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Panel 10. Trade, IPR and Protectionism in The New Global Context*

Chair: Eugenia Baroncelli  (University of Bologna)
Discussants: S. Costalli (University of Florence), C. Guerriero (University of Bologna), A. Minerva (University of Bologna),  A. J. Naghavi (University of Bologna)

Date: Friday  10.30 - 12.30
Room: Aula Candeloro

Political polarization has risen in Europe and in the US over the last few years, with mounting protectionist agendas from both the Right and the Left. Traditional domestic cleavages pro- and against economic openness have compounded with anti-immigrant fears, distrust in multilateral cooperation and claims for state protection of in-group identities against outsiders. Income-related and cultural triggers have thus contributed to mobilize those neo-protectionist demands. Yet, the fragmentation of production across different national settings and the rise of GVCs, as well as the adoption of specific non-tariff policy responses, are altering the parameters under which pro- and anti-globalization constituencies compact. At times, they possess competitiveness-enhancing dimensions and may more-than-compensate the losses from economic restriction. The effects on the global economy of specific domestic socio-tropic and economic dynamics in emerging countries – beyond the oft-quoted cases of China/BRICS -  are also part of the equation, and therefore deserve greater attention. Coupling insights from international economics, IPE and comparative politics, the papers in this panel address these and closely related issues adopting both formal and empirical approaches. The panel thus intends to bring a fresh contribution to the debate on the sources and outcomes of neo-protectionist attitudes and policies, focusing on trade and IPR, across heterogeneous settings at a variety of analytical levels (individual, firm, country, system).

*In the context of the University of Bologna ALMAIDEA Starting Grant Project 'International trade policies: between openness and protectionism. IPRs, Brain circulation and GCVs', PI A.J.Naghavi.

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Confirmed Papers:

1) Non-tariff measures and competitiveness
G. Barba Navaretti (University of Milan - Statale and Centro Studi Luca D’Agliano), G. Felice (Politecnico, Milan), E. Forlani (University of Bologna), P.Garella (University of Milan - Statale).

In this paper, we explore how tariff and standard-like Non-Tariff Measures (NTMs) introduced by the EU are related with market conditions in domestic EU markets. While Tariffs work as a pure tax on import, standard-like NTMs potentially affect costs of both domestic firms and foreign exporters. NTMs may not necessarily work as protectionist measures and even induce pro-competitive effects in the domestic market in the longer term, especially if we allow for firms’ mobility. The impact could be different for large and small firms. We extend the model by Melitz and Ottaviano (2008) to include Non-Tariff barriers. We derive some testable implications relating Non-Tariff barriers to the number of firms selling in the domestic market and average efficiency. The link between NTMs and domestic market conditions depends on whether they involve new standards and technical specifications imposed on both domestic and foreign firms, or, rather, the extension to foreign firms of standards and technical specifications already adopted by domestic firms. In the first case, there is a decline in the number of firms and in average productivity; in the second case, NTMs induce pro-competitive effects: an increase in the number of firms and of average productivity. We then take the model to the data for a group of European countries and manufacturing industries. We combine Compnet data for 15 EU countries in 2001-2012, providing information on firms’ performance at the industry level and by size class, with the STC WTO-I-TIP database, with information on Specific Trade Concerns raised at the WTO on NTMs and with the Trains database with information on Tariffs. The NTMs that we consider have similar effects as in the second NTMs case in the theoretical model; the results for Tariff are in the same direction, albeit of a larger magnitude. These results are consistent with a theoretical framework allowing for firms’ mobility in the longer term.

2) The Fallacy of Intellectual Property Right in Islamic Law
A. J. Naghavi (University of Bologna), G. Pignataro (University of Bologna)

The protection of intellectual property (IP) is rarely prescribed in religious doctrines. Islam is an exception. At the same time, we observe high piracy rates and little innovation in Muslim countries. This paper provides an economic model to explain the fallacy of the existence of IP protection in Islamic law (Sharia). Islam encourages IP protection, but does not punish expropriation. Muslim societies rely on morality and loyalty to religious rules as opposed to legal institutions for the enforcement of IP rights. Considering the example of a licensing relationship between an IP owner who shares its know-how and a supplier who must undertake a relation-specific investment, this creates scenarios of asymmetric information, in which moral agents underinvest in low-IP-sensitive sectors and amoral agents expropriate in high-IP-sensitive sectors. We show situations based on the equilibrium that prevails and the proportion of (a)moral agents in the society in which IP protection can be beneficial to IP owners. Legal IP enforcement fosters innovation and induces entry of IP into the market in high-IP-sensitive sectors when the proportion of amoral agents is high, and in low-IP-sensitive sectors when the society is more balanced in terms of morality.


3) Party preferences, mass attitudes and the choice for protection in the third millennium
E. Baroncelli (University of Bologna) and F. Negri (University of Milan - Statale)

This paper deepens the investigation on the domestic political determinants of trade openness. The role of income-related preferences on trade has been explored since long by economists, and its political mediation via domestic actors and institutions investigated by political science, IR and IPE studies. Recent findings on the implications of intra-industry trade in sectors with high firm heterogeneity, and the diffusion of global value chains (GVCs), have suggested to nuance fears about resurgent protectionism in the current global context, allegedly characterized by growing pro-free trade lobbying and lower salience of trade politics. However, systemic developments (e.g., major economic shocks, shifting security orders, demographic dynamics, migration flows) and their reverberations in the domestic political arenas (populist discourses in major trading states) indicate that it may be both timely and prospectively relevant to explore old and new relevant out-group dynamics that may influence protectionism. In the context of the Project ‘Trade policies, IPR, Brain Circulation and GVCs: between openness and protectionism’, sponsored by the University of Bologna, this paper maps mass attitudes on trade and trade-related aspects through data from surveys conducted in different areas of the world. Then, it deepens the focus on the relation between such mass attitudes and the actual trade policies implemented by states across time, as well as their connections with – and the relative importance of - other socio-economic, institutional and political determinants of protectionism.