Author Archives: jdingel

A crucial moment for Doha or just another weekend?

Pascal Lamy says that this weekend is a “moment of truth” for the Doha Round negotiations. Dozens of ministers are gathering in Geneva in a run-up to a meeting Monday. The G8 summit put out lots of “now is crucial” statements, but we’ve heard those so many times that Emmanuel dubbed Pascal Lamy to be Don Quixote.

Alan Winters says that the Doha Round agricultural negotiations are basically done, but all the other issues are far from a deal. He partly blames the large industrial lobbies’ loss of interest in WTO negotiations.

Addendum: Jeff Schott: “Dismiss the faint hopes of trade officials that the Doha Round can conclude in 2008. The window for doing so closed months ago.”

Let their footballers come

The Belfast Telegraph says that EU national teams are importing football talent through (presumably privileged) immigration openings:

[Marcos] Senna took Spanish nationality, enabling his club to field another non-EU player. Capped in March 2006, he was a starter in the ensuing World Cup…

Coaches and governments have realised that while countries are not allowed to use the transfer market to strengthen teams, they can use helpful immigration laws.

Since Brazil is the greatest producer of football talent in the world it follows that footballers most likely to be naturalised are from Brazil. Those playing at Euro 2008 are just the most visible tip of a ball-juggling mountain. There are Brazilians playing for Bosnia, Bulgaria and Hungary. Azerbaijan have four Brazilians playing for them – the recent spell as coach of Brazil’s 1970 World Cup captain, Carlos Alberto Torres, is undoubtedly a factor. Brazilians have been competing for Tunisia and Lebanon and for Japan and Qatar…

With globalisation the blurring of national allegiances is only going to increase, especially given the value of an EU passport to players from outside the union.

[HT: Emmanuel]

Financial globalisation ends offshore financial centres

FT:

The distinction between “offshore” and “onshore” financial centres has been dropped by the International Monetary Fund, in a victory for more than 40 small countries that complained they had been unfairly stigmatised in the fight against financial crime.

The IMF said the distinction between on- and offshore centres “had been blurred by globalisation”, which had increased the range of cross-border transactions in many countries, as well as the launch of new financial centres catering to non-residents in countries such as Botswana, Brunei, Dubai and Uruguay.

End biofuel subsidies

Kim Elliott says that precise estimates aren’t key to the biofuels debate: “Whether biofuels are responsible for 75 percent of the recent food price hikes, as Don Mitchell contends, or 30 percent, or even just 5 percent, tax incentives and subsidies for biofuels make no sense.”

US opinion on trade declining

Protectionism becomes more likely during economic downturns, and Emmanuel notes that public support is headed that way:

The most recent Pew Global Attitudes survey found that, in a sample of twenty-four countries, the United States came dead last in terms of viewing trade favourably… “Support for international trade continues to decline in the United States – 53% of Americans say trade is good for their country, down from 59% last year and 78% in 2002. Support for trade is lower in the U.S. than in any other country included in the survey.”

Addendum: See Ben Muse (1,2), who is on top of this topic.

US M&A nonsense watch

I very much doubt that the empirical evidence supports Dan Mitchell on this:

Indeed, that [higher corporate taxation] is why American companies almost always become the subsidiary rather than the parent when there is a cross-border merger.

Almost always?!? UNCTAD’s stats for 2006 M&A say that US entities made $171.3b in purchases and $172.2b in sales.

Do you know where your firms are?

As production comes to depend more on intangible productive assets, the location of production by multinational firms becomes increasingly ambiguous. The reason is that, within the firm, these assets have no clear geographical location, but only a nominal location determined by the firm’s tax or legal strategies.

The effects of these location ambiguities, and the resulting distortions for tax reasons of the location of production, are described and it is estimated that for U.S. firms’ affiliates in a few tax havens alone, the exaggeration of value added in those locations amounted, in 2005, to about 4 percent of worldwide affiliate sales, and the exaggeration of sales to about 10 percent of worldwide affiliate sales.

Robert Lipsey – Measuring the Location of Production in a World of Intangible Productive Assets, FDI, and Intrafirm Trade NBER WP 14121

Heterogeneous firms and wages

Mary Amiti & Donald R. Davis – “Trade, Firms, and Wages: Theory and Evidence” NBER WP 14106

We develop a general equilibrium model which features firm heterogeneity, trade in final and intermediate products, and firm-specific wages. In doing so, it builds on the work on heterogeneous firms of Marc J. Melitz (2003) as amended to allow trade in intermediate goods by Hiroyuki Kasahara and Beverly J. Lapham (2007). Both of these models maintain the assumption of homogeneous labor and a perfect labor market, so that the wages paid by a firm are disconnected from that firm’s performance. We continue to focus on homogeneous labor, but introduce a novel variant of fair wages which links the wages at a firm to the profitability of the firm…

A decline in output tariffs reduces the wages of workers at firms that sell only in the domestic market, but raises the wages of workers at firms that export. A decline in input tariffs raises the wages of workers at firms using imported inputs, but reduces wages at firms that do not import inputs…

We test our model’s hypotheses with a rich data set covering the Indonesian trade liberalization of 1991-2000. The trade liberalization provides us with over 500 price changes per period, covering both input and output tariffs. A distinctive feature of the Indonesian data set is the availability of firm level data on individual inputs, making it possible to construct highly disaggregated input tariffs. This, in turn, enables us to disentangle the effects of output and input tariffs…

A 10 percentage point fall in output tariffs decreases wages by 3 percent in firms oriented exclusively toward the domestic economy. But the same fall in the output tariff increases wages by up to 3 percent in firms that export. A 10 percentage point fall in input tariffs has an insignificant effect on firms that don’t import, but increases wages by up to 12 percent in firms that do import. In short, liberalization along each dimension raises wages for workers at firms which are most globalized and lowers wages at firms oriented to the domestic economy or which are marginal globalizers. Ours is the first paper to show an empirical link between input tariffs and wages, and the first to show differential effects from reducing output tariffs on exporters and non-exporters.