The Effect of Free Trade Agreements on International Trade: An Empirical Analysis for Developed and Developing Countries

One of the more frequent campaign promises made by Donald Trump was the elimination of the North American Free Trade Agreement (NAFTA). Calling it “one of the worst deals ever”, he held it responsible for the unemployment of many U.S. citizens (Welker, 2017). The statement has been one of many regarding Trump’s plan to put “America first”. His plans on protection include the renegotiations or elimination of free trade agreements (FTAs), increasing import tariffs and the “Buy American-Hire American” statements. However, especially Trump’s stance on FTAs has been criticized by many economists, as it seems that there is no bigger gap between economists and politicians than on the subject of free trade (Lowenstein, 2017). 

Regarding the FTAs, Trump is going down a path which could have large consequences for the United States, but also to the related countries in the free trade agreements. On the 23rd of January 2017, the U.S. pulled out of the Trans-Pacific Partnership (TPP), which CNN dubbed as “the largest proposed free trade deal in history” (Riley, 2017). By the U.S. pulling out, the agreement cannot be ratified due to pre-arranged conditions on ratification. With the participating countries, consisting of developed and developing countries, having a combined Gross Domestic Product (GDP) of 27.4 trillion US dollars, this trade agreement could have huge consequences for the international trade of the participating countries. 

Read more: https://thesis.eur.nl/pub/38473/Huijskens-R.-388659.pdf

Suggested by: Noor Amalina Mohd Ismail (Statistician, DOSM)

Monthly Palm Oil Trade Statistics 2019

Palm Oil 2019
Infogram

Statistics on UK-EU Trade

Main points:

• The EU, taken as a whole is the UK’s largest trading partner. In 2018, UK exports to the EU were £291 billion (45% of all UK exports). UK imports from the EU were £357 billion (53% of all UK imports).
• The share of UK exports accounted for by the EU has generally fallen over time from 55% in 2006 to 44% in 2016, though this increased slightly to 45% in 2018.
• The share of UK imports accounted for by the EU fell from 58% in 2002 to 51% in 2010, though this has now been at 53% since 2014.
• The UK had an overall trade deficit of -£66 billion with the EU in 2018. A surplus of £28 billion on trade in services was outweighed by a deficit of -£94 billion on trade in goods.
• The UK had a trade surplus of £29 billion with non-EU countries. A surplus of £77 billion on trade in services outweighed a deficit of -£48 billion on trade in goods.
• Services accounted for 41% of the UK’s exports to the EU in 2018. Financial services and other business services (a category which includes legal, accounting, advertising, research and development, architectural, engineering and other professional and technical services) are important categories of services exports to the EU – in 2018 these two service categories made up just over half of of UK service exports to the EU.
• Wales, followed by Northern Ireland and the North East of England had the highest percentage of goods exports going to the EU of all the countries and regions in the UK in 2018. The East of England followed by Northern Ireland had the joint highest proportion of goods imports from the EU.
• EU tariffs are generally low but are high on some goods, especially agricultural products.

Link: https://researchbriefings.files.parliament.uk/documents/CBP-7851/CBP-7851.pdf

Fundamental Principles of Official Statistics

Almost twenty years after their adoption in 1994 by the UN Statistical Commission, the ten Fundamental Principles of Official Statistics are still as relevant today as they were in the past. They have become an integral part and a common reference in the statistical systems at global and national level. 

A milestone in the history for the international statistical community was reached when, on 29 January 2014, the UN General Assembly adopted a resolution concerning the Fundamental Principles. It is the first time they have received such high recognition at global political level and it shows the importance of good statistics for decision-making in the democratic society. 

The 20th anniversary of adopting the Fundamental Principles, which was celebrated in early 2014, was used as an occasion to further promote their worldwide implementation. In this context, two main tasks (amongst others) were mandated by the UN Statistical Commission: 

• Revision and update of the language of the preamble of the Fundamental Principles in order to take new global developments into account. 

• Strengthening the practical implementation by elaborating a practical guide for the implementation of the Fundamental Principles and on how to ensure independence of national statistical systems. 

The implementation guidelines for the Fundamental Principles in Part I list several actions or activities, which a statistical agency is advised to take into account when aiming to improve the practical and effective implementation of a certain Principle or when developing a certain Principle further. Concrete as well as practice-orientated examples (good practices) complement these recommended actions

Read more: https://unstats.un.org/unsd/dnss/gp/Implementation_Guidelines_FINAL_without_edit.pdf

Trade Info Vol.3/2020 : Exports of Durian (2015-2019)

Latest Release: December 2019

Analysing International Trade Patterns: Comparative Advantage for the World’s Major Economies

Comparative advantage is the single most widely used indicator for measuring a country’s international trade performance. A country is considered to have a comparative advantage in the production of certain goods if it has low relative cost in the production of that good compared to other countries. This paper revealed comparative advantage (RCA) for seven major economies that contributed about 80% of global manufacturing exports. According to business literature, a country’s standard of living and a firm’s profit depend on competitive advantage. On the other hand, economics literature suggests that while it may be desirable to have an absolute advantage in the production of goods, it is the comparative advantage that is vital in explaining trade patterns.

There are two theories to explain patterns of trade: comparative advantage and increasing returns to scale. Comparative advantage occurs due to differences across countries in factor endowment or technology, whereas returns to scale is related to a country’s size (returns to scale), market structure (with imperfect competition), and location (with trade costs). While estimation of comparative advantage at a single point in time is important, a deeper understanding of trade dynamics requires the knowledge of how these advantages are changing over time.

Link: https://journals.lib.unb.ca/index.php/JCIM/article/download/12446/13352/0

Suggested by: Nur Fathin Mohd Khalil (Statistician, DOSM)

ASEAN-EU - International Trade in Goods Statistics

Link: https://ec.europa.eu/eurostat/statistics-explained/pdfscache/71515.pdf

This article provides a picture of the international trade in goods between the European Union (EU) and ASEAN . It analyses the type of goods exchanged between them and the shares of each EU Member State in those exchanges. 

The countries belonging to ASEAN are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. This article is part of an online publication providing recent statistics on international trade in goods, covering information on the EU’s main partners, main products traded, specific characteristics of trade as well as background information.

Suggested by: Jamaliah Jaafar (Statistician, DOSM)