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Many multinational firms attempt to cope with trade policy uncertainties by developing the option of manufacturing their goods in multiple production facilities in different countries. In this chapter, we explore how such “production switching” options affect the vulnerability of a country’s exports to foreign protectionism. We present a theoretical model of such behavior and show that production switching increases the elasticity of a country’s export with respect to tariffs. The magnitude of the elasticity depends on a country’s position in the value chain. We use the model’s predictions to provide new insights into the vulnerability of China’s exports during the current Sino–US trade war.

The purpose of this paper is to develop a formal representation of the imperfect substitutes model (ISM) of partial equilibrium, trade policy analysis and to conduct sensitivity analysis on the behavioral parameters of the model.

The paper develops an ISM in a manner that is conformable to more complex, applied general equilibrium models of trade policy analysis.

The paper presents a set of sensitivity analyses on key behavioral parameters for a better understanding of the model's properties.

Sensitivity analysis on the values of behavioral parameters in ISMs needs to be conducted by trade policy modelers.

The ISM is made more explicit here than in most representations, something that will be of great use to practitioners.

While widely used in trade policy circles, the ISM is rarely explicitly formulated, nor the role of its behavioral parameters explored.

This study aims to identify and classified non-tariff measures (NTMs) on Brazilian imports of robusta coffee beans, calculated a tariff-equivalent of non-tariff barriers (NTBs) and assessed the effects of removing NTBs from upstream and downstream domestic instant coffee supply chain.

The analysis uses documentary research to identify NTMs and the price-wedge method is applied to estimate a tariff-equivalent. The effects of suppressing the tariff-equivalent were evaluated using a partial equilibrium model with constant elasticity of substitution (Armington, 1969) and by incorporating vertical integration and uncertainty (Hallren and Opanasets, 2018).

The results show that NTMs seemingly hinder the entrance of coffee beans into the domestic market. The tariff-equivalent was estimated at 13.61%. Suppressing it reveals that the share of domestic coffee beans used to produce domestic instant coffee falls 0.21 p.p. while the share of domestic instant coffee consumed by the international trade rises 8.60 p.p.

What makes this paper original is that this paper investigated the effects of NTMs in a developing country, namely, Brazil. Although Brazil is one of the largest agricultural producers in the world, it has not appeared in literature in this type of analysis until now. Furthermore, it contributes to the literature on using existing techniques to investigate the impact of NTM removal on individual products in a specific country, in contrast to more recent papers that discuss using multi-country and multi-product data sets at the HTS-6 level. Thus, this paper demonstrates how a case study approach can be useful in quantifying policy changes.

The purpose of this paper is to demonstrate that higher tariffs under protectionism will have significant indirect impact through industrial forward and backward linkages, causing greater economic losses to tariff-imposing economies than to exporting countries.

The authors use partial equilibrium analysis based on unique multi-regional input-output (IO) data in measuring the second-round spillover effects of higher tariffs, also investigating the scenario of plausible substitutability across import sources as well as sectors based on historical import intensity data.

Higher tariffs do not only have a direct impact, but also a significant indirect impact—through forward and backward linkages. Indirect effects can be extensive across economies and sectors—both in forward and backward linkages such as in transport—when value chains are longer and more complex. When possible substitution effects between different import sources and sectors are considered, negative forward linkage effects can be smaller, while negative backward linkage effects become more pronounced. Nevertheless, both negative effects are still found to be much bigger in indirect impacts compared with direct impacts.

This implies that higher tariffs, including administrative trade measures such as anti-dumping duties and countervailing duties could ironically entail rather greater negative impact on the tariff-imposing importing economies by damaging their exports of domestic sectors using the targeted imports as intermediate inputs, which could be severe if the importing sector has a long value chain in particular through deep forward linkages.

This paper uses unique multi-regional IO data covering 45 economies’ 35 sectors in analyzing the second-round spillover effects across countries and sectors and employs comparative statics under different scenarios.

The purpose of this paper is to compare the Armington elasticities for world average values and country-specific values and obtain evidence for whether the world average elasticities and the “rule of two”, which have been applied in many papers, are accurate for cereals in trade policy studies related to an individual country.

The authors use panel data with a nested model to estimate and compare Armington elasticities based on world average values and country-specific values from 10 countries and regions.

The results suggest that cereals’ elasticities vary between world average values and country-specific values, and the “rule of two” is not strictly applicable. In fact, the “less than two” concept fits well in many cases.

This study sheds light on the effects of country heterogeneity on the elasticities and the accuracy of using world average elasticities in a trade policy study for an individual country. In addition, this paper offers estimated values of country-specific elasticities for 10 countries and regions.

During the period 1966/67–1984/85, the United States market share in the global wheat trade averaged 41 per cent. Recently, this percentage has declined considerably after a period when the US agricultural sector expanded rapidly to meet the needs of growing world markets. The US market share of wheat trade reached an all‐time high of 48 per cent in 1981/82 then steadily declined to 37 per cent in 1984/85.

Most current modeling approaches identify very small gains from trade reform. In this chapter, we examine recent developments in the literature to assess whether standard modeling approaches are mis-specifying, understating, or overstating the gains from trade reform. Key areas where the impacts of trade barrier reduction appear to be understated include the measurement of barriers; the aggregation of these barriers; process productivity gains, particularly those resulting from reallocation of resources between firms; product quality improvements and expansion of product variety; factor supply; and investment of gains from trade.

The purpose of this paper is to quantify and analyze the relative impact of agriculture Trade liberalization and South Asian Free Trade Agreement (SAFTA) over the global economic welfare. The objectives are to analyze and quantify the potential economic cost and benefits of the prospective trade between India and Pakistan to consumers, producers and government of the two countries by analyzing the potential economic costs and benefits of Pak‐India trade in exporting various consumer goods.

The Global Trade Analysis Project (GTAP) database is the database for the GTAP model of the world economy, which is publicly available. The main data source for this model is “The GTAP 4 Data Base” which is easy to adapt to appropriate sectoral and regional aggregations that allow one to focus on specific policy questions. The regional databases in the model are derived from individual country input‐output (I/O) tables that provide information about the individual regional economies in the model. The bilateral trade data are primarily derived from the United Nations Commodity Trade database. The economic research service (ERS) of the United States Department of Agriculture supplies the missing information in the UN trade data.

The first scenario is when normal trading relations with India will be restored; it means that each country will give the most‐favored‐nations (MFN) status to the other. In the second scenario, the SAFTA will be operative, and there will be free trade between India and Pakistan, and both countries will remove all tariffs and custom duties from each other's imports. The GTAP model is used to analyze the possible impact of SAFTA on Pakistan in a multi‐country, multi‐sector applied general equilibrium framework.

The analysis based on simulations reveals that current demand for Pakistani consumer items will expand after the free trade agreement (FTA) and consumer surplus will increase. The export of consumer items may be conducted by two scenarios, i.e. when normal trading relations between Pakistan and India will be restored and when there will be a free trade between Pakistan and India in the presence of SAFTA. Results based on this research reveal that, on SAFTA grounds, there will be net export benefits in Pakistan's economy.