Currently, developing countries have a low share of exports of final processed products which normally have a higher value added than primary agricultural products. Tariff barriers between developing countries themselves can be very high. There is, however, little evidence of tariff escalation on trade between developing countries: tariffs are often very high on both processed and unprocessed agricultural products.
This research estimates the impact of macroeconomic fluctuations on import protection policies over 1988:Q1-2010:Q4 for the United States, European Union, and three other industrialized economies. First, estimates on a pre-Great Recession sample provide evidence of three key relationships for the US and EU. Increases in domestic unemployment rates and real appreciations in bilateral exchange rates led to substantial increases in antidumping and related forms of import protection. Furthermore, economies historically imposed these bilateral import restrictions on trading partners going through their own periods of weak economic growth. Second, estimates from the pre-Great Recession model predict a major trade policy response during 2008:Q4-2010:Q4, given the realized macroeconomic shocks. New US and EU trade barriers were projected to cover up to an additional 15 percentage points of nonoil imports, well above the baseline level of 2-3 percent of import coverage immediately preceding the crisis. Third, re-estimating the model on data from the Great Recession period illustrates why the realized trade policy response differed from model predictions based on historical data.
This paper reviews recent developments in international trade to evaluate several arguments concerning the merits of preferential trade agreements (PTAs) and their place in the world trade system.
While India did not use antidumping, safeguards, and countervailing measures (temporary trade barriers) prior to 1992, it subsequently came to become the WTO system’s dominant user of those policies. There was also an increase in India’s use of global safeguard investigations as well as China-specific safeguards during the global economic crisis. However, the process of tariff liberalisation continued during such period, and it is possible that India’s use of temporary trade barriers might have helped it move in that direction.
WTO rules for safeguards have helped individual WTO Members to discipline domestic protectionist interests and to advance a generally liberal trade policy stance. This constructive use of safeguards and other trade remedies has been more effectively supported by the parts of the rules that deal with procedure (e.g., participation of interested parties) than by those parts that attempt to specify the circumstances in which an import restriction is permitted (e.g., serious injury to a domestic industry that results from imports). The chapter advances these points by describing how Latin American reformers used safeguards and anti-dumping as part of the liberalizations they have put in place in recent decades.