Empirical aspects of protectionism: LINK results

General aspects of protectionism as they are revealed or treated in the LINK system are discussed in this paper. Attention is focused on the macroeconomic aspects of protection, about which relatively little is known: most of the vast body of knowledge on this subject concerns the microeconomic aspects of protection. Some simulations of trade liberalization (opposite of protectionism) and of protection within the context of the LINK system are reported. A movement away from protection would benefit the present world economy but not by a large enough extent to deal effectively with pressing international economic problems; therefore, trade liberalization within the context of a larger program of coordination policy among major industrial countries is examined. Finally, the relationship between protectionism and inflation is explored.     

Multilateralism under threat: Causes,impact, and the policy debate on government intervention in trade

Several forces fostered trade liberalization since the end of World War II. Production and trade interacted quite favorably during the period. In the past quarter century real income in the OECD economies grew at almost 4% yearly, while the volume of export increased by almost 7 percent. However, in the first half of the 1980s, the chemistry of the situation seems to have changed as protectionist tendencies developed almost everywhere in the world. The very same multilateral nature of the world trading system is under threat, as illiberal discriminatory practices are being implemented bilaterally and, even more often, unilaterally. What are the forces at play to increase the pressure towards government intervention in trade? The paper reviews (i) macroeconomic issues and policy situations, as well as (ii) structural issues concerning the working of the economic systems of industrial countries. The pressure for trade intervention in the U.S. is addressed separately with respect to Europe, given the structural and cyclical differences between the two economies The case of Japan is dealt with with reference to the alleged interrelation between Japan's international competitiveness and its macroeconomic policies. Matters of more direct concern to the LDCs are covered at the end of the paper, with emphasis placed on the restructuring process under way in response to, and as a consequence of, the external debt. The paper ends with a recommendation to all countries to make efforts to preserve and strengthen the multilateral and liberal foundations of the international trading system.     

Global adjustment to US disengagement from the world trading system

US trade policy in the Trump administration is protectionist, raising tariffs outside of WTO rules, threatening trade wars, withdrawing from existing trade agreements, and negotiating new bilateral trade deals rather than free trade agreements. The reaction of the rest of the world has been to support the WTO rules-based trading system and to pursue new and expanded regional trade agreements that do not include the US. The result may be US disengagement from the world trading system, with countries diverting trade around the US. We use a global computable general equilibrium (CGE) model to analyze changes in trade and production patterns for a variety of scenarios, including US trade wars. We find that adjustment to US disengagement is feasible—the changes in trade shares as countries divert trade are modest and achievable, with very little impact on the volume of global trade. If the US engages in trade wars with major partners, the best response for other trade partners is to sit out the trade war, accept higher US tariffs, and gain markets from global trade diversion around the US. Finally, because of indirect effects, widespread tariffs fail to benefit the protected sectors—a fallacy of composition in a protectionist trade policy.     

An international trade model to capture linkages among supply-constrained economies

The development of a country's domestic and international markets depends on its own actions as much as on those of its trading partners. The study of market linkages is thus vital for policy making. Borrowing from the conceptual framework of Leontief's input-output analysis and from the national accounts equation, this paper presents a new model to calculate multilateral trade multipliers while minimizing data requirements. The novelty of the approach consists in the column-wise (supply-oriented) normalization of trade as opposed to the row-wise (demand-oriented) normalization that prevails in the literature. The explanatory power of the model has been successfully tested on data that refer to 1973–1974. Divergence from reality inevitably reflects the great fluidity that characterized trade during that period. Although most successful when applied to trade among supply-oriented economies (such as those of socialist or developing countries), at present empirical tests have been run only for a handful of OECD and OPEC countries.     

基于"环境优先"贸易保护论的国际营销对策

随着进口关税的下降,国际贸易透明度的提高,传统的贸易保护进一步受到有效限制,贸易保护主义正在积极寻求新的贸易保护手段,以实施其贸易保护战略。新兴的贸易保护手段多种多样,利用环保例外权的合法性进行贸易保护则是近年来发达国家常用的方法。这一保护方式以保护环境为出发点制定了一系列保护措施,以抵消发展中国家在资源与廉价劳动力方面的比较优势,从而阻碍了发展中国家的产品出口,作为发展中国家的中国企业要在充分认识“环境优先”贸易保护理论及其做法的基础上,采取有效的国际营销对策削弱这一贸易壁垒对企业的影响。     

Input-output technologies and the effects of tariff reductions

Using input-output (IO) tables from several developed countries (United States, EEC, and Japan) and one developing country (Brazil), we calculate the effects of tariff removal using various combinations of these tables to represent technologies for the countries included in the Michigan Computational Model of World Production and Trade. Among the IO tables, Brazil's reflected unusually high shares of value added, low labor shares, and small supply elasticities. Supply elasticities for the developed countries were somewhat lower than for the United States. Using the Michigan model, our calculated effects of tariff reductions are overstated using the U.S. IO table to represent technologies for other developed countries. Further, for developing countries that use import licensing, the model shows considerable sensitivity to IO table specification. It is especially important, therefore, for computational purposes to obtain the most accurate information possible about IO structures of developing countries.     

Automobile prices and protection: The U.S.-Japan trade restraint

We examine the effects of the U.S.-Japan trade restraint on automobile prices and quality upgrading, for both Japanese imports and American small cars. From April 1981 to April 1984 the suggested retail price of all Japanese models increased by 15.8 percent, or 5.3 percent per year. We find that nearly the entire amount of this rise can be explained by the upgrading of individual models. This upgrading may benefit consumers who would purchase a luxury import in any case, but harms those who desire the basic imports. In addition to upgrading, we conclude that a second cost of the trade restraint has been to prevent the yen depreciation from being passed onto American consumers, in terms of lower imported auto prices. For U.S. small cars we find a 9.1 percent rise in the suggested retail price, or 3 percent per year, with a fraction of this amount due to model upgrading. If the yen depreciation had led to lower import prices without the trade restraint, then we expect that U.S. auto prices would have been lower, too.     

The demand for protection against exports of newly industrializing countries

Exports of manufacturers from newly industrializing countries have increased dramatically in recent years. Yet, in the importing countries—largely the highly developed, “old” industrial countries—the NICs' exports constitute even now an almost insignificant proportion of total imports of manufacturers. Is there, then, some particular reason why the exports concerned seem to be strongly resented by the importing countries, and particularly likely to be faced with trade barriers? The paper examines this issue, and identifies four possible sources of demand for such protection: (1) the factor content of the NICs' exports—specifically, their relative intensity in unskilled and semiskilled labor; (2) the nature of the exported goods, which consist largely of final consumer goods rather than of machinery and equipment; (3) the NICs' lack of retaliatory power; and (4) the context of a relatively stagnant world economy, suffering from high unemployment, which the expansion of manufactured exports from the NICs has had to face.     

Must high commodity prices depress the world economy? An application of a world model system

The impact of higher primary commodity prices on the world economy is central to the North-South dialogue. The less developed countries are seeking a way to obtain a larger share of world income. In the context of current discussions of commodity price stabilization, UNCTAD's “integrated programme” for example, this is likely to mean higher commodity prices. A critical question is then, “Must higher prices for primary commodities depress the industrial economies?”The cyclical swing of 1973–1975 would seem to support the thesis that high primary commodity prices lead to recession in the industrial countries. Yet this experience is not conclusive evidence. Many complex forces, some natural and others policy induced, accounted for the recession. The impact of primary commodity prices must be considered in a full system, recognizing not only the direct costs, but also the resulting demand feedback. Under different circumstances, higher payments to the commodity producing LDCs may well increase demand for manufactures and stimulate exports and industrial activity in the developed countries.This paper uses a version of the LINK world model system to examine the linkages between commodity prices and world economic activity. In the first part we examine the demand feedback in a simple theoretical model of the interrelationships between commodity consumer countries and the commodity producers. In the second part we use an empirical system, COMLINK, the version of the LINK system that incorporates commodity models and commodity price linkages, to simulate various types of commodity price impacts.     

Dollar appreciation,deficit stimulation,and the new protectionism

This article probes whether contemporary U.S. protectionism arises from an appreciating dollar. It concludes that (a) an enrich-thy-neighbor policy of upvaluation has transformed the current U.S. economic recovery into an engine of global recovery; (b) flexible exchange rates continually equilibrate the balance of payments as evidenced in changed domestic—relative to foreign—prices, as well as in capital movements induced by interest-rate differentials resulting from exchange-rate shifts; and (c) flexible exchange rates automatically alter so as to maintain a country's competitive position in the world economy even when facing deficits at home and abroad.     

Computable general equilibrium models for trade policy analysis in developing countries: A survey

This paper surveys the contributions of computable general equilibrium (CGE) simulation models designed to quantify the implications of alternative trade policy scenarios in developing countries. The paper starts with a review of the basic structure of CGE models, using a one-sector model with product differentiation on the import and export side. The basic properties of CGE models are established and a series of applications to trade policy, internal-external balance and growth, and intertemporal issues are discussed.     

Transmissions of real economic shocks across the Pacific Rim economies

We use Asian International Input–Output Tables 1995 in measuring trade dependencies of 10 Pacific Rim economies within a regional general equilibrium model. We develop two sets of metrics in measuring the trade dependencies of the economies. First, we use final demand elasticity of exports in measuring the sensitivities of the economies in the model to autonomous changes in the final demand in any other economy in the region. Second, we use a final-demand-weighted index of export elasticities that are induced by variations in the final demand vector of any economy in the model as indicators of the strength of the shocks transmitted across countries.The estimated coefficients have important policy implications. First, these coefficients identify the most vulnerable sectors of the economies in terms of the export/import dependency. Second, these coefficients may be readily used in bilateral and regional trade negotiations. Using these coefficients, policy makers can provide mutual trade concessions in dampening the effects of real and financial shocks transmitted from the trading partners.     

Protectionism and real wage rigidity: A discussion of the macroeconomic literature

The paper discusses the macroeconomic literature on the relationship between real wage rigidity and the case for protectionism. First, it gives an account of the analytical arguments that lie behind the protectionist position of the Cambridge Economic Policy Group (CEPG). Then, it provides a critical appraisal of the model of the CEPG; the discussion is focused on its supply side, on the role it assigns to financial markets as well as on the issue of retaliation. Finally, the paper considers and evaluates the subsequent work by Eichengreen, which incorporates aggregate supply and wealth effects into the CEPG analysis.     

Cross-Atlantic implications of the new US policy mix

This paper will assess implications of shifting policy mix in the US for global imbalances and adjustment, with a focus on the euro area, using the European Commission’s QUEST model. Following early market euphoria after the elections on the account of expected “decisive” pro-market policies, uncertainty regarding the composition and timing of the new administration's economic policies has been the norm. Early proposals included a substantial fiscal stimulus which, combined with a tightening monetary stance, was expected to drive up long-run interest rates and the dollar, leading to widening global imbalances and potential instability. Today the expansionary impact of the fiscal plans is the subject of a heated debate while monetary policy continues to tighten steadily and risks related to a protectionist trade agenda remain pronounced. Contrary to initial expectations, real interest rates and the dollar have weakened, while global imbalances persist. Addressing policy and structural needs in the US – and abroad – is a necessary condition to rein in global imbalances. In this context, this paper will discuss the role of the G20/G7 to promote a coordinated policy approach and in particular to what extent the G20/G7 can deal with the transition from crisis management to the balancing of heterogeneous preferences among the policy makers to promote global growth and stability.     

Rent seeking and the North-South terms of trade

In this paper results are reported for a series of counterfactual experiments with an eight- region numerical general equilibrium model of world trade, production, and welfare. In these analyses trade restrictions in the developing world are modeled as quantity constrained import licensing, which generates competitive rent-seeking behavior. Model experiments concentrate on the implications of differential factor endowment growth for the North-South terms of trade, and the effects of alternative trade policy changes in developing countries.     

WTO贸易政策对中国林产品贸易政策的影响

以世界贸易组织原则为核心的国际贸易政策越来越多地影响着各种贸易行为和贸易政策制定。林产品贸易是一个国家国际贸易总和的一部分 ,对许多发展中国家来说 ,林产品的进出口蕴藏着极有经济价值的潜能并将为其服务。为适应多边自由贸易体制 ,阐述了WTO贸易政策的一般规范与扩展 ,分析了其对中国林产品贸易政策的影响以及我国林产品贸易面对WTO的贸易政策所应采取的战略对策。     

Policy responses to external shocks in sub-Saharan African countries

The author analyzes the experience of sub-Saharan African countries with external shocks in the form of the deterioration of the terms of trade and the world recession between 1973 and 1978, with distinction made between low-income and middle-income countries. Adjustment to external shocks in low-income sub-Saharan African countries took largely the form of reductions in imports through lower rates of economic growth and lower income elasticity of import demand while these countries lost export market shares. Losses in export market shares were smaller in the middle-income countries and in the entire group, export performance was positively correlated with the rate of economic growth.     

Protectionism: Old wine in new bottles

This paper addresses some new types of arguments that have recently arisen in defense of protectionism in developing and developing countries. The new sources of protectionism in developing countries discussed are: (1) recession-debt-crisis costs; (2) protection in the world economy; (3) wages and labor markets; (4) political requirements. The new arguments for protectionism in developed countries discussed are: (1) shift to the service economy; (2) defense; (3) threat of protection to induce foreign investment.     

Price controls, trade protectionism and political business cycles in the U.S. steel industry

The U.S. steel industry is subject to a microeconomic political business cycle resulting from U.S. Presidents designing protectionist policies on behalf of the steel industry; experiencing complaints from consumers and foreign producers as a result of the policy; modifying the policy which results in complaints from the steel industry; and finally, maneuvering policy back in favor of the industry to achieve re-election. Using a cointegrating vector error correction framework, this paper tests the hypothesized political business cycle for its effect on steel prices. We find that trade protectionism does not seem to have succeeded in its primary objective of supporting prices. By expending so much political capital on ineffective trade protection, the steel industry may have lost the opportunity to focus on more substantive issues that might have restrained factor cost and enhanced its competitive ability. The devolution of the steel industry, ironically, may have resulted from it's persistent pleas for protection. Political business cycles in the steel industry, with all its attendant negative consequences, would not occur if the steel industry did not continually lobby for protection.     

International Impacts of protection: model structure and results for FC agricultural policy

A dynamic international commodity trade model is introduced that combines stochastic production with three features: multimarket dynamics, endogenous trade policy behavior, and endogenous stock-holding behavior. The significance of these features is illustrated using versions of the model with each excluded in turn. Their role in policy analysis is examined by using each version to measure the impacts of the grain-meat components of the European Community's Common Agricultural Policy. The absence of each is found to alter significantly the estimated terms of trade, trade volume, and welfare effects. Endogenous stock holding is found to be especially important when insulating trade policies are reprented in the model.