Working Papers

IIT’s working papers series conveys current ideas and works in progress on major trade and development issues. 

We aim to disseminate our latest research in order to contribute substantially to the knowledge base through informing, influencing, and improving the practice of international trade policy and negotiations. 

These papers are technical in nature and written in the style of a journal paper, yet the ideas are presented in accessible formats to enable a wider readership. 

The views expressed in a working paper are those of the authors and do not necessarily reflect those of the University of Adelaide or IIT.

Latest working papers

The Value of Cross-border Digital Transmissions to MSMEs in Indonesia: Implications for Participation in the WTO E-commerce Moratorium

WORKING PAPER 15: Cross-border digital transmissions are crucial components of the global trading system. Currently, WTO members do not impose custom duties on inward flows, in-keeping with the WTO’s temporary moratorium. However, it is likely this moratorium will expire, and key members may move to impose taxes in the future. As our latest Working Paper attests, in Indonesia’s case this would amount to significant self-harm.

Read more about Implications for Participation in the WTO E-commerce Moratorium

Carbon Border Tax: How the CBAM could hold great potential for Australian Business

WORKING PAPER 14: Soon the Australian government’s Carbon Leakage review will recommend whether the country should adopt a border carbon tax, or not. In our latest Working Paper Dr Susan Stone sets out her reasoning for why we should.

Read more about How the CBAM could hold great potential for Australian Business

Standing up to Chinese economic coercion: Is Australia a model of economic resilience?

Contrary to some prior research findings, the economic costs to Australia of China’s economic coercion are high. Unfortunately, while the bilateral mood music is improving resetting relations may not be possible, nor likely, as both countries pursue economic diversification from the other. Yet there is much to be gained from a calibrated shift in trade and investment relations, notwithstanding the hostile geopolitical environment. Australia needs to establish a 10-15 years strategy for where it wants the relationship to be, and like every other country in the region, negotiate its differences with China.

Read more about Is Australia a model of economic resilience?

Measuring diversification in Australian Goods Exports, 2001-2021: Policy and Technical Considerations

China’s blocking of sales of Australian commodities has led to increased interest in diversification of Australia’s exports, to lessen dependence on the Chinese market. Australia’s export diversifications was increasing in the second half of the 21st century, with the Australian government seeking new markets in the emerging economies. However, export concentration, both geographically and in products and commodities, has increased since the start of this century. This paper measures the geographical export concentration and the product concentration of Australian exports to China and the World over the previous 20 years, and the policy implications.  

Read more about Policy and Technical Considerations

The future of EU trade policy and strategies in a militarised environment

China’s economic rise has transformed the international trade system. Furthermore, given its divergent economic model China is challenging the global economic order in ways that previous Asian competitors never did. In response to systemic rivalry and an increasingly tense international environment, the EU seeks to build more “strategic autonomy” from the United States, its main security benefactor. Economically, the EU policy of Open Strategic Autonomy seeks to maintain openness to trade, while developing tools for dealing with coercive and unfair trade practices. This paper identifies the key elements of this policy, as well as the risks it holds for European economic liberalism.

Read more about The future of EU trade policy and strategies in a militarised environment

Desktop analysis of agricultural subsidies and environmental impacts

There is broad agreement that much of the government support provided to agriculture today is environmentally harmful. This report explores the impacts of production and trade-distorting domestic support in agriculture on climate (i.e., greenhouse gas emissions) and the environment (i.e., water, biodiversity, and land degradation). Global reform is needed, however agriculture is a highly sensitive sector, one that is crucial for national food security. Gaining momentum for policy change can be difficult. Successful policy reform requires coalition building. A sustained evidence-based networking initiative that incorporates active public engagement and global coalition building should be developed on a priority basis.

Read more about Desktop analysis of agricultural subsidies and environmental impacts

Improving border adjustment mechanisms

Despite several attempts and significant progress, broad agreement on the most appropriate way to manage conflicts between international trade and environmental issues has yet to emerge. Consequently, this paper begins with a search for a set of principles to guide the use of border adjustment mechanisms to ameliorate global environmental problems or, as economists call them, global externalities.
Ten principles are developed, and then applied to the European Union's current CBAM design, and recommendations for improving that design are put forward. As this CBAM is rooted in the EU's Emissions Trading System, broad recommendations for aligning the ETS with the principles are also offered.

Read more about Improving border adjustment mechanisms

How China challenges the liberal trade order: Coercion, contestation and the socialist market economy.

The original China ‘engagement strategy’ was grounded in the assumption that WTO membership would turn China into a liberal market economy. Today the engagement strategy is acknowledged as having failed by China’s largest trading partners, who increasingly view Beijing as a systemic rival. Yet, much international economics still views the engagement strategy as a viable approach for driving liberal reforms within China, indicating a growing gap between political thinking and international economics. This paper addresses that gap, arguing there are theoretical and empirical grounds that support viewing China as a rival economic system that will increasingly challenge core aspects of the existing liberal trade order.

Read more about Coercion, contestation and the socialist market economy.

Strengthening African Agricultural Trade: The Case For Domestic Support Entitlement Reforms

Reform of domestic agriculture support in the form of financial subsidies has long been a vexed issue. One relatively promising area for reform is to address WTO members’ entitlements to deploy domestic support, rather than aiming to cut actual expenditures per se. Specifically, reducing entitlements would diminish members’ rights to increase domestic support payments in future. Such reductions are best targeted at those subsidies that distort trading partners’ production and trade incentives, rather than at subsidies generally regarded as either relatively benign, or minimally distorting to support domestic farmers and the agricultural economy.

Read more about The Case For Domestic Support Entitlement Reforms

Trade, Technology and Security: Exploring the Linkages.

Over the past decade China has developed into a technological competitor during a period of increased geopolitical tensions with its major trading partners. This has resulted in increasing securitization of trade and technology as well as growing techno-nationalism. This working paper explores the linkages between trade, technology and security, focusing on application of national security provisions, how the latter are justified or in breach of existing international trade rules, and potential solutions for balancing the multilateral principle of non-discrimination with the imperative of upholding national security.

Read more about Exploring the Linkages.

Rethinking special and differential treatment in the World Trade Organization

The overarching principle of SDT is encapsulated in paragraph 1 of the preamble to the Marrakesh Agreement (1994), establishing the WTO and specifying its functions. The WTO Secretariat lists 155 SDT provisions in the WTO Agreements. Development issues have been dealt with in the WTO for over sixty-years in subsequent ‘Trade Rounds’ and have concluded with varying degrees of success.

Read more about Rethinking special and differential treatment in the World Trade Organization

Economic Coercion by China: The impact on Australia's merchandise exports

Australia is estimated to have foregone export revenue of around US$4.9 billion (A$6.6 billion) over July 2020 to February 2021 as a result of China’s restrictions or discriminatory purchasing affecting eight key commodities – coal, copper ores and concentrates, frozen beef, wine, cotton, barley, rough wood and rock lobster.

Read more about The impact on Australia's merchandise exports

Industrial Subsidies and their impacts on exports of trading partners: The China Case

This paper explores the impact of Chinese subsidy interventions in the upstream sector on the competitiveness of the downstream sector. In particular, the paper investigates the effect of Chinese subsidies on basic metal products on the export competitiveness of downstream sectors in other major trading countries. To explore the impact of base metal subsidies interventions on the downstream sector of a trading partner, we exploit both temporal variation in subsidy interventions and in base-metal consumption by the downstream sector.

Read more about The China Case

Morphing Risks to Australia’s Goods Trade with China

At the start of 2020, the US-China Economic and Trade Agreement (the Phase One Agreement or Agreement) captured the attention of Australian policy makers and business. China had agreed to substantially increase goods imports from the United States in 2020 and 2021 and to accept certain US standards and conformity assessment procedures to assist US companies to access Chinese agricultural markets.

Read more about Morphing Risks to Australia’s Goods Trade with China

Industrial Subsidies, market competition, global trade and investment: Towards a research agenda

Subsidization by states of their domestic industries to gain competitive advantage abroad is a perennial topic in international trade discussions. As the world moves into a multipolar environment and China rises in economic prominence, the rules governing subsidies, particularly to the industrial sector, are in the spotlight. 

Read more about Towards a research agenda