position of Africa (that accounts for only 2.5%

of World trade), and its close relationship with European

countries.


22

Fonte: De Benedictis et al., (GEJ, 2014)

The Global trade network


Barriers to trade

All factors that influence (restrict) the amount of goods

and services shippped across international borders

Main barriers are:

• Tariffs: A tax on a good coming into a country

• Quotas: Physical restriction on the number of goods

coming into a country

• Non-Tariff Barriers: Any methods not covered by a tariff,

most usually (ex: standards on fuel emissions from cars;

documentation required to sell drugs in different countries,

ingredients in products ; etc)• Rules

• Regulations

• Voluntary Export Restraints (VERs)

• Legislation

• Exacting Standards or Specifications


Figure 1.4 Average Worldwide Tariffs, 1860–2000


Average Worldwide Tariffs, 1860–2000


Who are the main players

in international trade? -1


Trade is global…


Production is global: Boeing 787 Dreamline


Trade in intermediates

P. Montalbano - Sapienza Università di RomaBEC – World Trade Network of Trade in Intermediates, 2012


31


iPhone


iPhone: Added Value decomposition


iPhone: global components


35


The Smile curve of the iPhone


The evolution of international trade:

let’s wrap up International trade has grown tremendously in the last 30 years, much

faster than global output

• World merchandise and commercial services trade have increased by

about 7 per cent per year on average

New players have risen to prominence in world trade, most notably large

developing countries and rapidly industrializing Asian economies

The composition of trade has changed (i.e. the product breakdown of

merchandise trade and the relative importance of commercial services

trade)

Countries have become less specialized over time in terms of their exports

and therefore more similar in terms of their export composition.

Trade has tended to become more regionalized since 1990, particularly in

Asia, but intra-regional trade shares in Europe and North America have

remained steady or declined.


Trade is essentially a North-North phenomenon (60-70%)

Countries trade also in similar goods

Trade is not only between producers and final consumers:

• Intra-firm trade (30%), intermediate products (35%), final products

(35%), according to WTO’s estimates

Countries do not trade, firms do. But very few of them do it.

The evolution of international trade:

wrap up -2


*Definitions

The term “developing countries” does not have a precise

definition, but it is a name given to many low and

middle income countries.

Developing Countries

Middle-income (annual per capita Gross National

Product between $ 1.006 and $ 12.275 in 2010) and low

($ 1.005 or less in 2010) countries.

Industrialized Countries

High income countries (except Hong Kong, Israel,

Kuwait, Singapore, and United Arab Emirates): annual

per capita Gross National Product > $12.276 in 2010Source: World Bank


Data: Eurostat Comext and Electoral Commission UK. Figure: Piero

Stanig and Italo Colantone.

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