Chapter 3 develops a theory of the domestic politics of intra-industry trade. It argues that changes in the nature of trade away from endowments-based trade to two-way trade within industries change the structure of preferences over trade policy and the way that actors mobilize politically in order to influence trade policy. This, in turn, affects trade policy outcomes and the ease with which trade agreements are concluded. First, I argue that the distributional effects of intra-industry trade drive a wedge through industry preferences over trade policy. As intra-industry trade increases, globalized firms support openness, and smaller, domestic-oriented firms within the same industry support protection. Second, these heterogeneous firm preferences change the ability of industries to overcome collective action problems and organize politically to influence trade policy. I argue that industry associations are hamstrung in their ability to lobby while individual firms have a greater incentive to lobby alone for their preferred policies. Third, exporters will overwhelm domestic-oriented firms in their ability to lobby, and as a result, tariffs will be lower in industries with higher intra-industry trade, though this may not be the case with non-tariff barriers to trade.

This chapter examines the relationship between intra-industry trade and trade policy outcomes. Through a cross-national time-series analysis of trade liberalization in developed economies, the chapter shows that industries with higher IIT enjoy lower tariff levels, controlling for leading alternative explanations from the literature. This tests the hypothesis that intra-industry trade is less politically controversial and easier to liberalize than classic, endowments-based trade. However, this chapter also shows that IIT is associated with higher non-tariff measures, a new and significant finding, which is discussed as it pertains to the book's arguments about intra-industry trade’s winners and losers.

Multinational enterprises do not pay their fair share of taxes to market countries where profits are generated because market countries are only allowed to tax companies with a physical presence. Recently, a global tax deal (BEPS 2.0) was reached to tackle these issues. Proposed by the OECD/G20 Inclusive Framework and endorsed by nearly 140 countries, BEPS 2.0 sets forth two Pillars: Pillar One addresses digital taxation while Pillar Two addresses a global minimum tax. However, Pillar One’s success is doubtful, as its details have become increasingly complex and degraded by political compromises and carve-outs. Also, countries are unlikely to repeal digital services taxes (DSTs), which is an adamant requirement of the United States in adopting Pillar One. This chapter presents the treaty overrides problem that will occur if the United States implements Pillar One by executive agreement to bypass the treaty ratification and suggests separating the two Pillars to preserve the global minimum tax. Regarding DSTs, it provides empirical studies that demonstrate the harm retaliatory tariffs cause. Finally, it endorses the UN’s digital taxation proposal and proposes a new data excise tax.

With the rise of strategic rivalry and geopolitical competition, governments turned to economic policy to gain influence, power, and resources. The defining feature became the pursuit of national interest, which was invoked to introduce investment screening policies, increase tariffs, prevent cross-border M&A deals, expropriate assets, restrict technology transfer, provide preferential subsidies, and create national champions. To respond effectively, global companies must recognize the systemic changes underway and develop capabilities to address them. Companies need to acknowledge that they will come to be defined by their nationality and innovation is an important battlefield. Government policies to contain the influence of foreign firms from adversarial countries cluster around four levers: market access, level playing field, investment security, and institutional alignment. To actively manage geopolitical tensions, companies need to assess how geopolitics will share their resources, competitive advantage, and firm organization. They need to develop skills to scan the global landscape, personalize the information, plan the response, and pivot if there are headwinds. Impact on employees, who works, how work is performed, and where it takes place need to be evaluated. Managing policymakers becomes a crucial part of managing a global business.

The chapter examines the development of agriculture and rural society, the crisis of agriculture in the late nineteenth century, and the political mobilization of German farmers.

This chapter focuses on the new gas directive and regulation (the Gas Package) from the perspective of the hydrogen ‘revolution’, and the importance allocated to its future role in the ongoing energy transition and in the achievement of the ambitious net zero target by 2050. Particular attention is given to key regulatory concepts and pillars in the new Gas Package, aimed at creating the conditions for a more cost-effective transition and creating an internal market in hydrogen and low carbon gases: these are unbundling, tariff regulation and third-party access. The chapter first describes these concepts as developed by the new measures and questions whether these concepts, which have been effectively transposed from natural gas regulation to hydrogen regulation, are suitable to achieve a cost-effective transition to a decarbonised gas market. In particular, the chapter will examine whether the proposed terminology, although fundamental, is sufficiently clearly and comprehensively defined in the new measures. Second, the chapter questions whether the new Gas Package establishes the necessary stable regulatory framework for incentivising hydrogen investment, by highlighting where the Gas Package could have been more comprehensive but also flexible in its treatment of concepts such as unbundling, on the tariff regime and third-party access provisions. It also queries whether the challenges of regulatory balancing can be adequately dealt with by way of the ‘regulatory holiday regime’ as proposed in the Gas Package.

Introduces the economic crisis that the US is currently experiencing and the reasons why industrial policy is the right solution to it.

Explains the several dozen policy tools governments have used in the past and use today to impose effective industrial policies on their economies.

The WTO is founded on commitments that governments make to each other in the General Agreement on Tariffs and Trade. These rules provide a structure for international trade in which governments are generally restricted in when they can raise tariffs on imports and whether they can discriminate among their trading partners. This chapter examines the contemporary framework for international trade and its main rules, including national treatment, bound tariffs, and most-favored nation, as well as the WTO’s dispute settlement process. The Shrimp-Turtle case provides an illustration of how these rules interact with international politics to create new political dynamics.

This chapter discusses Keynes’s Economic Consequences of the Peace as a matrix for understanding the changing institutional landscape of international trade. In 1919, Keynes highlighted the perils of German participation and US non-participation in international politics, twin problems that continued to frame trade debates in the League of Nations for the remainder of the 1920s. Generally, German leaders supported the construction of an open and regulated world economy. Many internationalists were eager to lock Germany into a system of multilateral norms but also feared that integrating Germany into global markets would reinforce its dominance in key strategic sectors. In contrast, the United States remained aloof from League trade negotiations in the 1920s. Europeans were divided over whether to respond with universal trade rules that the United States might eventually be persuaded to follow or with a regionalist approach that would enable Europeans to negotiate directly with their Atlantic neighbour on a more equal footing. As Keynes saw clearly, both sets of concerns were exacerbated by the financial imbalances stemming from war debts and reparations.

This chapter investigates the degree of pass-through from import prices and tariffs to wholesale prices in interwar Britain using a new high-frequency micro data set. The main results are: (i) Pass-through from import prices and tariffs to wholesale prices was economically and statistically significant. (ii) Despite devaluation, import prices exacerbated deflation in the early 1930s because of the global slump in export prices. (iii) Rising protection, however, was a mild stimulus to prices during the shift to inflation.

Chapter Two identifies the current legal and regulatory arrangements related to China’s electricity sector by examining the institutions and governing authority, pricing and tariff regulations, and investment approval. These regulatory aspects often determine the market features and characteristics of an electricity system. This chapter provides the foundation for understanding the design of critical supporting mechanisms adopted by the Renewable Energy Law and their implementation, which are discussed in the subsequent chapter.