This paper analyzes the effect of the EU tariff increase for China and India for textile products in 2014 on trade from competitors of China and India to EU members and non-EU OECD countries. Assuming that this would hurt China’s and India’s trade to the EU, it is hypothesized that the trade volumes to EU members of the competitors increase. Second, this paper argues that these effects depend non-monotonically (inversed u-shaped) on the products’ market share of China and India. The hypotheses are tested using annual data from UNcomtrade between 2007 and 2016 for 20 competitors, 40 importers (27 EU members, 13 non-EU members) and 976 product categories. The data is analyzed using a triple difference approach with multiple high order fixed effects included. The hypothesized positive effect is not supported by the data, neither when the effect is hold constant for competitors nor when considered competitor-specific. In fact, for many competitors, trade to the EU decreased after 2014 rather than increased. We do find a u-shaped relationship between market share and the change in competitors’ exports. Finally, possible explanations for these unexpected results are provided.

Additional Metadata
Thesis Advisor Webbink, H.D.
Persistent URL hdl.handle.net/2105/49368
Series Economics
Citation
Weesie, S.F. (2019, October 8). Trade diversion of the 2014 EU tariff increase for China and India: A case study of the textile and clothing industry. Economics. Retrieved from http://hdl.handle.net/2105/49368