Download Briefing Paper 77 Briefing Paper 77 – December 2023Nicolò Tamberi Key points Introduction Conceptual background Lessons from data The evidence The space for trade policy Key points Cross-country macro studies find evidence of a positive association between trade and growth. The effect of trade on growth is conditional on a series of other economic conditions such as macro-stability and the absence of corruption. Domestic tariff liberalisation has positive effects on firm-level total factor productivity. The reduction in tariffs on intermediate inputs increases firm-level productivity but also raises markups. The reduction in the output tariff increases competition in the domestic output market, increases firm-level productivity and reduces markups. Import domestic liberalisation and increased foreign competition push firms to invest in innovation activities and reallocate resources from least-productive firms, which shrink and exit the market, to the most productive ones, which expand. Foreign tariff liberalisation allows firms to take advantage of economies of scale by enlarging the output market. Firms respond by increasing expenditure on innovation activities and technology. Trade policy is one of the instruments available to policymakers to foster growth. Growth-oriented policies should be designed together, and trade policy should make other growth-focused policies more effective. Ensuring [...]

Download Briefing Paper 75 Briefing Paper 75 – July 2023 Guillermo Larbalestier, Minako Morita-Jaeger, Nicolò Tamberi, and Manuel Tong Koecklin Key points Introduction Assessing the economic potential from the CPTPP Further policy considerations Political and institutional dilemmas that can arise from expansion Conclusion Key points: Accession to the CPTPP will not lead to substantial economic gains for the UK. Any such gains will largely depend on possible future expansion of the CTPPP, primarily should China ever accede, and to a lesser extent Taiwan, Costa Rica, Ecuador and Uruguay who have also applied to join. The UK’s current engagement in CPTPP supply chains is limited especially when compared to its relations with the EU and the US. However, further expansion of the CPTPP could create possibilities for the UK to strengthen supply chains with acceding CPTPP countries. In part this arises from a set of standardised CPTPP ‘rules of origin’ across all members. However, for some products, these are more restrictive than the UK has with those countries through recently signed bilateral agreements. Product-specific analysis is required to understand which products could benefit from the CPTPP ROOs arrangements. China’s accession into the CPTPP seems highly unlikely both on geopolitical [...]

Download Briefing Paper 72 Briefing Paper 72 – December 2022 Nicolò Tamberi and Manuel Tong Koecklin Key Points Introduction Distribution of PURs across products and between the UK and EU Composition issues Conclusion Key points For UK-EU trade, the TCA grants tariff-free trade – providing that the product originates in the partner country and can be shown to originate. Obtaining proof of origin can be costly, and in some cases, the cost may outweigh the duty saving under the preferential regime. While in principle the trade barriers imposed by the TCA are the same for trade going in either direction across the Channel, the utilisation of preferential tariffs differs between the EU and the UK. EU exporters are utilising preferences more than UK exporters – 8 percentage points more on total trade. UK exporters tend to use preferences more where the value of trade is larger, while this does not apply to EU exporters, who use preferences more generally. There are also big differences in the use of PURs in the Textile and Clothing sector. As well as the bureaucratic costs of proving origin, the underlying restrictiveness of the rules of origin themselves, is likely to affect the [...]