1. NS3040 Fall Term 2018 Protectionism
Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar

2. Analysis of a Tariff

3. Arguments for Tariffs

4. Price Discrimination Model

5. Non-Tariff Measures I Type I Measures (primary distortive intent)
Import quotas
Licensing
“Voluntary” export restrictions
Domestic procuerement requirements
Domestic Content
Advance deposit requirements
Subsidies to import competitors
Credit restrictions on importers

6. Non-Tariff Measures II
Type II Measures (secondary restrictive intent)
Communications-media restrictions
Packaging and labeling restrictions
Health, sanitary, quality regulations
Safety and industrial standards and regulations
Customs clearance procedures
Exchange restrictions

7. Non-Tariff Measures III
Type III Measures (no apparent trade distorting intent)
Tax holidays
Government regional policies
Variations in national tax systems
Variations in allowable capital depreciation rates
Various balance of payments policy measures
Most exchange rate movements

8. Costs of Protectionism (1980s)

9. Costs of Protectionism (1990s)

10. Patterns of Anti-Dumping
Deutsche Bank October 2015

11. Rising Protectionism in EMs I
KIM Kyung-Hoon, Rising Protectionism in Emerging Countries, SERI Quarterly, January 2013
Many emerging economies faced with slowing economic growth and declining exports due to
Weak global economy
Sluggish domestic consumption
Little fiscal space to stimulate economies
Looking for growth any way they can muster
Led to a surge in trade protectionism
WTO warns – protectionism has slid to dangerous levels for first time since the global financial crisis of 2008
Biggest gains in protectionism
Russia, Argentina and India

12. Rising Protectionism in EMs II

13. Rising Protectionism in EMs III
Methods of trade protectionism among emerging economies
Shifted from conventional tariffs and quantitative import restrictions
To non-tariff barriers – opaque protectionism on the rise
More subtitle measures outstripping overt protectionist measures
Tariff rates in emerging countries have either declined or showed little change since financial crisis of 2008
Partly due to the growth of vertical specialization in global economy in 2000s
Many emerging economies have concluded free trade agreements with large economies
Or joined the WTO

14. Rising Protectionism in EMs IV

15. Rising Protectionism in EMs V
Rising protectionist trends in EMs fall in three main categories:
Buy national policies
Stiffer technical barriers and safety regulations, and
Controls on foreign investment
1. Buy National encourage purchase of domestically produced goods and services
Led by U.S. and China
U.S. provision in American Recovery and Reinvestment Act of February 2009 – U.S. steel and iron in federally funded projects
China mandated purchases of foreign products or services in government investment projects obtain permits
Other emerging economies – particularly Brazil have followed. Also India.

16. Rising Protectionism in EMs VI
2. Technical, Safety Barriers
Variety of testing, certification procedures used to restrict trade
Deceptive because their stated purpose is quite different
Until recently measures have been used more actively in developed countries
Measures may be hurting local industries due to increased costs of compliance
3. FDI Controls
As manufacturing sector struggles in many emerging countries, primary sector increasing source of tax revenues and investment expansion
Prompting emerging countries to strengthen controls on foreign capital and ownership particularly in natural resources

17. Rising Protectionism in EMs VII
FDI (contd)
Resource nationalism increasing as is increased state control over resources
Countries also inclined to restrict foreign investments to ensure food security and farmland
Also in service sector – finance and telecoms.
Measures have increased uncertainty and lower investment rates
Assessment
Trend to increased protectionism likely to continue even after global economy recovers
Many countries feel they need to promote domestic products to advance their manufacturing sector over the mid- to long term
Will only result in higher costs and slower world economic growth

18. Rising Protectionism in EMs VIII