Agreement Globalization

April 8, 2021

The Peterson Institute for International Economics (PIIE) think tank notes that globalization stopped after World War I and that nations moved towards protectionism when they introduced import taxes to strengthen post-conflict surveillance of their industries. This trend continued with the Great Depression and World War II until the United States played a decisive role in reviving international trade. We are also in the process of analysing whether the impact of substantive trade agreements on the integration of GVC is heterogeneous across all sectors. In particular, we appreciate a number of sectoral regressions, including a notion of the interaction between the depth of an agreement and the value-added share of a sector in total production. The results indicate that deep trade agreements are particularly important for the integration of GVC into high-value-added industries (Figure 2). Unsurprisingly, these sectors are generally service sectors characterized by non-tangible activities such as research and development or high value-added retail services. With the proliferation of trade agreements leading to the emergence of competing trading blocs, companies are striving to securely access foreign markets and in turn achieve a higher level of economic security and competitiveness. Based on value-added trade data, we find that deep-sea EDPs increase the domestic share of export value added, particularly through global value chains. Chart 1 shows that adding a provision to an EPA increases the domestic value added of exports of intermediate goods and services (i.e. pre-GVC links) by 0.48%, while an additional provision in an EPA increases the foreign value added of intermediate goods and services exports (reverse GVC links) by 0.38%. We also find evidence that deep trade agreements improve the links forward, particularly for more complex GSPs, i.e. MMOs, for which intermediate products exported have twice or more cross-borders.

We do not find a significant impact of deep trade agreements on the domestic and foreign value added of exports of goods and services. We make separate estimates for services and goods to show that the impact of deep trade agreements on value-added trade in services is generally greater than value-added trade in goods. One of the obvious results of globalization is that an economic slowdown in a country can produce a domino effect through its trading partners. For example, the 2008 financial crisis had a serious impact on Portugal, Ireland, Greece and Spain. All these countries were members of the European Union who had to intervene to save indebted nations, later known by the acronym PIGS. Figure 1 The effects of deeper trade agreements on WTO integration more fall within the current WTO mandate (for example. (B) and are already subject to some sort of obligation in WTO agreements. On the contrary, the “extra” WTO provisions relate to political commitments outside the current WTO mandate (for example. B investment, competition).

It is estimated that additional WTO provisions are particularly important for CPC-related trade between the countries of the North and the South. On the other hand, the provisions of the WTO more remain relevant for trade between developing countries (South-South Agreement). Since 1992, important agreements such as the North American Free Trade Agreement and 200 other lesser-known trade agreements have been negotiated with the United States. They are responsible for substantially removing trade barriers, allowing U.S. companies to export more of their products. Many other trade agreements, which have been the building blocks of trading blocs, have been negotiated and do not include the United States.