The Impact of Trade Regimes on GVCs

Global value chains (GVCs) have attracted much attention amongst academics and, increasingly, policymakers seeking to understand the dynamics of global production and trade linkages. The focus in much of GVC research and policy engagement is on the role of the ‘lead firms’, how they organize, co-ordinate and govern global production networks and the consequences that arise for the ability of local producers to upgrade. Despite a focus on trade relations, there is limited study of trade regimes in GVCs. This paper addresses this gap by seeking to highlight how trade regimes impact on the structure and geography of GVCs. There is extensive existing evidence that trade restrictions and the terms of such access have been influential in deciding where production processes ‘land’ in the world economy. Yet still trade regimes and policy choices are often considered rather marginal factors in existing models of GVCs, which tend to focus on the actors within the chains and the nature of the linkages between them. This paper will leverage both existing research and analysis of trade flows in several key sectors in order to highlight the important role of trade regimes in fostering or inhibiting the integration of certain countries into the relevant GVCs. The analysis will focus on GVCs integrated into the EU market. The sectors covered will be clothing, cut flowers and processed fish. Through a comparative analysis of the trade dynamics of these three sectors, this paper will seek to highlight that in certain circumstances, trade regimes have a strong impact on the geography of GVCs. We argue that the relative marginalization of trade regimes in much GVC analysis needs to be addressed, if we are to fully understand the guiding factors behind company choices within GVCs and the consequences that arise for upgrading and the development of local capabilities