Skip to main content Accessibility help
×
Home
Hostname: page-component-8bbf57454-lxvzl Total loading time: 0.499 Render date: 2022-01-21T17:10:00.712Z Has data issue: true Feature Flags: { "shouldUseShareProductTool": true, "shouldUseHypothesis": true, "isUnsiloEnabled": true, "metricsAbstractViews": false, "figures": true, "newCiteModal": false, "newCitedByModal": true, "newEcommerce": true, "newUsageEvents": true }

11 - Why Are Safeguards Needed in a Trade Agreement?

Published online by Cambridge University Press:  03 May 2010

Kyle W. Bagwell
Affiliation:
Stanford University, California
George A. Bermann
Affiliation:
Columbia University, New York
Petros C. Mavroidis
Affiliation:
Columbia University, New York
Get access

Summary

This chapter reviews the theoretical and empirical literature on the use of safeguards in a trade agreement. It then analyzes the available data on the use of safeguards by World Trade Organization (WTO) members to examine two hypotheses in the economics literature: (i) that safeguards improve welfare by facilitating tariff reductions and (ii) that safeguards improve welfare by providing insurance against adverse economic shocks. I find that countries that undertook larger tariff reductions during the Uruguay Round conducted more safeguards investigations after the WTO was established. This finding suggests that the presence of a safeguard clause in the WTO agreement may have facilitated greater tariff reductions during the Uruguay Round. I find no evidence that safeguards are used more intensively by countries exposed to more aggregate economic uncertainty. It thus seems unlikely that safeguards provide insurance against aggregate economic shocks.

Introduction

Economists have a love–hate relationship with the idea of contingent policies in general and the use of safeguards in a trade agreement in particular. On the one hand, because the economic environment is constantly bombarded with sudden and unexpected changes in everything from technology, to individual preferences, to the weather, it makes sense to give the parties to a trade agreement some flexibility to change the terms of the agreement when something unexpected occurs. On the other hand, depending on the rules of the agreement, it is not clear that the benefits of flexibility outweigh their costs.

Type
Chapter
Information
Publisher: Cambridge University Press
Print publication year: 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bagwell, K., and Staiger, R. W.. 1990. A theory of managed trade. American Economic Review 80:779–795.Google Scholar
Bown, C. P., and Crowley, M. A.. 2005. Safeguards in the WTO. In The World Trade Organization: Legal, economic and political analysis, eds. Appleton, A., Macrory, P.. Dordrecht: Springer.Google Scholar
Bown, C. P., and Tovar, P.. 2007. “Protecting India's Trade Liberalization? Tariff Reform, Antidumping and Safeguards.” Brandeis University working paper.
Brainard, S. L., and Verdier, T.. 1994. Lobbying and adjustment in declining industries. European Economic Review 38:586–595.CrossRefGoogle Scholar
Brainard, S. L., and Verdier, T.. 1997. The political economy of declining industries: Senescent industry collapse revisited. Journal of International Economics 42:221–237.CrossRefGoogle Scholar
Caves, R. E., Frankel, J. A., and Jones, R. W.. 2002. World trade and payments: An introduction. Ninth, ed. Boston: Addison-Wesley.Google Scholar
Crowley, M. A. 2006. Do antidumping duties and safeguard tariffs open or close technology gaps?Journal of International Economics 68:469–484.CrossRefGoogle Scholar
Dixit, A. K., and Norman, V.. 1980. Theory of international trade. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Ethier, W. J. 2002. Unilateralism in a multilateral world. Economic Journal 112:266–292.CrossRefGoogle Scholar
Finger, J. M., Ingco, M., and Reincke, U.. 1996. The Uruguay Round: Statistics on tariff concessions given and received. Washington: World Bank.CrossRefGoogle Scholar
Fischer, R. D., and Prusa, T. J.. 2003. WTO exceptions as insurance. Review of International Economics 11:745–757.CrossRefGoogle Scholar
Heston, A., Summers, R., and Aten, B.. 2002. Penn World Table Version 6.1, Center for International Comparisons at the University of Pennsylvania (CICUP).
Hillman, A. 1982. Declining industries and political-support protectionist motives. American Economic Review 72:1180–1187.Google Scholar
Jackson, J. H. 1997. The world trading system: Law and policy of international economic relations. Second ed. Cambridge: The MIT Press.Google Scholar
Klimenko, M., Ramey, G., and Watson, J.. 2008. Recurrent trade agreements and the value of external enforcement. Journal of International Economics 74: 475–499.CrossRefGoogle Scholar
Knetter, M. M., and Prusa, T. J.. 2003. Macroeconomic factors and antidumping filings: Evidence from four countries. Journal of International Economics 61:1–17.CrossRefGoogle Scholar
Konings, J., and Vandenbussche, H.. 2007. Antidumping protection and the productivity of domestic firms. CEPR Discussion Paper 4620.
Krugman, P. R., and Obstfeld, M.. 2000. International economics: Theory and policy. Fifth ed. Reading, MA: Addison-Wesley.Google Scholar
Magee, C. 2002. Declining industries and persistent protection. Review of International Economics, 10.CrossRefGoogle Scholar
Matsuyama, K. 1990. Perfect equilibria in a trade liberalization game. American Economic Review 80:480–492.Google Scholar
Miyagiwa, K., and Ohno, Y.. 1995. Closing the technology gap under protection. American Economic Review 85:755–770.Google Scholar
Miyagiwa, K., and Ohno, Y.. 1999. Credibility of protection and incentives to innovate. International Economic Review 40:143–163.CrossRefGoogle Scholar
Pauwelyn, J. 2004. The puzzle of WTO safeguards and regional trade agreements. Journal of International Economic Law 7:109–142.CrossRefGoogle Scholar
Staiger, R., and Tabellini, G.. 1987. Discretionary trade policy and excessive protection. American Economic Review 77:823–837.Google Scholar
Staiger, R., and Tabellini, G.. 1999. Do GATT rules help governments make domestic commitments?Economics and Politics 11:109–144.CrossRefGoogle Scholar
Staiger, R. W., and Wolak, F. A.. 1994. Measuring industry-specific protection: Antidumping in the United States. Brookings Papers: Microeconomics51–118.CrossRefGoogle Scholar
Sykes, A, O. 2007. “Trade remedy laws.” In Research handbook of international economic law, ed. Guzman, A. T. and Sykes, A. O.. Cheltenham, UK: Edward Elgar Press.Google Scholar
,United States International Trade Commission. 1982. The Effectiveness of Escape Clause Relief in Promoting Adjustment to Import Competition. USITC Publication 1229, Investigation 332–115, March.
,World Trade Organization (WTO). 1995–2005. Report (year) of the Committee on Safeguards to the Council for Trade in Goods. Geneva: WTO.
Maruyama, W.H., “The Wonderful World of VRAs: Free Trade and the Goblet of Fire,” 24 Arizona Journal of International and Comparative Law 2007, 149Google Scholar
Bermann, G.A. and Mavroidis, P.C. (Eds.), Trade and Human Health and Safety (2006) Cambridge University Press: CambridgeCrossRef
Jackson, J.H., World Trade and the Law of GATT – A Legal Analysis of the General Agreement on Tariffs and Trade (Indianapolis, The Bobbs-Merrill Company, 1969), 53–57Google Scholar
Grossman, G.M., and Mavroidis, P., “United States – Definitive Safeguard Measures on Imports of Circular Welded Carbon Quality Line Pipe from Korea,” in Horn, H., and Mavroidis, P. (Eds.), The WTO Case Law of 2002 (Cambridge, Cambridge University Press, 2004)Google Scholar
Sykes, AO., “The Persistent Puzzles of Safeguards: Lessons from the Steel Dispute,” 7 Journal of International Economic Law 2004, 523CrossRefGoogle Scholar
Horn, H., and Mavroidis, P., “United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia: What Should be Required of a Safeguard Investigation,” in Horn, H., and Mavroidis, P. (Eds.), The WTO Case Law of 2001 (Cambridge, Cambridge University Press, 2003)Google Scholar
Sykes, A.O., “The Safeguards Mess: A Critique of Appellate Body Jurisprudence,” 2 World Trade Review 2003, 261CrossRefGoogle Scholar
Lawrence, R.Z., and Litan, R.E., Saving Free Trade: A Pragmatic Approach (Washington, DC, The Brookings Institution, 1986)Google Scholar
Aho, C.M., “U.S. Labor-Market Adjustment and Import Restrictions,” in Preeg, E.H. (Ed.), Hard Bargaining Ahead: U.S. Trade Policy and Developing Countries (New Brunswick, NJ, Transaction Books, 1985), 87Google Scholar
Deardorff, A.V., “Safeguards Policy and the Conservative Social Welfare Function, in Protection and Competition” in Kierzkowski, H. (Ed.), International Trade: Essay in Honor of W.M. Corden (Oxford, Blackwell, 1987), 2Google Scholar
Sykes, A.O., “Protectionism as a ‘Safeguard’: A Positive Analysis of the GATT ‘Escape Clause’ with Normative Speculations,” 58 University of Chicago Law Review 1991, 255, 272CrossRefGoogle Scholar
Messerlin, P., Measuring the Costs of Protection in Europe: European Commercial Policy in the 2000s (Washington, DC, Institute for International Economics, 2001)Google Scholar
Trebilcock, M.J., and Howse, R., The Regulation of International Trade, 314 (3rd ed., New York, Routledge, 2005)Google Scholar
Dixit, A.K., and Norman, V., Theory of International Trade (Cambridge, Cambridge University Press, 1980)CrossRefGoogle Scholar
Rander, J., and Spencer, B., “Tariff Protection and Imperfect Competition,” in Kierzkowaski, H. (Ed.), Monopolistic Competition and International Trade (Oxford, Oxford University Press, 1984)Google Scholar
Bagwell, K., and Staiger, R., The Economics of the World Trading System (Cambridge, MA, MIT Press, 2002), 104–106Google Scholar
Fearon, J., “Bargaining, Enforcement, and International Cooperation,” 55 International Organization 1998, 269CrossRefGoogle Scholar
Rosendorff, B.P. and Milner, H.V., “The Optimal Design of International Trade Institutions: Uncertainty and Escape,” 55 International Organization 2001, 829CrossRefGoogle Scholar
Koremenos, B., “Contracting Around International Uncertainty,” 99 American Political Science Review 2005, 549CrossRefGoogle Scholar
Koremenos, B., Lipson, C., and Snidal, D., “The Rational Design of International Institutions,” 55 International Organization 2001, 761CrossRefGoogle Scholar
Raustiala, K., “Form and Substance in International Agreements,” 99 American Journal of International Law 2005, 581CrossRefGoogle Scholar
Guzman, A.T., “The Design of International Agreements,” 16 European Journal of International Law 2005, 579CrossRefGoogle Scholar
Helfer, L.R., “Exiting Treaties,” 91 Virginia Law Review 2005, 1579Google Scholar
Balassa, B., The Structure of Protection in Developing Countries (Baltimore, Johns Hopkins Press, 1971)Google Scholar
Finger, J.M. and Nogues, J.J. (Eds.), Safeguards & Antidumping in Latin American Trade Liberalization: Fighting Fire with Fire (Washington, DC, World Bank Publications, 2005)CrossRef
Eckes, A., Opening America's Market: U.S. Foreign Trade Policy Since 1776 (Chapel Hill, University of North Carolina Press, 1995)Google Scholar
Horowitz, M.J., “Foreword: The Constitution of Change: Legal Fundamentality Without Fundamentalism,” 107 Harvard Law Review 1993, 30, 63Google Scholar
Friedman, B., “The History of the Countermajoritarian Difficulty, Part One: The Road to Judicial Supremacy,” 73 New York University Law Review 1998, 333, 334Google Scholar
Amar, A.R., “The Consent of the Governed: Constitutional Amendment Outside Article V,” 94 Columbia Law Review 1994, 457, 495CrossRefGoogle Scholar
Tushnet, M.V., “Anti-Formalism in Recent Constitutional Theory,” 83 Michigan Law Review 1985, 1502CrossRefGoogle Scholar
Kang, M., “The Bright Side of Partisan Gerrymandering,” 14 Cornell Journal of Law & Public Policy 2005, 443Google Scholar
Aleinikoff, T.A. and Issacharoff, S., “Race and Redistricting: Drawing Constitutional Limits After Shaw v. Reno,” 92 Michigan Law Review 1993, 588CrossRefGoogle Scholar
Levinson, S., Our Undemocratic Constitution: Where the Constitution Goes Wrong (And How We the People Can Correct It) (Oxford, Oxford University Press, 2006)Google Scholar
Dahl, R.A., How Democratic Is the American Constitution? (New Haven, CT, Yale University Press, 2002)Google Scholar

Send book to Kindle

To send this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle.

Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Send book to Dropbox

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Dropbox.

Available formats
×

Send book to Google Drive

To send content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about sending content to Google Drive.

Available formats
×