Author Archives: jdingel

Did China cause the Doha stalemate?

Alex Gadzala says that China played a role in the special safeguard mechanism stalemate that ended last week’s negotiations in Geneva. If China was really India’s co-equal in balking at the Quad’s position on SSM, as the IHT portrayed it, then the emerging power terribly disappointed those, like Fred Bergsten, who called for China to be an active participant in the round rather than playing a passive part. The fear was that China, having undergone significant liberalization and enjoying significant payoff from its 2001 accession, would have little impetus to push for further liberalization at the Doha round. Now, it seems, China has become an engaged stakeholder, but not as Bergsten & co. had hoped.

The pros and cons of rising food prices

Brookings’ Homi Kharas says that rising food prices are a symptom of demand outstripping supply and the price system is working – today’s high prices are triggering a new wave of investment that will increase future supply and may also cause reform in some countries. He’s optimistic:

[F]or the majority of the world’s poor, to be found among the 1.7 billion rural residents of India, China and Indonesia, the dream of a “chicken in every pot” is becoming more attainable because world food supply is rising again. That is the upside for humanity from today’s high food prices.

IFPRI’s Joachim von Braun is less sanguine:

[M]arket failures and new misguided policies are likely to keep food prices high and volatile for years to come… [M]ost small farmers in developing countries are actually net buyers of food, so they feel the pinch from rising food prices.

John Parker, moderating this debate for the Economist, interprets this as:

For Mr von Braun, it is the speed, rather than the fact of the price increase that matters. Prices have risen so quickly—the food index of the Food and Agriculture Organisation (FAO) rose by 50% in the year to May 2008, he says—that people have not been able to adjust. Or rather, “adjustment” has taken the form of the poor eating less and going hungry…

The very phrase “food crisis” may predispose participants against a proposition that there is an upside to rising prices. On the other hand, it’s an ill wind that blows absolutely nobody any good; there is always some sort of upside. The question for the audience is how big, and whether it is big enough to be meaningful.

The Economist has a roster of guests that will also be participating in the debate over the next week.

Mandelson on negotiations in Geneva

It’s not exactly liveblogging, but Peter Mandelson is posting daily updates from Geneva. It’s a bit informal and potentially interesting:

Word gets around that the Indian Commerce Minister Kamal Nath has arrived in Geneva fresh from the successful vote of confidence in the Indian Parliament that confirmed the Singh government. True to form, Nath immediately takes the opportunity to set out his stall in the morning Trade Negotiating Committee meeting. Nath goes straight on the attack; criticising the US’ offer to reduce farm subsidies and dismissing the idea of an Anti-Concentration Clause in industrial goods negotiations. Nath is playing to the gallery, and he is wrong when he suggests that such a clause would claw back many of the additional flexibilities that developing countries have fought to hard to include in the Doha package as a way of sheltering growing industry or protecting sensitive sectors.

Mandelson also says that “we are potentially closer than we have ever been to a deal.” Sadly, the European Commission hasn’t included a comments section on its website.

Evading tariffs: Misrepresenting differentiated product prices

Beata Javorcik and Gaia Narciso’s paper on “Differentiated Products and Evasion of Import Tariffs” is forthcoming in the Journal of International Economics. Here’s the abstract from an older, ungated version:

An emerging literature has demonstrated some unique characteristics of trade in
differentiated products. This paper contributes to the literature by postulating that
differentiated products may be subject to greater tariff evasion due to the difficulties associated
with assessing their quality and price. Using product-level data on trade between Germany and
10 Eastern European countries during 1992-2003, we find empirical support for this hypothesis.
We show that the trade gap, defined as the discrepancy between the value of exports reported
by Germany and the value of imports from Germany reported by the importing country, is
positively related to the level of tariff in 8 out of 10 countries. Further, we show that the
responsiveness of the trade gap to the tariff level is greater for differentiated products than for
homogenous goods. A one-percentage-point increase in the tariff rate is associated with a 0.6%
increase in the trade gap in the case of homogenous products and a 2.1% increase in the case of
differentiated products. Finally, the data indicate that greater tariff evasion observed for
differentiated products tends to take place through misrepresentation of the import prices.

The most well-known use of double-reporting in international trade to detect tax evasion is Ray Fisman and Shang-Jin Wei’s paper on “missing” trade between China and Hong Kong.

Messerlin on Doha’s potential benefits

Patrick Messerlin urges trade ministers to move towards a Doha deal at tomorrow’s WTO meeting, noting that it’d be good to (1) bind industrial tariffs to create certainty for businesses considering fragmenting production processes and (2) liberalize agriculture, which will hurt some loud lobbies but help many that don’t currently benefit from the CAP.