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GATT experience with safeguards - making economic and political sense of the possibilities that the GATT allows to restrict imports, Volume 1
 
Author:Finger, J. Michael; Collection Title:Policy Research working paper ; no. WPS 2000
Date Stored:2001/04/25Document Date:1998/10/31
Document Type:Policy Research Working PaperSubTopics:Common Carriers Industry; Environmental Economics & Policies; Rules of Origin; Economic Theory & Research; Free Trade; Globalization and Financial Integration
Language:EnglishMajor Sector:(Historic)Economic Policy
Report Number:WPS2000Sub Sectors:Trade
Volume No:1  

Summary: Realizing that trade liberalization would require periodic adjustments because of problems in particular industries, GATT's framers provided that tariff reductions that led to such problems could be renegotiated; in an emergency a country could raise its tariff first and negotiate compensation with the principal exporting countries later. GATT lists many provisions that allow import restrictions, provisions that, over time, have proven quite fungible. Renegotiations were replaced by negotiated quantitative restraints (VERs), which were replaced by antidumping. The problem (troublesome imports) was always the same, but the instruments changed. And none of the instruments made much political or economic sense. They did not help a government isolate those import restrictions for which the benefits to the domestic economy would exceed the costs. And politically, the procedures through which renegotiations, VERs, or antidumping actions are decided provide a public tribune for interests that would benefit from protection but provide no voice for domestic interests that would bear the costs of restricted access to imports. The author offers guidelines for a safeguards process that makes more economic and political sense: A) Identify the costs and losers as well as the benefits and winners. B) Be clear that the action is an exception to the principles underlying the liberalization program. Emphasize that too many such exceptions would constitute abandonment of the liberalization program and its benefits. Included in the investigation process should be an expression of the costs the proposed restriction would impose. C) Don't sanctify the criteria for the action. Procedures should not presume, as antidumping does, that there is some good reason for granting exceptions. Providing a list of good reasons invites protection-seekers to demonstrate that they qualify and places the government in the position of having to demonstrate that they do not. Procedures should stress that the function of the review is to identify the benefits, costs, and domestic winners and losers from the action requested.

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