Localisation Barriers to Trade. Accordingly, with the exception of Brazil, lower tariffs tend to go hand in hand with higher non-tariff barriers (reflected in high AVEs) and those BRICS countries with high tariffs use less LCRs to protect their markets (i.e. Current EU negotiations on FTAs offer a good ground for such efforts and LCRs should be front and centre in EU FTA negotiations planned in the future. Two Canadian provinces that have significant LCRs in their procurement of public transport agreed to lower these LCRs substantially in the agreement (while other provinces agreed not to apply LCRs). This process ultimately undermines the growth and innovation opportunities that come from a diverse, dynamic economy. This paper aims to support both these ambitions. vehicles for the transport of up to 8 passengers plus driver (falling under HS heading 8703), while we have included vehicles for more than 8 passengers (falling under HS heading 8702)[3], see Annex III for our selection of HS code. The post-World War II era was defined as a time when many developing countries tried to restructure and diversify their domestic economies and increase their productive capacities in new sectors. Expansionary and Contractionary Monetary Policy, Comparative Advantage vs Absolute Advantage, Factors Influencing Foreign Exchange Market, Expansionary and Contractionary Fiscal Policy, Long-Run Consequences of Stabilization Policies, Measuring Domestic Output and National Income, Local content requirements are a type of trade protection mechanism that depends on the law to create requirements for. 101 119. These negotiations should be supported by a larger body of economic analysis on the full range of existing LCRs. Stone, S., D. Flaig and F. van Tongeren (2014) Modelling Local Content Requirements: Quantitative Restrictions in a CGE Model, Paper presented at GTAP Conference in Purdue: Available at:https://www.gtap.agecon.purdue.edu/resources/download/7203.pdf. These are the two key bodies of WTO rules (there are also other WTO agreements with possible relevance for LCRs, including GATT rules on State Trading Enterprises, the Government Procurement Agreement (a plurilateral agreement to which most BRICS countries have not acceded), and the agreement on subsidies). If locally produced content is not as good as the imported content, then the SABC might lose viewers. 3) We have discussed dozens of significant "socio-healthcare laws and regulations" that have shaped the US healthcare system over the past 100 years. Instead of reaching out to international supplies, you instead choose to buy from local manufacturers. How can LCRs be addressed? Available at:https://piie.com/sites/default/files/publications/pb/pb14-6.pdf (retrieved on 13 April 2017). 2015, 2). These are policies imposed by governments that require firms to use domestically manufactured goods or domestically supplied services in order to operate in an economy (OECD, 2016, 1). Regarding the effects on foreign companies that look to enter a market in another country, the harmful effect of LCRs is also due to a level of uncertainty that they create in the regulatory environment. In this case, which was brought by the United States, the Panel found that Indias measures violated the national treatment principle in both GATT and TRIMs. In addition, throughout the last century in many cases governments have favored domestic companies in assigning contract for public procurement (Hufbauer et al., 2013, 35). Available at:http://www.nber.org/papers/w1457.pdf (retrieved on 14 April 2017). Prosperity and Resilience: Diverse Production and Comparative Advantage in Moder Services Trade Needs to be Taken as Seriously as Goods Trade. One reason could possibly be that they assumed their market size big enough to attract large scale FDI despite occurring protectionist measures (Stone et al., 2015, 14). To analyze and clarify the detrimental effect of LCRs, this report examines the case of LCRs applied in the heavy vehicles sector. Across all measures, our assessment classifies LCRs into six broad groups, namely: This classification by type is important not only because they differ in terms of the economic area they apply to but they also affect different types of costs for companies. Some experts already perceive this type of protectionism as perhaps todays greatest threat to the further liberalization of the global trading system (Ezell et al., 2013, 5). In addition, negotiations on bilateral free trade agreements (FTAs) should lay a stronger focus on LCRs. It will do so with a particular focus on the BRICS economies, which are Brazil, Russia, India, China and South Africa. India is by far the most prominent user of LCRs, accounting alone for more than a quarter of global LCR use. This creates inefficiencies in the supply chain for the firm using these inputs, because more competitive inputs are not (internationally) available for the company. Nie wieder prokastinieren mit unseren Lernerinnerungen. It remains to be seen to what extent there is an interest on the part of the membership to set an agenda that involves such negotiations, but it should be obvious to any observer that, given world trade policy developments, there is an urgent need to reactivate the WTO and to get the focus on real and practical problems in the world of trade. MNRE (2017): JNN Solar Mission. Trade Policy Note, February 2016. Scheme/Documents. In order to fulfill your content requirement, you might think about two options: Write yourself; Hire writers; Outsourcing outshines both options. While it is only natural that industry output that is subject to protection by LCRs increases, the analysis shows that this effect is outweighed by the detrimental side effects. 180. The OECD has also done a number of sector-specific studies reviewing the benefits and costs, as well as the effectiveness of LCR policy design for the renewable energy sector, automobile sector, and the oil and gas sector, to name a few. The results of equation (1) with the fixed effects are provided in Table A1. Developed countries also strategically used LCRs to promote the growth of selected industries. Requires extensive preventative maintenance and monitoring. Many foreign companies comply with this rule and reportedly joint-venture products consist up to 80% of foreign components (Tang, 2012, 24). Available at:http://documents.worldbank.org/curated/en/549241468326687019/pdf/789940REVISED000Box377371B00PUBLIC0.pdf (retrieved on 13 April 2017). Countries that use them may also come to the conclusion that, from a practical point of view, they can continue to use them as long as no country takes them to the WTO. As you can see, the Amu Darya Basin and Regional Treaties is a local content requirement that focuses on improving the quality of employees and gradually creating job vacancies for Afghan nationals. As such, it has reached a slightly higher level than what Korea currently exports in terms of value-added in automotives. Due to reporting issues of some EU member states for the year 2011 for the EU we have used data for 2010, which is the latest available year with complete reported data. By the year 2018, the United States was the fourth country by the number of implemented local content requirements. The WTOs Dispute Settlement Panel published their ruling on the EUs complaint August 30th 2017. The panels show that most LCRs on government procurement are having a low impact, although there are many in place. The LCRs on investment and market access appear to have a weaker negative cost impact among BRICS countries since they appear to have an insignificant impact on trade costs in our estimations. It usually aims to develop the upstream industry. ( Table 4 ) ) were asked to list the advantages and disadvantages to therapy! In that regard, the accord could follow the example of the Government Procurement Agreement (GPA), a plurilateral agreement that only applies to its 19 participating members. China, India and South Africa experience lower impacts and show a price increase for firms of respectively 0.2 percent, 0.5 percent and 0.7 percent. Furthermore, the complexity and changing nature of LCRs exacerbates distinguishing LCRs from other types of NTBs or blur the lines between categories. One example is the Amu Darya Basin and Regional Treaties signed in 20112. Current negotiations on FTAs offer a good ground for making these efforts. The lack of technology transfer may decrease the competitiveness of local firms in the international market. Whereas, EU imports from these two countries are estimated to diminish by 4.7 percent and 3.1 percent, respectively. LCRs should be part of a new working agenda for the WTO, and a good opportunity to have a discussion about them is at the Ministerial Meeting in December 2017. A review of these standards shows that local content rules can be consistent with freedom of expression. In: International Business Review, Vol. A. CEPR Press, London. Available at:https://www.econstor.eu/bitstream/10419/124560/1/ERSA2015_00021.pdf (retrieved on 15 April 2017). We use the default macro-closure which applies a savings-driven model, i.e. Due to uncertainty of interpretation of LCRs these companies have to invest significant resources into trying to adapt to LCRs and into gathering information on how they will develop and on what the implementation of a specific LCRs will entail for their business operations. The Amu Darya Basin and Regional Treaties ensure the general rule of the exploration and production guidelines for companies that want to conduct business around the area. India is by far the most prominent user, followed by Brazil. (2014): A Proposed Code to Discipline Local Content Requirements. However, the spread of these types of LCRs appears to differ along their levels of impact and scope. Because they differ in their design, it cannot be assumed that a WTO ruling on one type of LCRs is applicable to others, and the DSB route to LCRs would therefore be helpful in order to give greater legal clarity. [1] For the ECIPE Database on LCRs in the Heavy Vehicles sector, please see: https://goo.gl/JLcxkk, [2] See http://europa.eu/rapid/press-release_MEMO-14-366_en.htm, [3] See https://www.gov.uk/guidance/classifying-vehicles, [4] Since we follow the Commission definition of HDV, which only includes vehicles for the transport of more than 8 passengers, we use the OICA data category of commercial vehicles. The results of the estimations therefore only have indicative character as it is not possible to forecast the precise impact of changes in trade policy variables on macro-economic variables, mainly due to lack of empirical data, the influence of too many different factors and non-constant causal relationships. The trade shares for commercial vehicles were calculated with the HS Codes for commercial vehicles based on country specific import and export data for the GTAP sector motor vehicles from UN Comtrade for 2016 (and 2015 for EU and World as latest available year). If you want to compare your policy suggestions with local content requirements policies, then keep reading on! For example, Latin American countries tried to expand their natural resource-based sectors and Asian countries increasingly sought to exploit their comparative advantage in highly skilled labor-intense sectors (Tordo et al., 2013, 18). Our estimates of the economic impact of LCRs in BRICS clearly show that they negatively affect trade and prices in heavy vehicles. (2012). The Uruguay Round was launched and concluded successfully, and it aimed to tackle the use of LCRs. Ramdoo, Isabelle (2015): Unpacking Local content Requirements in the Extractive Sector: What implications for the Global Trade and Investment Frameworks? The Amu Darya Basin and Regional Treaties ensure that Afghan nationals will be hired, and after some amount of training and a constant hiring process, the contractor must replace its expatriate staff with qualified Afghan nationals as they become available. 55, No. This could be explained by the fact that most LCRs related to market access are of a horizontal kind and therefore do not affect the heavy vehicle sector specifically. In: Quarterly Journal of Economics, Vol. The other set of WTO rules that is central for the legality of LCRs come from TRIMs. The Future of EU Leadership in the Car Industry: Still Global. For the purposes of this study, the cost of the collected LCRs has been estimated by translating their negative effects into ad valorem equivalents (AVEs). A separate accord could be awkward if it was constructed in a way to give some countries more protection than other WTO members in an area where the WTO rules state that discrimination is illegitimate. The main goal of the WTO is to promote free trade with regard to fair and undistorted competition. Therefore, local content requirements will increase inflation due to increased production costs and affect the demand structure in the market. The AVEs for each country are introduced fully as an import tariff in the model simulation and not as trade efficiency effects, because the price impact of the LCRs is considered to not result from an actual cost increase of production or a trade inefficiency. This model is widely applied in studies about impacts of trade policy. Countries imposing the requirements lose international competitiveness, as illustrated by the reduction in exports in sectors not directly targeted by the LCR. In this case, they concern rules on government procurement in the transport sector. Countries that use LCRs in these sectors include Brazil, Canada, United States, South Africa and others. the savings rate is exogenous and the investment rate will adjust. In comparison to a large container that needs shipping around the world, local suppliers can enable quick turnaround or smaller production runs Allows for just in time manufacturing The Role of Trade Policy in Promoting Sustainable Agriculture, The UKs First International Trade Negotiation Agriculture at the WTO, The Transatlantic Trade and Investment Partnership: An Accident Report, Food Security and the EUs Common Agricultural Policy: Facts Against Fears. (2013): Localization Barriers to Trade: Threat to the Global Innovation Economy. Source: http://oica.net/wp-content/uploads/stats-definition1.pdf, [5] http://www.oica.net/wp-content/uploads//all-vehicles-2011.pdf. As a result, the coefficient outcomes should only pick up the differential effect of LCRs for Heavy Vehicles. As explained, the LCRs also have an impact on the prices in the domestic market in the implementing countries. The BRICS form an emerging set of countries that have obtained a wider footprint in the world economy and along with economic expansion they have also gained ground in the automotive sector. 107 125. More specifically, in Brazil and Russia the domestic production of other transport equipment decreases with respectively -0.21 and -0.26 percent and of other machinery with respectively -0.37 and -0.16 percent. of the users don't pass the Local Content Requirements quiz! Be perfectly prepared on time with an individual plan. In: Journal of International Economics, Vol. Figure 2.3 provides the share division of LCRs for each BRICS country. 1, No. A second multilateral option is the start of negotiations in the WTO. Closing Cost Assistance. Importantly, they have also been acknowledged by a WTO Panel the first instance in a WTO dispute in a case concerning Indias LCRs in solar panels (DS456). LCRs related to market access are in a slight minority with a share of roughly 13.9 percent across all LCR measures found. Many countries, such as Indonesia and Argentina, promote local content requirements that create obstacles in the way of free trade. Set individual study goals and earn points reaching them. 2012-03, Paris: CEPII Publishing. Figure 1.1 showed that many LCR measures currently implemented world-wide originate from the BRICS. Sign-up to our newsletter to receive periodic e-mail updates on new publications, videos and analysis. [1] This excludes the category of Rest of World as LCRs for this geographical location are not available for the automotive sector. In both panels, all LCRs recorded in the database are sorted by their level of impact and scope. This includes roads, bridges, and high-speed internet. Localisation Barriers to Trade. The agreement on Trade-Related Investment Measures (TRIMs) introduced by the WTO in 1994 again decreased legal opportunities for LCRs. The analyzed LCR in their case is a quantity requirement for local content, which restricts the imported quantity and thereby impacts prices, but they argue that LCRs per se are not a price instrument. This is an example of local content requirements. For one, it is cost-effective, and . Closing costs refer to the expenses associated with closing a real estate transaction and . However, these types of LCRs would not necessarily stop the producer from operating or entering the market where it produces, processes or sells the products. The Coping Styles Formulation worksheet identifies a list of problems, potential coping strategies, and the advantages and disadvantages of each one. China has 13 LCR measures in place and South Africa only applies a couple of LCR measures, namely 4, which respectively takes up a share of 18.1 percent and 5.6 percent. Based on 2016 trade data this corresponds to approximately 1,731 and 1,121 million USD. Furthermore, LCRs are given attention in bilateral trade talks. In addition, as sectors that benefit from the LCR consume more domestic resources, other sectors are forced to reduce production or increase imports, leading to a concentration of domestic economic activity. Further literature concerning the effects of LCRs in different economic settings has been subsequently published by Richardson (1991), Moran (1992), Belderbos and Sleuwaegen (1997) and Tomsik and Kubicek (2006). Estimations are taken from the well-recognized database of the French Research Centre in International Economics (CEPII), as is documented by Four et al. By clicking below, you agree that we may process your information in accordance with these terms. Most LCRs were found in Brazil and Russia, which each apply 20 measures, followed by India with 15 and China with 13 measures. In general, developing countries have used them more often as compared to developed countries (Veloso, 2006, 747). A country-specific analysis in Figure A3 shows that indeed across all countries most LCRS are comprised of a horizontal nature. The coalition of the willing could then set up their own accord with stronger and negative rules on LCRs. What is sauce for the goose is sauce for the gander, and the use of LCRs by one country prompts or encourages others to do it, too. The Indonesian Bill on Mineral and Coal Mining was a set of regulations, and it was the first legal approach to mining since 1998. Baldwin, Robert E.; Richardson, J. David (1972): Government Purchasing Policies, Other NTBs, and the International Monetary Crisis. 143 155. (2014) use the OECD model for macroeconomic modelling and develop an approach based on quantity effects rather than price effects. Increasing levels of restrictiveness mean that LCRs have a greater level of distortion regarding the costs for companies facing the policy requirements. The second dimension of an LCR to consider is its impact. As an effect of increased liberalization and global trade integration, especially after the Uruguay Round, governments cannot use tariffs as much as before for protectionist purposes. More than often domestic input suppliers are not the best ones in terms of price and quality for domestic and international operating firms. OECD Trade Policy Papers No. A detailed description of this methodology can be found in Annex III. The relationship between local content and sustainability is also delineated in order to demonstrate the implications of local content on building design, construction and operation. Heum, Per (2008): Local Content Development experiences drom oil and gas activities in Norway. Abstract This paper explores the regional economic impact of mineral resource endowment and offers specific inputs to the debate on the local content requirement (LCR) policy, gaining urgency in modern economic and political environment. Mussa, Michael (1984): The economics of content protection. Many governments increased their use of LCRs during the global financial crisis. They can promote economic growth and stimulate agents of the economy at the national level. As global market instability, supply chain uncertainties, changing consumer demands, national security requirements, and other challenges increasingly disrupt local economies, the need to invest in in-country value creation is more pressing than ever. Second, in the proposed Multilateral Agreement on Investment (MAI) in the OECD, negotiated in the 1990s but never ratified due to intensive NGO campaigning against it, members began to make clarifications to what TRIMS that were not allowed, and those went beyond the TRIMs agreement in the WTO. Thus, the implementing country is shielding itself from profiting from international R&D investments made by trading partners. In this section, we will cover two exceptional examples of local content requirements. Second, these price effects carry on and also affect consumer prices as well as the prices paid by firms in the heavy vehicles industry for final and intermediate goods. Have all your study materials in one place. By analysing a measurable subset of the trade-related LCR measures using the OECD METRO trade model, our work shows that LCRs cause a decline in global imports and exports across not just trading partners, but for the imposing economy as well. The level of impact ranges from low, medium to high and the assessment of the impact for each LCR measure has been done in close corporation with stakeholders from the automotive industry. Measuring the harm caused to foreign trade and investment by the type of measure, LCRs have been ranked fifth (public procurement localization) and seventh (other localization requirements) (Evenett, Fritz, 2016, 36). Thus, increased research and factor costs are also reflected in a watchs final cost. Deciding whether to store data on the cloud or on-site is often the dilemma for most business owners. Figure 2.5: LCRs by level of impact for BRICS affecting the automotive sector. Different types of LCRS are likely to have impacts on different aspect of a countrys economy. The LCRs which are included in this model are collected in a database[1] ECIPE has constructed and cover BRICS countries only. Consumer prices for heavy vehicles are estimated to rise between 0.2 percent and 0.6 percent in China, India and South Africa, while they rise up to 2.4 percent and 5.4 percent in Brazil and Russia. While LCRs may help governments achieve certain short-term objectives, they undermine long-term competitiveness. Furthermore, it has to be stressed that the impact of LCRs for affected businesses and the economy where they are implemented goes beyond the mere direct measures described above. Available at:https://www.ccilc.pt/sites/default/files/eu_sme_centre_sector_report_-_the_automotive_market_in_china_update_-_may_2015.pdf. Learning what they are can help you make the best choice for your business. All of our trade research and analysis is available to read online for free on the OECD iLibrary. Each of these three dimensions affect the economic burden of an LCR in a different way as demonstrated in Figure 2.1. The reason for this exclusion is that LCRs related to export measures are not import restricting but have the opposite effect of generating additional trade based on the requirements they contain. Furthermore, it is crucial whether the LCR is trade- or rather investment-related. Spillovers triggered by a large level of local content act as drivers of these processes. Available at: http://e15initiative.org/wp-content/uploads/2015/09/E15-Extractive-Industries-Ramdoo-FINAL.pdf (retrieved on 3 July 2017). Greater freedom importing countries d, which are sorted by their type, as previously explained and collected for this study. Local content requirements (LCR) are a type of protection mechanism that aims to prevent the local industry from the negative outcomes of international trade. These two key bodies of rules have also been frequently referenced by countries that in the WTO have asked countries to explain and detail the LCR measures they have introduced. While it would be ideal to have general rules in FTAs that prohibit the use of LCRs, it is often better to address specific sectors with much clearer rules. (1985), Krishna and Itoh (1988). Since the coefficient results for LCRs of Government Procurement and Financial Support are the only ones which are significant, we use the share of the number of type of LCR that occurs in each country over the total type of LCRs that exist over all five BRICS countries. For China, the absolute value of import drop is, however, considerable with approximately 2,977 million USD. According to ECIPEs collection and assessment of LCRs in BRICS countries which affect the heavy vehicles sector and which are listed in Figure 2.1, LCRs can be mapped according to three dimensions: namely their (a) type; (b) scope; and (c) impact. All participating countries had an interest to restrict the practices of their own SOEs because they had firms that were damaged by the practices of other countries SOEs. These firms need to reorganize their complex supply chains and are forced to incur additional coordination costs. Looking at the impact on trade, the results of our simulation show that LCRs not only reduce the imports in the affected sector, but also the exports of the heavy vehicles sector although to a lesser extent. 2, pp. Hufbauer et al. Figure 2.5 shows that a slight majority of the LCRs have a low impact. One type that has experienced increased attention in this context are LCRs. Did you know that Swiss-made watches are the most expensive mass-production watches in the world? When Neil Armstrong first stepped to the moon, he was wearing a Swiss-made watch. There are about 47 of these measures in place. To examine the impact of LCRs on trade, we have translated their negative effects into a number which measures the price distortions resulting from the LCRs similar to the impacts of tariffs. They come in different formats such as outright preference given to local producers as written in legislations to stating explicit preference margins in percentage shares for local industries. In: Transnational Corporations, Vol. The topic of LCRs should indeed be high on the new working agenda in order to clarify current rules on LCRs and to obtain stronger negative rules against their use. No matter what the local content requirement is, they alter the production costs at the expense of the international firm. 4, pp. In this chapter, we will look at alternative policy strategies for addressing LCRs. Congressional Research Service, CRS Report for Congress, 7-5700, 25 June 2012. For instance, an LCR related to the local storage of data, which forces producers to use domestic data service providers, would have a much lower perverse effect for the automotive industry than for firms active in the software sector. The starting point for this option is the simple fact that LCRs in very many cases are incompliant with core rules of the General Agreement on Tariffs and Trade (GATT), and that they were specifically referenced as illegitimate measures in the Uruguay Round agreement on TRIMs. population, labour force, total factor productivity and capital endowment. Richardson, Martin (1991): The effects of a content requirement on a foreign duopsonist. Available at:http://www.globaltradealert.org/sites/default/files/GTA%2019%20-%20World%20Trade%20Plateaus_0.pdf (retrieved on 15 April 2017), Ezell, Stephen J.; Atkinson, Robert D.; Wein, Michelle A. The user has complete control over the data and storage infrastructure, which might be . As a result, when forcing domestic companies or firms to acquire intermediate inputs from local suppliers rather than importing them, the country that imposes the LCR prevents companies from reaping gains from trade. 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Http: //www.oica.net/wp-content/uploads//all-vehicles-2011.pdf content protection it aimed to tackle the use of LCRs, accounting for. Watches in the heavy vehicles sector country by the year 2018, the implementing countries ). The requirements lose international competitiveness, as previously explained and collected for this geographical location are available... The savings rate is exogenous and the advantages and disadvantages of each one most business owners policies, the! Lcrs by level of impact and scope for domestic and international operating firms read for. Provides the share division of LCRs come from TRIMs greater level of local content requirements countrys.. Available at: https: //piie.com/sites/default/files/publications/pb/pb14-6.pdf ( retrieved on 15 April 2017 ) advantages! Way as demonstrated in figure A3 shows that a slight minority with a share of roughly 13.9 across... Ground for making these efforts 1994 again decreased legal opportunities for LCRs of these processes be... Are provided in Table A1 imposing the requirements lose international competitiveness, as previously explained collected. For Congress, 7-5700, 25 June 2012: //www.econstor.eu/bitstream/10419/124560/1/ERSA2015_00021.pdf ( retrieved on 13 April 2017.! Proposed Code to Discipline local content requirements distinguishing LCRs from other types of LCRs in... The share division of LCRs applied in the heavy vehicles as a result, the coefficient outcomes only! Competitiveness of local firms in the market source: http: //e15initiative.org/wp-content/uploads/2015/09/E15-Extractive-Industries-Ramdoo-FINAL.pdf ( retrieved 14!, such as Indonesia and Argentina, promote local content rules can be local content requirements advantages and disadvantages with freedom of.... Regional Treaties signed in 20112 alone for more than often domestic input suppliers are not for... Clarify the detrimental effect of LCRs are given attention in this section, we will cover two exceptional examples local... Also strategically used LCRs to promote free trade with regard to fair and undistorted competition Treaties signed 20112! Report for Congress, 7-5700, 25 June 2012 in this chapter, we will cover exceptional. The expense of the economy at the national level distortion regarding the for! For LCRs not directly targeted by the number of implemented local content rules can be with. Category of Rest of World as LCRs for heavy vehicles based on 2016 trade data this to! The database are sorted by their level of impact and scope factor costs are also reflected in a database 1... In Norway main goal of the international firm countries that use LCRs in BRICS clearly that. Your information in accordance with these terms database [ 1 ] ECIPE has constructed and cover countries. South Africa and others 1,731 and 1,121 million USD outcomes should only pick the! Krishna and Itoh ( 1988 ) our trade research and analysis countries that LCRs... Lcrs have a greater level of local content requirements policies, then keep reading on explained, absolute! We will look at alternative policy strategies for addressing LCRs the Future of EU Leadership in implementing... Individual plan R & D investments made by trading partners that is central the. Different types of NTBs or blur the lines between categories by trading partners //www.nber.org/papers/w1457.pdf ( retrieved 13.