The Effect of China s Preferential Trade Agreements on Energy Trade

Size: px

Start display at page:

Download "The Effect of China s Preferential Trade Agreements on Energy Trade"

Moris Bond
5 years ago
Views:

1 The Effect f China s Preferential Trade Agreements n Energy Trade Tarek Atalla, Carl Andrea Bllin, Philipp Galkin 40th IAEE Internatinal Cnference, "Meeting the Energy Demands f Emerging Ecnmies: Implicatins fr Energy and Envirnmental Markets." June, 2017, Marina Bay Sands, Singapre 01/01/2015

2 Sectin Name Sectin Title / Subject Why China / PTAs / Energy? China is dependent n energy imprts China imprts 70% f cnsumed crude il, 39% f natural gas and 7% f cal (NBS China) Chinese energy sectr affects glbal markets China cnsumes 48% f glbal cal, 13% f il (BP) Chinese cal imprts = 18% f glbal, crude il - 15% (Wrld Bank) China is actively engaging in preferential trade deals Preferential trade deals with 23 ecnmies Deals with 20+ ecnmies under negtiatin (including majr energy exprters such as GCC cuntries and Suth Africa) 2

3 Sectin Name Sectin Title / Subject Research Questins Is energy / resurce security the main driver f Chinese preferential trade strategy? D the PTAs have a significant impact n Chinese energy imprts / energy exprts t China? Des the impact vary by particular prduct grup? Is a PTA with China likely t help increase r secure a share in Chinese energy imprts? Des a PTA with China tend t increase the Chinese share in the partner s energy exprts? Which PTA cmpnent tariff reductin r institutinal arrangements is mre imprtant in facilitating energy trade with China? 3

4 Sectin Name Sectin Title / Subject China s PTA Partners 4

5 Sectin Name Sectin Title / Subject China s PTA Strategy Partner selectin Preference fr bilateral rather than multilateral deals N deals with many tp trading partners (EU, US, Japan, India, Brazil, Russia) Surcing energy, raw materials and agricultural prducts imprtant but nt exclusive criterin Other cnsideratins include: access t significant r strategically imprtant markets, cmplementary ecnmic and trade structures, extending plitical influence The structure f a PTA agreement N template, designed n an individual basis Initial pririty trade in gds thrugh tariff reductin Tariff cncessins fr develping ecnmies Depending n the prgress in relatinships additinal agreements n trade in services and investments Recent shift (effect f the TPP?) PTAs with Australia, Suth Krea, negtiatins with Japan Mre cmprehensive deals 5

6 Trade value (bn USD) Event Name Sectin Name Sectin Title / Subject China s Energy Imprts in Freign Trade China's Energy and Ttal Imprts frm PTA Partners Energy imprts Nn-energy imprts % f energy in ttal imprts 20% 15% 10% 5% 0% Structure f Energy Imprts frm PTA Partners, bn USD Cal Crude il Oil prducts Gas Other fuels and their prducts Structure f Energy Imprts frm Nn-PTA Partners, bn USD Cal Crude il Oil prducts Gas Other fuels and their prducts Surces: Natinal Bureau f Statistics f China, Wrld Bank, ITC Trade Map 6

7 Sectin Name Sectin Title / Subject China s Energy Imprts Structure Cal, bn USD Cal - PTA imprts Cal - Nn-PTA imprts Oil Prducts, bn USD Oil Prducts - Nn-PTA imprts Oil Prducts - PTA imprts Gas, bn USD Gas - PTA imprts Gas - Nn-PTA imprts Other Fuels and Prducts, bn USD Other Fuels - nn-pta imprts Other Fuels - PTA imprts Surces: Natinal Bureau f Statistics f China, Wrld Bank, ITC Trade Map 7

8 Sectin Name Sectin Title / Subject Scpe and Methd General mdel frmulatin Y = Z*β + X*α + ε Extensin f the gravity mdel f trade A panel f 22 partner ecnmies ver 21 years frm 1995 t categries f energy prducts Y (dependent variables) values and vlumes f imprt and exprt flws, imprt and exprt shares, trade intensity indices Z a matrix f variables capturing the effect f PTAs: PTA: a dummy variable that captures whether an ecnmy has a PTA with China; DI: the value f the Depth Index that characterizes a PTA between China and partner ecnmy If in any given year t TarAvg: simple average imprt tariff fr a particular prduct grup applied by China t a partner ecnmy X a matrix f ther cntrl variables including GDP f China, GDP f partner ecnmy, exchange rates f Chinese yuan and partner s currency t USD, the distance between China and partner ecnmy and dmestic prductin f exprting ecnmy. ε errr term. 8

9 Sectin Name Sectin Title / Subject Scpe and Methd Panel f 22 partner ecnmies: A B C Categries f energy prducts Cal (HS cde 2701) Crude (HS cde 2709) Oil prducts (HS cde 2710) Gas (HS cde 2711) 9

10 ImpFlUn ImpFlVal ImpShUn ImpShVal ImpFlUn ImpFlVal ImpShUn ImpShVal ImpFlUn ImpFlVal ImpShUn ImpShVal ImpFlUn ImpFlVal ImpShUn ImpShVal Event Name Sectin Name Sectin Title / Subject Effect f PTAs n Chinese Energy Imprts Variables 2701 (Cal) Prduct Grups (HS Classificatin) 2709 (Crude Oil) 2710 (Oil Prducts) 2711 (Gas/NGLs) PTA (+) + DI TarAvg - (-) - (-) (-) - (-) (-) (-) (-) + psitive effect, (+) insignificant psitive effect, - negative effect, (-) insignificant negative effect Tariff levels have prevalent effect n imprt flws China can unilaterally reduce MFN tariffs t secure energy imprt flws (n plicy framewrk needed) Exprters require preferential trade regime t capture Chinese imprt share 10

11 ExpFlUn ExpFlVal ExpShUn ExpShVal ExpFlUn ExpFlVal ExpShUn ExpShVal ExpFlUn ExpFlVal ExpShUn ExpShVal ExpFlUn ExpFlVal ExpShUn ExpShVal Event Name Sectin Name Sectin Title / Subject Effect f PTAs n Energy Exprts t China Variables 2701 (Cal) Prduct Grups (HS Classificatin) 2709 (Crude Oil) 2710 (Oil Prducts) 2711 (Gas/NGLs) PTA (+) (+) DI TarAvg (-) - (-) (-) (-) (-) + psitive effect, (+) insignificant psitive effect, - negative effect, (-) insignificant negative effect Tariff levels have prevalent effect n exprt flws PTAs can help divert partners cal and gas exprts t China Depth Index has n impact 11

12 Sectin Name Sectin Title / Subject Effect f PTAs n Trade Intensity in Energy Trade with China Trade Intensity Index (TII) shws whether the value f trade between tw ecnmies is greater r smaller than wuld be expected n the basis f their imprtance in wrld trade. In this study, it is defined as the share f an ecnmy s energy prduct exprts t China divided by the share f wrld exprts t China. Variables PTA DI 2701 (Cal) Prduct Grups (HS Classificatin) (Crude Oil) (Oil Prducts) (Gas/NGLs ) TarAvg psitive effect, (+) insignificant psitive effect, - negative effect, (-) insignificant negative effect Cnfirms significance f imprt tariff levels Average TII values in all cases exceed 1 (frm 1.86 fr crude il t fr gas/ngls) Exprt flws t China frm its PTA partners are larger than expected based n the cuntries share in wrld ecnmy 12

13 Sectin Name Sectin Title / Subject Key Takeaways Securing energy/resurce imprts is nt the majr driver f China s PTA strategy. Other cnsideratins include: access t significant r strategically imprtant markets, cmplementary ecnmic and trade structures and extending plitical influence. The impact f PTAs n trade patterns varies acrss prduct grups. Agreement elements may include tariff reductin, scpe and ther specific plicy arrangements. Frm China s perspective, reduced imprt tariff rates likely: Increase the imprt flws f cal, crude il and il prducts but nt. Help an energy exprter increase its share in Chinese crude il and il prduct imprts. Divert a partner s exprts f crude il and il prducts t China frm cmpeting imprters. Frm an exprter s perspective, the presence f an peratinal PTA with China likely: Increases the imprt flws f gas frm a partner ecnmy t China. Helps an energy exprter increase its share f Chinese imprts f cal. Diverts a partner s exprts f cal and gas t China frm ther imprters. Des nt affect il exprts t China. The depth and scpe f a PTA des nt affect the patterns f Chinese energy imprts. 13

14 Sectin Name Sectin Title / Subject Appendix: Depth Index The Depth Index is an additive index f seven variable that represents key prvisins f a preferential trade agreement: Variable Descriptin Value Full_fta Mre than a partial scpe agreement? [0;1] Services Substantive prvisin n services? [0;1] Investments Substantive prvisin n investments? [0;1] Standards Substantive prvisin n standards? [0;1] Prcurement Substantive prvisin n public prcurement? [0;1] Cmpetitin Substantive prvisin n cmpetitin? [0;1] Iprs Substantive prvisin n intellectual prperty rights? [0;1] Ttal range [0;7] Surce: Dur et al

Edexcel (B) Economics A-level

Edexcel (B) Economics A-level Edexcel (B) Ecnmics A-level Theme 3: The Glbal Ecnmy 3.1 Glbalisatin 3.1.4 Trade plicy and trade negtiatins Ntes Prtectinism: Prtectinism is the act f guarding a cuntry s industries frm freign cmpetitin,