This chapter reviews the existing data and literature on the European Union’s use of trade policies to pursue non-trade policy objectives (NTPOs), such as labor rights and environmental commitments, and proposes avenues for future research. It starts by reviewing the state of the art on the institutional design of NTPOs in EU trade agreements and gives an account of EU commitments to NTPOs vis-à-vis its trade partners over time. It then examines the political economy of the EU’s pursuit of objectives beyond trade and reviews novel data on EU stakeholder preferences over NTPOs. It subsequently argues that additional research is needed to focus on the implementation of measures that involve NTPOs. Researchers would benefit from exploring how (and to what extent) stakeholders effect the pathways that link implementation of non-trade policies to trade policies and the extent to which compliance with NTPOs in the past influences stakeholders’ political mobilization in future trade agreements and policies.

Preferential trade agreements (PTAs) have been estimated to increase bilateral foreign direct investment (FDI) between the signing countries. There is, however, significant heterogeneity between PTAs, and, with increasing frequency, several non-trade issues (NTIs) are also incorporated into PTAs. These include provisions on political and civil rights, economic and social rights, and environmental protection measures. Given the overall intrinsic heterogeneity in PTAs, it is relevant to analyse which of their characteristics are driving the increase in bilateral FDI flows after signing a trade agreement. The chapter uses a structural gravity model of FDI to empirically test the specific relation between non-trade provisions contained in preferential trade agreements with bilateral FDI. It is found that NTI provisions have, if any, a positive relation with bilateral FDI. The civil and political rights (CPR) index has a positive, significant and robust relation with bilateral FDI. However, the other two indicators, economic and social rights (ESR) and environmental protection (EP), usually have positive coefficient signs, but they are not robust to different specifications. The policy implications of these results are that we do not find any negative relation between including more and/or stronger non-trade provision in trade agreements and FDI flows.

This chapter examines the treatment of trade and domestic taxes in a computable general equilibrium (CGE) model. Trade taxes are imposed on imports and exports of goods and services. Domestic taxes are taxes paid by production activities on output and factor use and by purchasers on sales of intermediate and retail goods, and income taxes. We trace the tax data in a Social Accounting Matrix (SAM) to describe the agent and the economic activity on which the tax is levied and the amount of revenue generated by each tax; we also show how to use the SAM’s data to calculate tax rates. Partial equilibrium diagrams then illustrate the theoretical effects of taxes on economic activity and welfare. The results of tax policy experiments using a CGE model support the theoretical predictions and offer insight into the economywide effects of each tax. Three applied examples of tax policy analysis explore the second-best welfare effects of a tax, the marginal welfare impacts of a country’s entire tax structure, and the elimination of import tariffs in a preferential trade agreement.