Smoke in the Water : The Use of Tariff Policy Flexibility in Crises
As the economic crisis deepens and widens, fears of a return to the protectionist spiral of the 1930s become more common. However, an important difference between the 1930s and today is the existence of the World Trade Organization and the legal li...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090914082452 http://hdl.handle.net/10986/4242 |
| Summary: | As the economic crisis deepens and
widens, fears of a return to the protectionist spiral of the
1930s become more common. However, an important difference
between the 1930s and today is the existence of the World
Trade Organization and the legal limits it imposes on the
protectionist responses members can pursue. The objective of
this paper is threefold. First, to assess the extent to
which applied tariff can legally be raised without violating
tariff-bound obligations, and compare it with what is
economically possible. Second, to examine what has been the
protectionist response of individual countries when facing
an economic crisis since the creation of the WTO. Finally,
to predict how far the protectionist responses will go
during the current crisis. Results suggest that the policy
space left when looking at what is economically possible is
indeed quite large. However, in the recent past very little
of the available policy space has been used by countries
suffering from an economic crisis. Our predictions for the
current crisis are modest tariff hikes in the order of 8 percent. |
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