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Trade Agreements and Supply Chains

Project description

A closer look at regional trade agreements

Regional trade agreements (RTAs) are a key part of all international trade relations. RTAs are reciprocal trade agreements for goods and services between two or more partners, not necessarily belonging to the same region. In recent years, they have increased in number, and also in depth and complexity. There are currently 301 RTAs in force. The EU-funded TRASC project will develop new theoretical models to analyse the RTA supply chain nexus. It will study their impact on firms’ decisions, productivity and welfare. The project will also seek to shed new light on the interplay between firms and economics, law and politics. Overall, it will furnish researchers, economists and policymakers with information concerning the advantages and disadvantages of trade agreements.

Objective

Recent decades have witnessed two major trends in international trade. The first is the increasing fragmentation of production processes across countries: advances in information and communication technology and falling trade barriers have allowed firms to retain in their domestic economies only a subset of production stages, leading to a surge of trade in intermediate goods. The second trend is the proliferation of regional trade agreements (RTAs), which have risen in number and have become “deeper”, encompassing many provisions that go beyond traditional trade policy. RTAs have contributed to the creation of regional supply chains (e.g. “Factory Europe”, “Factory North America”), shaping firms’ sourcing decisions through preferential tariffs and rules of origin. The recent backlash against RTAs, exemplified by Brexit and President Trump’s decision to renegotiate the North American Free Trade Agreement, could have dramatic consequences for supply chains in Europe and North America.

I propose an ambitious research agenda that will develop new theoretical models and use exceptionally rich new data for pathbreaking analysis of the RTAs-supply chains nexus. First, I will study the impact of RTAs on firms’ sourcing decisions, productivity, and welfare, breaking from the literature on global sourcing, which neglects the role of trade agreements. Second, I will examine how large corporations with international supply chains shape the content and political support for deep RTAs, breaking from a vast literature in political economy, which studies agreements covering trade provisions only and neglects the role of firms.

I will address novel and timely questions about the RTAs-supply chains nexus, emphasizing the key role played by firms and the interplay between economics, law, and politics. This is an extraordinarily high-return agenda, given the importance of understanding the consequences and determinants of trade agreements for economic policy and academic research.

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Keywords

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Programme(s)

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Topic(s)

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Funding Scheme

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ERC-ADG - Advanced Grant

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Call for proposal

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(opens in new window) ERC-2018-ADG

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Host institution

THE CHANCELLOR, MASTERS AND SCHOLARS OF THE UNIVERSITY OF OXFORD
Net EU contribution

Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.

€ 623 942,16
Address
WELLINGTON SQUARE UNIVERSITY OFFICES
OX1 2JD Oxford
United Kingdom

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Region
South East (England) Berkshire, Buckinghamshire and Oxfordshire Oxfordshire
Activity type
Higher or Secondary Education Establishments
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Total cost

The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.

€ 623 942,41

Beneficiaries (2)

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