Global Value Chains and the Removal of Trade Protection

Bown, Chad and Erbahar, Aksel and Zanardi, Maurizio (2020) Global Value Chains and the Removal of Trade Protection. Discussion Paper. Centre for Economic Policy Research.

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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 WTO rules adopted in 1995 that impose an exogenously-timed requirement for countries to re-evaluate their previously-imposed trade protection, we 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, we 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.

Item Type:
Monograph (Discussion Paper)
Subjects:
ID Code:
142015
Deposited By:
Deposited On:
03 Mar 2020 09:30
Refereed?:
No
Published?:
Published
Last Modified:
08 Sep 2020 23:54