In Washington: Christopher Neal (202) 473-7229
Stevan Jackson (202) 458 5054
WASHINGTON, January 26, 2006—Latin American countries’ use of safeguards and antidumping measures is not undermining continent-wide movement towards trade liberalization, says a new World Bank study presented today.
The case studies presented in “Safeguards and Antidumping in Latin American Trade Liberalization—Fighting Fire with Fire” show that skilled institutionalization of WTO-sanctioned trade defense or contingent protection instruments has served to increase the scope and depth of trade liberalization in these countries in the past quarter-century.
Examining studies from seven WTO member countries—Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and Peru—editors J. Michael Finger and Julio J. Nogués highlight the judicious creation and economically sound management of safeguards (temporary restriction on import of a product when the domestic industry is facing a severe threat) and antidumping (restriction on exporting a product at a lower price than in the domestic market) measures as part of domestic policy.
“Creating trade defense mechanisms which by definition impose rather than remove import restrictions raises the distinct possibility of indiscriminate use,” said L. Alan Winters, Director of the World Bank’s Development Research Group. “The momentum of liberalization was maintained by courageously managing industry pressures so that exceptional situations of import competition were taken care of—and remained exceptions.”
Six out of seven countries employed fewer than three safeguard measures between 1995 and 2004. Antidumping measures were used far more frequently to manage pressures for exceptional protection, but the country studies in the book show that these were truly emergency actions, coming at critical times in the trade liberalization process with the rate of use falling off afterwards.
“In Argentina, despite the country’s recent macroeconomic imbalance and currency crisis, WTO rules prevented the proliferation of protection instruments that has characterized previous crises there,” said Julio J. Nogués, Professor at the Universidad T. Di Tella’s School of Government in Buenos Aires, and co-editor of the book. “In the past, precisely such proliferation has made discipline impossible.”
Among the factors that helped discipline in the countries studied were the administrative content of the WTO rules, which support unification of process and criteria and provide guidelines for objectivity, transparency, and accountability in public decision making; and the rigorous standard for the information that a protection-seeking industry is required to provide.
However, the economic content of these rules leaves much room for improvement, conclude the book’s editors. WTO rules are found to be too generous with respect to separating both good interventions from bad ones, and in restraining the number of interventions.
“Tinkering with the technicalities of determining dumping or injury will be of little help,” concludes J. Michael Finger, a former Lead Economist at the World Bank, and co-editor of the book. “To support liberalization, WTO rules should give more weight to identification of the benefits from liberalization.”
The Overview of the book is available at http://econ.worldbank.org/programs/trade
To order the full publication, please visit http://publications.worldbank.org/ecommerce/catalog/product?item_id=4928012