- 5 February 2020
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 1, 2020Details
- Foreign trade zones (FTZs) are designed to promote economic development by favouring international trade, especially trade within global production networks. In FTZs, a substantial share of imports (ranging from 12-17% of total domestic imports) is manufactured and, in part, re-exported. FTZs can break the “chain effect” of tariffs because intermediate goods imported via FTZs enjoy preferential treatment or even duty exemption. This already occurs in the United States and is under consideration in China, where capital controls in FTZs are looser and tax advantages already exist. In the European Union, however, FTZs are mainly used to smooth out customs processes, while an import duty suspension scheme is used to grant favourable treatment to imports of intermediates.
- JEL Code
- E23 : Macroeconomics and Monetary Economics→Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy→Production
F10 : International Economics→Trade→General
F13 : International Economics→Trade→Trade Policy, International Trade Organizations
- 27 July 2020
- ECONOMIC BULLETIN - BOXEconomic Bulletin Issue 5, 2020Details
- The world economy is facing an unprecedented shock, and as the impact of the pandemic unfolds, world trade will be hit particularly hard. Global value chain linkages are likely to magnify the impact. This box assesses the effects of disruptions associated with the COVID-19 pandemic and provides estimates of the impact on world trade. We find that GVC spillovers could significantly amplify the decline in world trade.
- JEL Code
- F31 : International Economics→International Finance→Foreign Exchange
F41 : International Economics→Macroeconomic Aspects of International Trade and Finance→Open Economy Macroeconomics
F60 : International Economics→Economic Impacts of Globalization→General
- 15 December 2020
- WORKING PAPER SERIES - No. 2503Details
- In this paper we provide evidence on the existence of short-run trade diversion effects towards third countries as a consequence of tariff shocks. We exploit sudden policy changes in the context of the trade dispute between the US and China. Based on a data set covering monthly product-level information on US imports from 30 countries for the period January 2016 until May 2019, we employ a difference-in-differences estimation framework. Doing so, we (1) can confirm previous findings showing a strong negative direct effect of US tariffs on US imports from China, but (2) do not find evidence for significant short-run trade diversion effects towards third countries. This latter finding holds for product and country subgroups as well as for a variety of robustness checks.
- JEL Code
- F13 : International Economics→Trade→Trade Policy, International Trade Organizations
F14 : International Economics→Trade→Empirical Studies of Trade
F61 : International Economics→Economic Impacts of Globalization→Microeconomic Impacts