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 15% of the trade flows subject to the most common temporary restrictions (i.e. antidumping) applied by high-income countries in 2007.
| Original language | English |
|---|---|
| Article number | 103937 |
| Journal | European Economic Review |
| Volume | 140 |
| DOIs | |
| Publication status | Published - Nov 2021 |
Bibliographical note
Funding Information:We thank the Editor, Isabelle Mejean, two anonymous referees, Alessandro Borin, Paola Conconi, Valentina Corradi, Egor Gornostay, Sacha Kapoor, Marcus Noland, Roman St?llinger, Patricia Tovar, Lorenzo Trimarchi, Wouter Vergote, Eva Zhang, participants at the European Trade Study Group, the Ljubljana Empirical Trade Conference, the ?Economics of Global Interactions? conference at the University of Bari Aldo Moro, the Midwest International Trade Conference, and the Southern Economic Association Conference for comments and suggestions. We also thank John Romalis for sharing his tariff data and Marcel Timmer for help with the inter-country input?output tables. We gratefully acknowledge the World Bank as the funding source for collecting data on antidumping expiry reviews. Milla Cieszkowsky and Alisa Yusupova provided excellent research assistance.
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© 2021 Elsevier B.V.