The international investment agreement regime (IIA Regime) is composed of thousands of IIAs and a system of investor–state dispute settlement. Historically, high-income developing countries (HIDCs) were part of the global South and thus ‘hosts’ of foreign direct investment (FDI). Increasingly, however, these countries have become ‘home’ to investors who are hosted and exposed to political risk abroad. Representing both home and host country interests simultaneously, how do HIDCs balance these crosscutting pressures? We argue that as the position of an HIDC shifts from mostly a recipient towards a sender of significant amounts of FDI, it will be more willing to provide protection to foreign investors at the expense of state regulatory space in its IIAs, thereby increasing its exposure to the IIA Regime. Employing an original data set that measures this exposure for sixty-four HIDCs over six decades, we first show that the degree of HIDC exposure to the IIA Regime varies a great deal. Using a general method of moments (GMM) analysis and controlling for a host of confounding factors, we demonstrate that, indeed, higher levels of FDI outflows as a share of the national economy result in greater exposure to the IIA Regime.

The World Trade Organization (WTO), a unique multilateral trading regime, has failed to establish its relevance to the digital nature of trade. This article revisits the ‘principle of technological neutrality’ to make the cross-border supply of services by electronic means subject to the current rules-based trading regime. I argue that the principle of technological neutrality could help resolve a number of thorny legal issues: confirming the applicability of the General Agreement on Trade in Services (GATS) rules to the delivery of services by electronic means; providing a guideline to determine the likeness of services in the era of digital trade; and backing up an evolutionary approach to interpreting the GATS schedules of commitments. However, the WTO adjudicatory bodies have been reluctant to rely on the principle of technological neutrality, which is referred to as strategic neutrality in this article. This article urges the WTO adjudicatory bodies to abandon their strategically neutral position on technological neutrality immediately. It also explores ways to incorporate the principle of technological neutrality into the world trading system at the bilateral, plurilateral, and multilateral levels.

The European Union (EU) has been using economic sanctions both as a foreign policy tool and as a liberal alternative to military action. Since 2006, it has been implementing general sanctions against the whole economy of Iran, affecting their trade relations, and since 2007, following the imposition of sanctions by the UN Security Council, it has also been using smart sanctions targeting Iranian entities and natural persons associated with the country's military activities. In a nonlinear autoregressive distributed lag (NARDL) model, this paper investigates the impact of general and targeted EU sanctions against Iran on quarterly bilateral trade values between the 19 members of the euro area (EA19) and Iran between the first quarter of 1999 and the fourth quarter of 2018. In a robustness NARDL specification, trade between Iran and the 28 members of the EU is analysed. In addition, a gravity model of bilateral trade between Iran and the EU member states is run in a robustness check. The results indicate that the EU's general sanctions have strongly hampered trade flows between the two trading partners in almost all sectors, except for the primary sectors. Furthermore, our study finds that the impact of smart sanctions targeting Iranian entities and natural persons is much smaller than the impact of general sanctions on total trade values and the trade values of many sectors. Smart sanctions affect the exports of most sectors from the EA19 and the EU28 to Iran, while they are statistically insignificant for the imports of many sectors from Iran. Thus, this paper provides evidence of the motivations behind smart sanctions, which target specific individuals and entities rather than the whole economy, unlike general sanctions, which have a negative impact on ordinary people.

The Common External Tariff (CET) of the East African Community (EAC) customs union has long been considered the cornerstone of the most successful example of regional integration in Sub-Saharan Africa. In this paper, we assess the implementation of the EAC-CET using a novel dataset of country- and firm-level deviations from the common tariff regime constructed by digitizing information in gazettes published by the Secretariat of the EAC between 2009 and 2019. Employing these data, we present five patterns on EAC tariff policy: (i) increased usage of country-level deviations from the common tariff regime render the EAC-CET less and less ‘common’; (ii) Kenya, Tanzania, and Uganda predominantly use unilateral deviations to increase external protection while Rwanda mostly decreases tariffs; (iii) Kenya, Tanzania, and Uganda increase tariffs for the same classes of products, but target different industries; (iv) unilateral tariff reductions at the country level are mostly used to facilitate access to inputs; (v) data on firm-level exemptions suggest that private sector development in the EAC would benefit from lower tariffs on intermediate inputs. Our findings demonstrate an incipient but clear trend in the EAC away from a communal tariff regime and towards national and more protectionist trade policies.

Legitimate reasons for the imposition of non-tariff measures (NTMs) within regulations have triggered their extensive use. Among these measures, technical barriers to trade (TBTs) and sanitary and phytosanitary (SPS) measures allow countries to impose restrictions on the import of low-quality products suspected of harming domestic consumers’ health, plant life, or the environment. This paper analyses two regulative and standard-like NTMs – TBTs and SPS measures – and the quality of traded products that is driven by their imposition, which is a general underlying motive for the adoption of such regulations. A dummy variable measuring the existence of these NTMs and a count variable indicating their stringency are used in the analysis. Moreover, two other variables indicate flows of NTMs imposed in each year and stocks of these NTMs accumulated over years. The results indicate that TBTs and SPS measures do indeed imply a higher quality of traded products. Stringent TBTs with more regulations imposed in each year (i.e. flows of count TBTs) have the largest impact on the quality of traded products. However, for SPS measures, only the existence of a regulation (i.e. the dummy variable on flows of SPS measures) on a traded product has the strongest impact on its quality.

The tariff preferences in FTAs do not apply automatically to all imports. Instead, importers can request to use the tariff preferences, but must then show that the imported goods fulfil the formal requirements (e.g. rules of origin) of the FTA. This is costly, which is a likely reason why tariff preferences are not always used. This research note examines preference utilization under the FTA between the EU and South Korea, which was formally ratified in 2015 (but had been provisionally applied from 2011). We use firm and transaction level data for Swedish imports from South Korea during November 2016 to answer the question ‘Who uses the EU's FTAs?’ With information on firm size, product category, import mode (direct imports or customs warehousing), preference margin, potential duty savings, and transaction size, we provide a detailed picture of when firms choose to utilize the tariff preferences. The results suggest that the differences across importers are not primarily related to firm size, as is sometimes suggested in extant literature. We also find that it is the size of the import transaction rather than the size of the preference margin that determines preference utilization.

This article offers the justification for a type of carbon customs union in which countries with a diverse range of high-ambition domestic climate measures would adopt a common external tariff on carbon intensive imports from countries outside the union. We explain why any pragmatic approach to carbon border measures (CBMs) is likely to create problems under prevailing interpretations of the World Trade Organization's (WTO) primary rules. Given the urgency of the climate crisis and the fact that the legality of a CBM – no matter how designed – will be a question of first impression for any WTO dispute panel, WTO consistency should take a backseat to considerations of domestic legal and political feasibility in designing a CBM. Instead of trying to fit a CBM into current understandings of WTO rules, WTO members should renegotiate WTO rules to permit a range of aggressive, but likely trade-restrictive, decarbonization measures. Having said that, we also recognize that WTO negotiations may take longer than optimal from a decarbonization standpoint. We therefore suggest an approach that would allow WTO members to take advantage of flexibilities that existing WTO rules afford.