Think globally,buy locally: International agreements and government procurement

Do international treaties constrain national governments? The answer appears to be “yes” when it comes to the use of traditional barriers to trade, such as tariffs. Yet, while many governments have cut tariffs to comply with international agreements, they have often raised non-tariff barriers in their place. One increasingly prominent non-tariff barrier is discrimination in public procurement. Governments frequently discriminate against foreign suppliers in favor of domestic ones when buying goods and services. In an attempt to reduce procurement discrimination, international organizations, such as the World Trade Organization, have devoted ever more attention to members’ procurement practices. Additionally, a growing number of preferential trade agreements seek to regulate public procurement. It remains unclear, however, whether international rules are effective in changing governments’ purchasing behavior. Using original data, we find that neither multilateral nor preferential procurement agreements substantially reduce governments’ propensity to “buy national.” These results illustrate the difficulty of regulating non-transparent policy areas via international treaties.     

The Demand for Protectionism: Democracy,Import Elasticity,and Trade Barriers

Numerous studies suggest that democracies employ lower trade barriers than nondemocracies. In this article, we examine the conditioning role that the elasticity of import demand at the commodity level plays on the relationship between democracy and import barriers. Beginning with the assumption that democracies are more responsive than nondemocracies to the preferences of mass publics, we demonstrate that the value of free trade as a public good depends on the elasticity of import demand. When import demand for a given commodity is inelastic, trade barriers are more harmful to consumers; as such, democracies will employ lower trade barriers than nondemocracies. However, as import demand becomes more elastic, publics find it easier to adjust to higher prices; as a result, the difference in imposed trade barriers by regime type decreases. We find support for this argument in statistical analyses of crosssectional data covering 4,656 commodities imported by 73 countries Furthermore, we find that democracies raise higher trade barriers than nondemocracies on commodities for which import demand is very elastic.     

Does infrastructure facilitate trade connectivity? Evidence from the ASEAN

This paper explores the impact of infrastructure on trade connectivity among ASEAN and three Asian countries—India, China, and Japan. Our study is mainly motivated by the increased infrastructure investment and trade among these countries in recent years. The main results of trade network analysis include high trade density and interconnectedness among ASEAN, India, China, and Japan. There are specific “trade intensive paths” among the few countries in the group. It highlights the “export hubs” or main “suppliers of intermediate goods” in the region. Further, the paper analyzed the nexus between trade connectivity and infrastructure by applying the panel fixed effects method and Poisson pseudo-maximum likelihood. Moreover, the robustness of the results is tested by estimating two-stage least square. Hard infrastructure, foreign direct investment plays a crucial role in bringing the nexus to trade connectivity. Reducing trade barriers and improving infrastructure quality are essential for deepening regional trade integration.

     

The European Union’s trade and investment policy in Asia: new challenges and opportunities in a changing global environment – or: following individual roadmaps

Asia is Europe’s largest trading partner and EU-Asia trade relations have undergone a rapid change since the global financial crisis. On a global scale, the new multilateral trade agreements such as the now stalled Trans-Pacific Partnership (TPP) involving European Unions’ (EU) major trading partners such as Japan, Singapore and Vietnam also have the potential to change the trade equations. In this paper, we evaluate the new EU trade policy which has been designed to ensure that the EU benefits from the changing global trade scenario and also look at the steps which have been taken by the EU to promote trade relations with its major trading partners in Asia in the predicted ‘Asian century’. We look into the Free Trade Agreements, which are being negotiated with its Asian partners and seek to understand the reasons which have resulted in delays in their signing and negotiations. We evaluate new policies pushed forward by its Asian partners such as the One Belt One Road policy by China and Japan’s policy of securing a large number of trading agreements in the America. Moving ahead, we also shed light on the indirect factors that may influence the success of EU trade negotiations in Asia such as the EU policy on granting China market economy status and the commencement of the ‘Brexit’ process. Lastly, we try to present a list of immediate priorities for EU in Asia, which will ensure that it secures a toehold in trade with the region. All in all, it is shown that the EU has not one and the same approach for all Asian countries but it negotiates flexibly and individually country by country. Because of this “country by country approach” the EU is also not ready to enter into general EU-ASEAN trade negotiations again.     

Tariffs and Carbon Emissions

International trade and the environment are uneasy partners. Both environmentalists and free traders worry that the pursuit of one goal may obstruct the other. Nowhere is this tension more evident than in the area of climate change. Does trade liberalization increase carbon emissions? Do efforts to reduce carbon emissions lead to protectionist pressures? This paper addresses these questions by examining the relationship between CO2 emissions and tariffs in 109 to 153 countries from 1988 to 2013. Using instrumental-variable regressions to address reciprocal causation, I find that emissions reductions led to higher tariffs on manufactured goods. This suggests that carbon-intensive industries responded to carbon restrictions by lobbying against trade liberalization. In contrast, emissions did not affect tariffs on less carbon-intensive primary products, and neither type of tariff affected CO2 emissions. My results imply that efforts to combat climate change may obstruct trade liberalization, but the latter should not hinder climate change mitigation.     

States Sued: Democracy,the Rule of Law,and Investor-State Dispute Settlement (ISDS)

Investor-state dispute settlement (ISDS) cases have increased dramatically in recent decades, and the institutions of investment arbitration to resolve investor-state disputes constitute the core of the modern investment regime. In this article, we seek to explain the variation in the host governments’ risk of being challenged by foreign investors before international arbitration tribunals. We argue that such risk is greatest at the intermediate level of democracy where some democratic elements such as elections are strong, but the system of rule of law remains weak. In those regimes, “regulatory risk” runs higher than in autocratic regimes as the host governments are under greater pressure for regulating matters of broad public concern. At the same time, more traditional political risk of arbitrary, discriminate, and abusive acts remains considerable at that level of democracy due to weak rule of law, exacerbating the former risk. Empirical analysis provides a good deal of support for the argument.     

A third wave of autocratization is here: what is new about it?

Less than 30 years after Fukuyama and others declared liberal democracy’s eternal dominance, a third wave of autocratization is manifest. Gradual declines of democratic regime attributes characterize contemporary autocratization. Yet, we lack the appropriate conceptual and empirical tools to diagnose and compare such elusive processes. Addressing that gap, this article provides the first comprehensive empirical overview of all autocratization episodes from 1900 to today based on data from the Varieties of Democracy Project (V-Dem). We demonstrate that a third wave of autocratization is indeed unfolding. It mainly affects democracies with gradual setbacks under a legal façade. While this is a cause for concern, the historical perspective presented in this article shows that panic is not warranted: the current declines are relatively mild and the global share of democratic countries remains close to its all-time high. As it was premature to announce the “end of history” in 1992, it is premature to proclaim the “end of democracy” now.     

Out of the shadows or into the dark? Economic openness,IMF programs,and the growth of shadow economies

The existence of shadow economies is an important, yet understudied, issue for international political economy and development. This study examines how two distinct types of international economic engagement—economic openness and participation in International Monetary Fund (IMF) programs—affect the growth of shadow (informal) sectors. We theorize that increased economic openness will reduce the size of countries’ shadow sectors. More specifically, we posit that eliminating market-distorting trade barriers will decrease the incentives for shadow sector activities such as smuggling. Additionally, we posit that increased participation in global production and supply chains is likely to lead to a positive, “climb to the top” effect on states’ regulatory and labor policies that enhance the prospective benefits associated with formal sectors. Conversely, we argue that participation in IMF structural adjustment programs can lead to great shadow sector activity as IMF-imposed structural conditions might cause significant near-term economic hardship and degrade states’ regulatory capacity. The results from a panel of 145 countries from 1971 to 2012 indicate that economic openness reduces the size of the shadow economy, while participation in IMF programs is significantly related to a larger shadow economy. These findings have important implications for understanding how the divergent forms of international economic engagement might affect shadow economies.     

Shaking off the neoliberal shackles: “democratic emergence” and the negotiation of democratic knowledge in the Middle East North Africa context

ABSTRACT

There is a general assumption in democracy promotion that liberal democracy is the panacea that will solve all political and economic problems faced by developing countries. Using the concept of “good society” as analytical prism, the analysis shows that while there is a rhetorical agreement as to what the “good society” entails, democracy promotion practices fail to allow for recipients’ inclusion in the negotiation and delivery of the “good society”. Contrasting US and Tunisian discourses on the “good society”, the article argues that democracy promotion practices are underpinned by neoliberal parameters borne out from a reliance on the transition paradigm, which in turn leave little room to democracy promotion recipients to formulate knowledge claims supporting the emergence of alternative conceptions of the “good society”. In contrast, the article opens up a reflective pathway to a negotiated democratic knowledge, which would reside in a paradigmatic change that consists in the abandonment of the transition paradigm in favour of a “democratic emergence” paradigm.     

The most-favored nation rule in principle and practice: Discrimination in the GATT

The conflicts of interest that prevailed between the great powers in the wake of the First World War eviscerated their ability to respond collectively to the advent of the Great Depression. Instead, each turned to discriminatory trade barriers and trade blocs to try to revive domestic output. Persuaded that trade discrimination exacerbated the political tensions that erupted in World War II, policy makers constructed a postwar economic order that institutionalized nondiscrimination. Thus, Article 1 of the charter of the General Agreement on Tariffs and Trade (GATT) mandates most-favored nation (MFN) treatment. We argue here that the MFN clause itself encouraged the adoption of practices and policies that actually recreated discrimination. In particular, we argue, developing countries, long regarded as victims of discrimination, institutionalized it in their negotiations with each other. We examine two developing country PTAs that included about 80 percent of all developing-country GATT members by output (the Global System of Trade Preferences and the Protocol Relating to Trade Negotiations). We show that as in the GATT writ large, their patterns of tariff cuts and trade expansion were highly skewed toward a small number of their largest members. In trying to avoid discrimination, policy makers actually encouraged its de facto adoption.     

Explaining popular participation in India’s local democracy: Some lessons from panchayats in West Bengal

The 73rd amendment to the Indian Constitution launched an extensive experiment in local democracy. Based on a study of 2,794 gram panchayats and field observations in West Bengal, this article examines when and why popular participation in panchayat elections—the most basic and visible aspect of local democracy—differs across local governments. The study finds that gram panchayats witness high levels of participation when they pursue policies that benefit the villagers, such as greater investment in education, and when they are seemingly less corrupt. Investment in public goods and lower rents are known to promote economic development and general welfare. In addition to these familiar implications, this study shows how these policies also have political consequences for democracy in India.     

Not as bad as it seems: EU and US democracy promotion faces China in Africa

The rise of China in Africa is often described as a major challenge to the United States (US) and the European Union (EU) democracy promotion policies. China is accused of providing important volumes of loans, development aid, trade and investments without “political strings” attached, thereby undermining the US and the EU's possibilities to set material incentives for reforms. This article investigates Ethiopia and Angola as two cases where one would expect that the growing presence of China has made it more difficult for the EU and US to support reforms. Empirical findings presented in this article go against this argument. In both countries, the EU and the US face substantial difficulties to make the respective government address governance issues. However, the presence of China has not made it more difficult for the US and the EU to implement their strategies. Instead the empirical analysis suggests that domestic factors in Ethiopia and Angola, notably the level of challenge to regime survival both governments face, influence both governments’ willingness to engage with the EU and US.     

Contagion in the Transpacific Shipping Network: International Networks and Vulnerability Interdependence

To what extent are states vulnerable to disruptions in trade networks? We investigate this question by simulating attacks on the intermodal shipping network, whose ubiquitous containers carry 80% to 90% of all global trade in goods. While this network has reduced transportation costs and spurred international trade, the dependence of modern economies on ship-borne trade means disruptions in one region may produce considerable costs for states in another region. We simulate an “optimal terrorist” that learns about the conditions under which attacks on the network in other parts of the world generate economic losses to the United States. The study illustrates that by adopting a network- and process-oriented ontology, the study of interdependence may better anticipate new sources of interstate and transnational conflict.     

Globalization and Domestic Trade Policy Preferences: Foreign Frames and Mass Support for Agriculture Subsidies

Reforming agriculture trade policy is key to breaking the deadlock in multilateral trade negotiations. While existing studies have focused on institutions and interest group barriers to agriculture trade reform in developed countries, most have failed to recognize the broad support for agriculture protection among developed countries. In this article we examine one of the drivers of this support: the ability of politicians to frame their own agriculture policies as less generous relative to those of other countries. Drawing on existing literature on heuristics, we argue that voters are malleable to politicians’ comparative framing of agriculture policies. Using an original survey experiment in the United States, we find that framing US agriculture as less generous than other countries generates an additional 12% of respondents supporting increased farm payments to US farmers. These results speak to the difficulty in reforming agriculture and more broadly about the lack of public support for unilateral trade liberalization.     

Familiarity breeds contempt? Knowledge and understanding of democracy,support for democratization,and global city residence in Russia

Using Russian survey data from 2011 to 2012, this article examines public understanding of and support for democratization in a semi-authoritarian context. When knowledge of democracy is weak, and conceptual understanding of democracy is mixed—as in Russia—traditional measures of democratic support inadequately capture demand for democratization; that is, for more democracy than currently perceived. Contrary to conventional wisdom, Russians who adhere to “textbook” political definitions of democracy are more, not less, likely to advocate democratization. Residence in global cities increases support for democracy and democratization, while education fosters the latter but not the former. Other traditional indicators of middle-class status, such as income and urbanization, lack consistent effects. Based on these results we re-evaluate the mechanism linking modernization and support for democracy in developing, non-democratic societies. Rather than exert social-psychological or normative effects, modernization works primarily by raising exposure to global political discourses that define and promote democratic government.     

美国“新门罗主义”拉美政策及面临的挑战

自特朗普政府上任以来,美国对拉美政策奉行“新门罗主义”,加大了对拉美国家的干预,反映在经济、政治和安全等领域,如鼓噪“美国优先”,大打“贸易牌”“移民牌”,使前任奥巴马政府与古巴关系正常化的努力出现全面倒退,甚至拒绝承认委内瑞拉民选总统马杜罗而另行“任命”一个代理总统瓜伊多等。当今世界处于百年未有之大变局,拉美政治、经济格局也经历着深刻变化。中国、俄罗斯等在拉美的影响力不断增强。“一带一路”倡议在拉美落地生根,深化了中拉政治、经济互信;俄罗斯强硬支持委内瑞拉加剧了美俄博弈,导致美国“后院失火”的可能性增大,迫使特朗普深度调整美国对拉美政策。这一政策调整对美国究竟意味着全球战略扩张还是战略收缩,值得探讨。特朗普的拉美政策不仅会影响美拉关系及美拉双方的发展,也将影响中拉关系的发展。本文尝试对美国“新门罗主义”拉美政策的现状、原因和影响进行分析,并考察其面临的挑战。     

Democracy promotion between the “political” and the “developmental” approach: US and German policies towards Belarus

Following the end of the East–West conflict, the global spread of liberal democracy became an important strategic objective in world politics. Primarily, the foreign policy of the US and EU (states) demonstrated the relevance of democracy promotion abroad. While Western democracies' policy objectives regarding democracy promotion go well together, an obvious difference between their approaches in this area has often been shown: a largely “political” approach of the US vs a “developmental” one of European states. Accordingly, this article focuses on recent tendencies in democracy promotion by comparing US and German policies in the European post-Soviet space in order to investigate the expression of both approaches in a strategically important region. It thereby analyses the pivotal case of Belarus, which presents a great challenge to democracy promoters. The study concludes that external democracy promotion in that part of the world does not show a clear differentiation between the two approaches, and suggests a few potential explanations to be explored in future research.     

“Journalism ideology” and its influence on the producers of Radio Sonder Grense radio current affairs

In the same way that people can have a political or a personal ideology, their professional identities and how they practise a craft or an occupation may be influenced by what can be labelled as a “professional ideology”. Through conducting interviews with the producers of the South African Broadcasting Corporation (SABC) Afrikaans radio programmes Monitor, Spektrum and Naweek-Aktueel, this article reports on research which showed that there is indeed such a thing as a “journalism ideology”. The interviews focused on how “internal influences” – such as a journalist's background and training, newsroom routines – and “external influences” – such as the audience – influenced the decisions they made in choosing news stories and producing content. This “journalism ideology” influences the producers and in turn the news content of these current affairs programmes that are listened to daily by almost two million listeners. The conclusion drawn from the study is that, although the participants’ “journalism ideology” largely determines the news stories for their programmes, structural forces, newsroom routines and organisational constraints often dictate their actions. Finally, although all the participants saw themselves as “watchdogs of democracy”, internal pressures within the SABC could endanger that role.     

Sharing benefits of globalisation through an EU-ASEAN FTA?

In the aftermath of the stalled launch of a new WTO round in Seattle in 1999, Singapore and Japan initiated a joint study into a possible bilateral Free Trade Agreement (FTA). The resulting New-Age Economic Partnership Agreement was signed in 2002, reduced barriers in trade and investment in goods as well as services, technical standards and public procurement. Other FTAs followed including a US-Singapore FTA in 2003. In response, other ASEAN countries initiated negotiations towards bilateral FTAs, such as Thailand with India and Malaysia with Japan etc. Moreover, China declared its intention to enter into a FTA with the ASEAN by 2012. The failure at Cancun in 2003 implies that the Doha Development Agenda will not be achieved within the time-frame set. In this environment, the question of a feasibility of an inter-regional EU-ASEAN FTA is investigated. ASEANs trade policy regime is opening up and the gains of further tariff elimination will be modest, because most ASEAN countries already apply low tariffs, while those of the EU on import from ASEAN are low as well – e.g. for Singapore the tariff rate is merely 1.04 per cent (trade weighted). Nevertheless, a further reduction will benefit both EU and ASEAN because a significant share of imports is intra-firm trade, with EU firms operating from ASEAN as a production platform for the EU markets. However, for an EU-ASEAN FTA to be worthwhile, it must generate benefits on issues relating to non-tariff barriers to trade, esp. technical standards, SPS and mutual recognition of testing. Further significant benefits to EU and ASEAN may be realised by advancing liberalisation of international trade in services (e.g. banking and insurance licences, air and sea transport). Reducing restrictions on foreign direct investment in selectedservice sectors is bound to enhance investment flows from the EU to ASEAN.This article draws extensively on a study directed by the author with Dr. Paul Brenton, Prof. Ludo Cuyvers and Prof. Patrick Messerlin (van der Geest et al. 2003). Research assistance by Ms. Vanessa Sumo and Ms. Roberta Zavoretti is gratefully acknowledged. The views expressed in this article are solely those of the author and do not reflect the views of the European Institute for Asian Studies or of its sponsors. The author is solely responsible for any remaining errors or inaccuracies. All comments are welcomed at w.vandergeest@eias.org     

Democratic Accountability and Foreign Security Policy: Theory and Evidence from India

Identifying the links between democracy and foreign security policy has proven elusive. This paper engages this research agenda by developing a novel theory of “accountability environments” and exploring it in the case of India. We hypothesize that the varying electoral salience of foreign security policy and the clarity of responsibility for policy outcomes combine to create different accountability environments in which politicians operate. Accountability environments determine the incentives that politicians face for devoting effort to external security issues. We illustrate the argument with evidence from India over time and across issue areas (India, Pakistan, and defense procurement/development). Scholars need to incorporate the complexities and diversity of representation and rule into the study of democratic politics and international relations.