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What’s Going On? Digitization and Global Music Trade Patterns since 2006

March 11, 2015 Comments off

What’s Going On? Digitization and Global Music Trade Patterns since 2006
Source: European Commission (Joint Research Center)

The objective of this paper is to document the evolution of cross-border music trade patterns in this transition period and to explain what drives digital music trade patterns. The shift from analogue to digital music distribution has substantially reduced trade costs and has enlarged the choice sets of music consumers around the world. Yet, trade costs associated with copyright clearance and language barriers have not disappeared. The objective of this paper is to document the evolution of cross-border music trade patterns in this transition period and to explain what drives digital music trade patterns. Using comprehensive data on digital track sales in the US, Canada, and 16 European countries, 2006-2011, we document patterns of music trade in the digital era and contrast it with what’s known from elsewhere about trade in popular music for the past half century. While home bias in music consumption among the top 100 songs had grown in the pre-digital distribution period prior to 2006, home bias has declined since then. We find that the share of imported songs in music consumption has grown in all countries except in the US. Moreover, although the number of European songs available has risen faster than the number of US songs, the market share of the US in digital music sales has increased while the market shares of European repertoires have fallen. US repertoire holds the largest market share in almost every country. Home bias is lower in the long tail than at the top end of the distribution. We consider four candidate explanations for the shift away from domestic music: a) that growth in availability of particular repertoires explains their growth in total sales and market shares, b) that changes in the effect of distance-related trade costs on trade made possible by digitization explain changed patterns of trade, c) that changed preferences toward particular origin repertoires explains changed patterns, and d) that recent vintages of particular repertoires have grown more or less appealing to world consumers. We conclude that a combination of c) and d) offers the most credible explanation for the observed patterns.

CRS — Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations (February 13, 2015)

March 11, 2015 Comments off

Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations (PDF)
Source: Congressional Research Service (via National Agricultural Law Center)

In December 2014, President Obama announced major changes in U.S. policy toward Cuba, including the restoration of diplomatic relations (relations were severed in January 1961), a review by the Department of State of Cuba’s designation as a state sponsor of terrorism (Cuba was designated in 1982), and an increase in travel, trade, and the free flow of information to Cuba. This third step required the Departments of Commerce and the Treasury to amend the embargo regulations, which were announced on January 15, 2015.

When the President announced his policy change on Cuba, he acknowledged that he does not have authority to lift the embargo because it is codified in legislation. While the embargo was first imposed in the early 1960s under the authority of the Foreign Assistance Act of 1961 and the Trading with the Enemy Act, Congress enacted additional laws over the years that strengthened the embargo on Cuba, including the Cuban Democracy Act of 1992, the Cuban Liberty and Democratic Solidarity Act (LIBERTAD) Act of 1996 (which codified the embargo regulations), and the Trade Sanctions Reform and Export Enhancement Act of 2000. Congress also has enacted numerous other provisions of law that impose sanctions on Cuba, including restrictions on trade, foreign aid, and support from the international financial institutions.

This report provides information on legislative provisions restricting relations with Cuba. It lists the various provisions of law comprising economic sanctions on Cuba, including key laws that are the statutory basis of the embargo, and provides information on the authority to lift or waive these restrictions.

China’s Growing Demand for Agricultural Imports

February 20, 2015 Comments off

China’s Growing Demand for Agricultural Imports
Source: USDA Economic Research Service

This report examines China’s recent emergence as a major agricultural importer, analyzes U.S.-China trade patterns, summarizes projections of future imports, and discusses how Chinese officials are adjusting their strategic approach to agricultural trade as imports grow.

USDA Agricultural Projections to 2024

February 16, 2015 Comments off

USDA Agricultural Projections to 2024
Source: USDA Economic Research Service

USDA’s 10-year projections for the food and agriculture sector cover major agricultural commodities, agricultural trade, and aggregate indicators of the U.S. farm sector, such as farm income.

Who Is Internationally Diversified? Evidence from 296 401(k) Plans

February 16, 2015 Comments off

Who Is Internationally Diversified? Evidence from 296 401(k) Plans
Source: Center for Retirement Research at Boston College

We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75 percent, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the U.S. market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy, and the fraction of the foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.

CRS — U.S. Trade Concepts, Performance, and Policy: Frequently Asked Questions (January 30, 2015)

February 11, 2015 Comments off

U.S. Trade Concepts, Performance, and Policy: Frequently Asked Questions (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Congress plays a major role in U.S. trade policy through its legislative and oversight authority. There are a number of major trade issues that are currently the focus of Congress. For example, bills were introduced in the 113th Congress to reauthorize Trade Promotion Authority (TPA), the U.S. Generalized System of Preferences (GSP), and the U.S. Export-Import Bank, and legislative action on these issues could be forthcoming in the 114th Congress. Additionally, Congress has been involved with proposed free trade agreements (FTAs), including the Trans-Pacific Partnership (TPP) involving the United States and 11 other countries and the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union (EU). Also of interest to Congress are current plurilateral negotiations for a Trade in Services Agreement (TISA) and a new multilateral Information Technology (ITA) agreement in the World Trade Organization (WTO). Trade and investment policies of major U.S. trading partners (such as China), especially when they are deemed harmful to U.S. economic interests, are also of continued concern to Congress. Recent improved U.S. relations with Cuba have resulted in the introduction of several bills to boost bilateral commercial ties. The costs and benefits of trade to the U.S. economy, firms, workers, and constituents, and the future direction of U.S. trade policy, are the subject of ongoing debates in Congress.

This report provides information and context for these and many other trade topics. It is intended to assist Members and staff who may be new to trade issues. The report is divided into four sections in a question-and-answer format: trade concepts; U.S. trade performance; formulation of U.S. trade policy; and trade and investment issues. Additional suggested readings are provided in an appendix.

Trade Adjustment Assistance: Let the Ineffective and Wasteful “Job-Training” Program Expire

February 8, 2015 Comments off

Trade Adjustment Assistance: Let the Ineffective and Wasteful “Job-Training” Program Expire
Source: Heritage Foundation

Members of Congress should be wary of reauthorizing the ineffective and wasteful Trade Adjustment Assistance (TAA) program. Trade Adjustment Assistance should be considered on its own merits and not linked to legislative proposals, such as Trade Promotion Authority (TPA). Similarly, TPA should be evaluated independently based on its merits and not tied to unrelated legislation like TAA.

Under TAA, workers who lose their jobs due to foreign trade are eligible for job training, relocation allowances, and income maintenance while they attempt to shift into new occupations. Absent congressional action, the entire TAA program will expire on December 31, 2014.

TAA provides very expensive benefits for a small fraction of laid-off workers. Furthermore, program evaluations have found that this spending does not actually help this small fraction of workers. A recent federal evaluation found that TAA hurts its beneficiaries’ job prospects. This finding should not be surprising: scientifically rigorous evaluations of federal job-training programs consistently find these programs to be highly ineffective.

Moreover, the Obama Administration has used very loose eligibility standards for TAA benefits. The Administration awarded TAA benefits to both Solyndra and Hostess employees—two companies whose failures had little to do with foreign trade. Congress should not waste $1 billion on a program that does not help—and may hurt—unemployed workers.

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