The Firm-Level Costs of Utilizing Free Trade Agreements.  (with Stefan Legge). International Economics, forthcoming.

For preferential market access, firms sourcing or producing abroad increasingly face non-tariff barriers. Particularly in relation to sustainability regulations, companies must increase supply chain diligence and transparency. To explore the importance of these non-tariff costs, we analyze firm-level variation in the utilization of free trade agreements. Lower tariffs are applied only if firms comply with sourcing requirements. Analyzing Switzerland’s wide FTA network based on a novel dataset on all import transactions, our findings shed light on how sourcing requirements affect FTA utilization. Using a revealed preference criterion, we identify a fixed cost component of the utilization, which firms avoid especially for urgent shipments. We also find limited evidence of learning effects among firms and provide well-identified estimates of the restrictive effects of rules of origin.

Trade Policy Responses to the COVID-19 Pandemic Crisis: Evidence from a New Data Set. (with S. Evenett, M. Fiorini, J. Fritz, B. Hoekman, N. Rocha, M. Ruta, F. Santi, & A. Shingal). The World Economy, 2021, vol. 45(2), p.342-364.

This paper presents new high‐frequency data on trade policy changes targeting medical and food products since the beginning of the COVID‐19 pandemic, documenting how countries used trade policy instruments in response to the health crisis on a week‐by‐week basis. The data set reveals a rapid increase in trade policy activism in February and March 2020 in tandem with the rise in COVID‐19 cases but also uncovers extensive heterogeneity across countries in both their use of trade policy and the types of measures used. Some countries acted to restrict exports and facilitate imports, others targeted only one of these margins, and many did not use trade policy at all. The observed heterogeneity suggests numerous research questions on the drivers of trade policy responses to COVID‐19, on the effects of these measures on trade and prices of critical products, and on the role of trade agreements in influencing the use of trade policy.

You Can Smuggle But You Can't Hide: Sanction Evasion During the Ukraine crisis. Aussenwirtschaft, 2021, vol. 71(1), p. 73-125. Link.

I investigate whether sanctions imposed in the wake of the Ukraine crisis by the Western countries and Russia have been evaded by analyzing monthly product-level trade patterns. Consolidating different methods from the literature related to the detection of illicit trade, I find that in particular goods facing sanctions imposed by the Russian government have most likely been evaded. While the detected amounts do not question the general effectiveness of the sanctions, they are non-negligible: roughly 482 million US dollars (USD), or 8.56% of the total estimated trade loss of 5.633 billion USD from the Russian sanctions, may have been smuggled either directly or through its neighboring countries. As more than half of the estimated evasion involves trade flows through Belarus and Kazakhstan, the findings highlight the importance of trade policy coordination with third countries, especially if these are part of the same customs union.

Working Papers

Harmonizing the Harmonized System. (with David Torun)

International trade research relies heavily on data reported at the product level. Regular classification updates of the “Harmonized System” lead to intertemporal inconsistencies affecting up to 44% of world goods trade. Existing methods to standardize product vintages either drop numerous products over time or bulk updated codes into large synthetic categories. We largely overcome these issues by developing an algorithm that exploits the persistence of trade data to convert trade flows between vintages. Our conversion estimates are robust to year and sample choices. Provided a clear correspondence and persistent data, the algorithm can be applied to other classifications.