Five projects have been awarded funding in the second round of the Centre for Inclusive Trade Policy's Innovation Fund.
The Dawn of Inequality
PI: Mattia Bertazzini (University of Nottingham)
Scholars agree on the central role of economic differences between people, communities and regions in explaining political and developmental outcomes. However, there is limited understanding of the process that first led to the emergence of economic inequality and its persistence.
This project aims to explore and identify the origins of inequality by studying the emergence of inequality in the context of ancient Iraq. This is a particularly fruitful setting to study this question owing to its role as the “cradle of civilization” and the extraordinary amount of archaeological and historical research that has been carried out. By creating a novel archaeological dataset that builds on the researchers’ previous work on the area, the study aims to test the role of the political process of state formation that took off around 3000BCE (and which persisted afterwards) and the role played by trade in shaping patterns of inequality in the area.
Understanding the trader-agent connection: Effects on UK firms’ supply chain engagement and trade resilience
PI: Wanyu Chung (University of Birmingham)
85% of UK trade goes through specialised agents that are dedicated to dealing with customs and logistics issues. However, the reasons why firms engage with agents is unclear. Using comprehensive UK Customs data from HM Customs and Revenue (HMRC), this study empirically examines the factors guiding firms' choices to involve agents. The researchers investigate how agent-assisted trade influences firms' market strategies and resilience during disruptions like Brexit.
The findings will not only advance the understanding of the role of intermediaries' but also hold significant policy implications. By uncovering these dynamics, policymakers can pinpoint trade barriers, support small and medium enterprises, and develop strategies to navigate challenges, fostering a more inclusive and resilient global trade landscape.
The justice footprint of mineral imports in UK value chains
PI: Anabel Marin (Institute of Development Studies)
This project aims to give a justice dimension to the concept of ‘inclusive trade policy’ by uncovering a usually hidden link between trade and social and environmental justice for the UK. Focusing on the trade of minerals, which is at the core of the new European Open Strategic Autonomy Policy, which aims to ‘'de-risk' trade and reduce dependence on critical minerals, in line with the UK’s Critical Mineral Strategy, the team will build an index that captures the socio-environmental-conflict footprint of the UK’s final goods trade.
Mining is the first link in most global value chains (e.g. electronic devices, transport, construction). Increasing trade in minerals has potential justice implications as mineral extraction can cause numerous negative environmental impacts and generate socio-environmental conflicts with local populations. Understanding the link between these conflicts and trade is important for justice and the viability of trade.
Environmental Trade protection and Business perceptions: What are the implications for UK trade?
PI: Amrita Saha (Institute of Development Studies)
Environmental trade protection is being increasingly integrated in regulatory regimes across countries. The resulting regulatory stringency has a critical influence on business competitiveness, their export capacity and positioning in global value chains. Yet there is no clear consensus on how businesses perceive such strict regulations.
Using a mixed methods interdisciplinary approach, this project will investigate how environmental regulations affecting UK trade aligns with UK business perceptions on the stringency of those regulations. The researchers will use secondary data on technical barriers to trade for environmental protection and bilateral trade to ascertain regulatory stringency across sectors. They will then conduct discussions with businesses in specific sectors to understand their perceptions on such stringent regulations. The results will identify which sectors in the UK are the most exposed and vulnerable to technical barriers to trade for environmental protection based on their stringency, and the alignment between such stringency and business perception.
Trade and Gender Inequality
PI: Martina Uccioli (University of Nottingham)
Trade can have profound effects on gender inequality, and gender inequality might impact how economies adjust to trade shocks. The aim of this project is to study how gender inequality and traditional gender norms might have hindered efficient resource reallocation following a large trade shock - the “China shock” in the UK. The basic hypothesis is the following: when a woman is hit by a shock that reduces her employment opportunities, she may decrease her market hours and increase her share of housework, whereas a man may be less inclined to make similar adjustments, the more so the more conservative his views. These gendered responses to shocks might prevent the efficient allocation of resources within the household, which might be less resilient to shocks, and within society, which might face more volatility as a result. Understanding the different responses of households is crucial to quantifying the impact of trade shocks on gender inequality and societal welfare.
Two projects have been awarded funding in the first round of the Centre for Inclusive Trade Policy's Innovation Fund.
Designing Credible Leakage Border Adjustments To Promote Compliance. Theory and Empirics
PI: Chiara Forlati (University of Southampton)
By 2022, the EU should approve the Carbon Border Adjustment Mechanism (CBAM). Many countries, including the UK, are considering similar measures. CBAM is designed to prevent carbon leakage due to the Emission Trading System (ETS) by taxing imports according to their carbon content. However, since estimating import carbon content is very complex, CBAM will be applied only to a few sectors, and it is likely not to be effective in eliminating leakage.
This project proposes an alternative route towards leakage prevention: the Leakage Border Adjustment Mechanism (LBAM). LBAM offsets ETS-induced cost disadvantages of domestic producers relative to foreign competitors and requires knowledge only about product-specific import demand, export supply and output-to-emissions elasticities. This approach will enable computation of Leakage Border Adjustment Taxes that prevent leakage induced by ETS and then comparison of these with CBAMs in terms of welfare and emissions.
Treaty Scrutiny: The Role of Parliament for UK Trade Agreements
PI: Holger Hestermeyer (Kings College, London)
Parliaments play an important role in the democratic legitimation of international agreements, including trade agreements. In many jurisdictions they possess an up-or-down vote on trade agreements and their norm-creating and -legitimating functions are used for developing trade policy through collaboration between government and parliament.
In the UK, Parliament’s role in treaty-making is limited to scrutinizing treaties under CRAG 2010. The need to replace the EU’s trade agreements has incentivised a reform of internal parliamentary procedures. However, scrutiny is still found badly wanting, as a House of Commons International Trade Committee report dated 27 October 2022 concluded.
This project sets out to describe the development and current state of affairs of UK treaty scrutiny and from there develop realistic proposals for improvement, allowing for a greater involvement of parliament in treaty-making and thus for a more inclusive policy.