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Global Value Chains and the Removal of Trade Protection

Chad Bown (), Aksel Erbahar and Maurizio Zanardi ()

No 14451, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 almost a third of the trade flows subject to the most common temporary restrictions (i.e., antidumping) applied by high-income countries in 2006.

Keywords: antidumping; global value chains; tariffs; trade liberalization; WTO (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-int
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