Trade in intermediate inputs, customs unions, and global free trade

Tsirekidze, David

doi:10.1111/roie.12392

Cited by 2 publications

(2 citation statements)

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“…This paper is closely related to Tsirekidze (2019), in which I study similar issues in the Customs Union setting. In addition, my paper is related to the recent literature on trade policy in global supply chains.…”

Section: Introductionmentioning

confidence: 99%

Global supply chains, trade agreements and rules of origin

Tsirekidze

2021

World Economy

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Free Trade Agreements (FTAs) usually come with restrictions on the use of intermediate inputs in order for final goods to qualify for free trade. I focus on Rules of Origin (RoO), which limit expenses on nonmember country's intermediate inputs. In a three‐country FTA formation game, I introduce international trade in intermediate inputs and RoO restrictions. In the case of symmetric countries, I show that as countries become more involved in global supply chains, measured by their input shares in foreign final goods production, global free trade is less likely to be a stable equilibrium outcome. Free riding is the main problem preventing countries from liberalising trade. Countries are better off being nonmembers of FTAs between the other two countries relative to global free trade. Rules of Origin can solve this problem by limiting the benefits countries get from other countries' free trade agreements. In the case of asymmetric countries, an additional incentive exists for the smaller country not to join: such a country gives up more than it gains from joining an FTA for a sufficiently high degree of asymmetry in country sizes. I show that global free trade is a stable Nash equilibrium under a larger region of asymmetric country parameter space in the case of RoO than without it. Therefore, it is shown that RoO is essential in order to attain global free trade.

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Section: Introductionmentioning

confidence: 99%

Global supply chains, trade agreements and rules of origin

Tsirekidze

2021

World Economy

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“…-Development of international cooperation and use of transit potential of the customs space of a country (Afontsev 2014). -Intensification of professional development of specialists who will ensure the operation of the customs space institutional platform, including through distance learning (Tsirekidze 2019). -Introduction of innovative technologies in the activities of customs institutions, taking into account the challenges of the 4.0 industrial revolution for national customs spaces and the possibility of future physical movement of goods produced using 4D and 5D printers across the border, which significantly distorts the organizational and institutional structure of customs (Darling 2015).…”

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Modeling the Risks of the Global Customs Space

Borysenko

Vasyl’yeva

Katerna

et al. 2022

JRFM

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The influence of globalization processes, the customs space of the country, requires the development and implementation of a transparent state customs policy to ensure security and integration into the space of the higher hierarchical order. The purpose of the study is to form scientific-applied recommendations regarding the development vectors of the customs space of a country in the global environment to improve its risk management system. The main method of study is econometric modeling, namely, canonical analysis in determining the interdependence of sustainable development and customs space. The purpose of the study is to suggest directions for development vectors for a country’s customs space that will mitigate various risks. Originally, 174 countries were selected for analysis, but the final sample was formed by 98 countries. According to the results of econometric modeling, it was determined that the following variables have the greatest impact on the customs space: human development index; GDP per capita; corruption perception index; global enabling trade index; environmental performance index; social progress index; global competitiveness index. The findings can be used by public authorities in developing a strategy for reforming the customs system of developing countries, taking into account the risks and challenges of the global environment.

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Trade in intermediate inputs, customs unions, and global free trade

Cited by 2 publications

References 35 publications

Global supply chains, trade agreements and rules of origin

Global supply chains, trade agreements and rules of origin

Modeling the Risks of the Global Customs Space

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