Taxonomy of Trade Barriers: Five Types of Protectionism
Abstract
This paper examines the different motives for introducing trade barriers and identifies five types of protectionism. While the 20th century was dominated by “lobbyist protectionism” and “industrialiser protectionism,” the period following the global financial crisis of 2008–2009 has been a time of “geostrategist protectionism” and “populist protectionism.” Finally, the introduction of a carbon border adjustment mechanism in the EU could be the beginning of the spread of “benevolent protectionism.” The proposed taxonomy of protectionism shows why, despite the consensus among economists on the benefits of international trade, protectionism remains so prevalent. It also helps to explain why developed countries, once the main proponents of free trade and globalization, played a major role in the intense growth of trade barriers in the 2010–2020s.
Downloads
References
Amiti, M., Redding, S. and Weinstein, D., 2019. The Impact of the 2018 Trade War on Prices and Welfare. Journal of Economic Perspectives, 33 (4), pp.187-210.
Bairoch, P., 1995. Economics and World History: Myths and Paradoxes. Chicago: University of Chicago Press.
Baldwin, R.E., 2016. The Great Convergence: Information Technology and the New Globalization. Cambridge: Harvard University Press.
Beghin, J.C. and Elobeid, A., 2017. Analysis of the US Sugar Program. [pdf] Available at: <https://www.aei.org/wp-content/uploads/2017/11/Analysis-of-the-US-Sugar-Program.pdf> [Accessed 24 April 2023].
Blanchard, E.J., Bown, C.P. and Chor, D., 2019. Did Trump’s trade war impact the 2018 election? [pdf] Available at: <https://www.nber.org/system/files/working_papers/w26434/w26434.pdf> [Accessed 24 April 2023].
Borchert, I., Gootiiz, B., Grover, A., Matoo, A., 2012. Landlocked or Policy Locked? How Services Trade Protection Deepens Economic Isolation. [pdf] Available at: <https://ferdi.fr/dl/df-HQS8qbA1eJDXLQb6BE38YyYY/document-landlocked-or-policy-locked-how-services-trade-protection-deepens.pdf> [Accessed 24 April 2023].
Brander, J.A., 1986. Rationales for Strategic Trade and Industrial Policy. In: P. Krugman, ed. 1986. Strategic Trade Policy and the New International Economics. Cambridge: MIT Pres.
Clark Center Forum, 2012. Free Trade. [online] Available at: <https://www.igmchicago.org/surveys/free-trade/> [Accessed 24 April 2023].
Cox, L., 2021. The long-term impact of steel tariffs on US manufacturing. [pdf] Available at: <https://economics.princeton.edu/wp-content/uploads/2022/06/cox_steel_20220601.pdf> [Accessed 24 April 2023].
Davies, R.B. and Vadlamannati, K.C., 2013. A race to the bottom in labor standards? An empirical investigation. Journal of Development Economics, 103, pp.1-14.
Di Tella, R. and Rodrik, D., 2020. Labour market shocks and the demand for trade protection: Evidence from online surveys. The Economic Journal, 130 (628), pp.1008-1030.
Dixit, A.K. and Stiglitz, J.E., 1977. Monopolistic Competition and Optimum Product Diversity. American Economic Review, 67 (3), pp. 297-308.
Durán, G.M., 2023. Securing Compatibility of Carbon Border Adjustments with the Multilateral Climate and Trade Regimes. International & Comparative Law Quarterly, 72 (1), pp.73-103.
Ehrlich, S.D., 2008. The Tariff and the Lobbyist: Political Institutions, Interest Group Politics, and US Trade Policy. International Studies Quarterly, 52 (2), pp.427-445.
European Commission, 2022. European Green Deal: Agreement reached on the Carbon Border Adjustment Mechanism (CBAM). [online] Available at: <https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7719> [Accessed 24 April 2023].
Fajgelbaum, P.D., Goldberg, P.K., Kennedy, P.J. and Khandelwal, A.K., 2020. The return to protectionism. The Quarterly Journal of Economics, 135 (1), pp.1-55.
Farrell, H. and Newman, A.L., 2019. Weaponized Interdependence: How Global Economic Networks Shape State Coercion. International Security, 44 (1), pp.42-79.
Feenstra, R.C. and Weinstein, D.E., 2017. Globalization, Markups, and US Welfare. Journal of Political Economy, 125 (4), pp.1040-1074.
G7 Germany, 2022. G7 Leaders’ Communiqué. [pdf] Available at: <https://www.g7germany.de/resource/blob/974430/2062292/9c213e6b4b36ed1bd687e82480040399/2022-07-14-leaders-communique-data.pdf?download=1> [Accessed 24 April 2023].
Global Trade Alert, 2023. Global Dynamics. [online] Available at: <https://www.globaltradealert.org/global_dynamics> [Accessed 24 April 2023].
Grossman, G.M. and Helpman, E., 1994. Endogenous Innovation in the Theory of Growth. Journal of Economic Perspectives, 8 (1), pp.23-44.
Heckscher, E., 1919. The Effect of Foreign Trade on the Distribution of Income. Ekonomisk Tidskrift, 21, pp. 497-512.
Helleiner, G.K., 1992. Trade Policy, Industrialization, and Development: New Perspectives. Oxford: Oxford University Press.
Howse, R., and Regan, D., 2000. The product/process distinction – an illusory basis for disciplining “unilateralism” in trade policy. European Journal of International Law, 11 (2), pp.249-289.
Irwin, D.A., 1996. The US-Japan semiconductor trade conflict. In: A.O. Krueger, ed. 1996. The Political Economy of Trade Protection. Chicago: University of Chicago Press, pp.5-14.
Keller, W., 2004. International Technology Diffusion. Journal of Economic Literature, 42 (3), pp.752-782.
Kim, I.S., Milner, H.V., 2019. Multinational Corporations and their Influence Through Lobbying on Foreign Policy. Multinational Corporations in a Changing Global Economy, pp. 497-536.
Kim, S.E. and Margalit, Y., 2021. Tariffs as electoral weapons: the political geography of the US–China trade war. International organization, 75 (1), pp.1-38.
Krueger, A.O., 1974. The Political Economy of the Rent-seeking Society. American Economic Review, 64 (3), pp. 291-303.
Krugman, P., 1979. Increasing Returns, Monopolistic Competition, and International Trade. Journal of International Economics, 9 (4), pp.469-479.
Lake, J. and Nie, J., 2022. The 2020 US Presidential election and Trump’s wars on trade and health insurance. European Journal of Political Economy, 102338.
Lamb, R.L., 2006. Rent Seeking in US-Mexican Avocado Trade. Cato Journal, 26 (1), pp.159-177.
Lee, J., 1997. The maturation and growth of infant industries: the case of Korea. World Development, 25 (8), pp. 1271-1281.
List, F., 1856. National System of Political Economy. Philadelphia: JB Lippincott & Company.
Makarov, I.A., 2012. Rol’ SSHA v protivodeystvii global’nomu potrebleniyu klimata [The role of the USA in counteracting global climate change]. SSHA i Kanada: ekonomika, politika, kul'tura [USA and Canada: Economy, Politics, Culture], 4, pp.101-117.
Makarov, I.A., 2022. Mezhdunarodnaya torgovlya: ot giperglobalizatsii k zamedleniyu mezhdunarodnogo obmena [International Trade: From Hyperglobalization to Slowing International Exchanges]. In: L.M. Grigoriev, A.A. Kurdin, I.A. Makarov (eds.), Mirovaya ekonomika v period bol'shikh potryaseniy [World Economy in the Period of Great Shocks], Moscow: INFRA-M, pp. 117-146.
McKinsey, 2015. China is betting big on these 10 industries. [online] Available at: <https://web.archive.org/web/20180915122827/http://mckinseychina.com/chinas-new-initiative-to-promote-homegrown-technology/> [Accessed 24 April 2023].
Melitz, M., 2003. The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica, 71 (6), pp.1695-1725.
Mitra, D., Thomakos, D.D. and Ulubaşoğlu, M.A., 2002. “Protection for Sale” in a Developing Country: Democracy vs. Dictatorship. Review of Economics and Statistics, 84 (3), pp.497-508.
Mobarak, A.M. and Purbasari, D.P., 2006. Corrupt protection for sale to firms: evidence from Indonesia. [pdf] Available at: <http://spinup-000d1a-wp-offload-media.s3.amazonaws.com/faculty/wp-content/uploads/sites/45/2019/06/corrupt-protection-for-sale-to-firms.pdf> [Accessed 24 April 2023].
Nordhaus, W., 2015. Climate clubs: Overcoming free-riding in international climate policy. American Economic Review, 105 (4), pp.1339-1370.
Ohlin, B., 1967. Interregional and International Trade. Cambridge: Harvard University Press.
Petri, P.A. and Plummer, M.G., 2016. The economic effects of the Trans-Pacific Partnership: New estimates. [pdf] Available at: <https://www.aapa-ports.org/files/PDFs/Peterson%20Institute%20TPP%20report.pdf> [Accessed 24 April 2023].
Pikkety, T., 2017. Capital in the Twenty-First Century. Cambridge: Harvard University Press.
Porter, M., 1998. Competitive Advantage of Nations. New York: Free Press.
Reinert, E.S., 2019. How Rich Countries Got Rich and Why Poor Countries Stay Poor. New York: Public Affairs.
Roach, S., 2014. Unbalanced: The Codependency of America and China. New Haven: Yale University Press.
Rodrik, D., 2011. The globalization paradox: Democracy and the future of the world economy. New York: W. W. Norton & Company.
Rodrik, D., 2018. Populism and the Economics of Globalization. Journal of International Business Policy, 1, pp. 12-33.
Saez, E., and Zucman, G., 2019. The triumph of injustice: How the rich dodge taxes and how to make them pay. New York: W. W. Norton & Company.
Satake, M., 2000. Trade conflicts between Japan and the United States over market access; the case of automobiles and automotive parts. [pdf] Available at: <https://crawford.anu.edu.au/pdf/pep/pep-310.pdf> [Accessed 24 April 2023].
Seitz, M., Tarasov, A. and Zakharenko, R., 2015. Trade Costs, Conflicts, and Defense Spending. Journal of International Economics, 95 (2), pp.305-318.
Stolper, W.F. and Samuelson, P.A., 1941. Protection and real wages. The Review of Economic Studies, 9 (1), pp.58-73.
The Wall Street Journal, 2019. Economists’ Statement on Carbon Dividends. [online] Available at: <https://www.wsj.com/articles/economists-statement-on-carbon-dividends-11547682910> [Accessed 24 April 2023].
Timofeev, I. N., 2019. Politika prinyata: odnopolyarnyy ili mnogopolyarnyy mir? [Sanctions policy: unipolar or multipolar world?], Vestnik mezhdunarodnykh organizatsiy [International Organisations Research Journal], 14 (3), pp. 9-26.
Topalova, P., 2010. Factor immobility and regional impacts of trade liberalization: Evidence on poverty from India. American Economic Journal: Applied Economics, 2 (4), pp.1-41.
Tullock, G., 1967. The Welfare Costs of Tariffs, Monopolies, and Theft. Economic Inquiry, 5 (3), pp.224-232.
Volchkova, N.A., Kuznetsova, P.O., 2019. Skol’ko stoyat kontrsanktsii: analiz blagosostoyaniya [How Much Do Counter-Sanctions Cost: Well-Being Analysis], Zhurnal novoy ekonomicheskoy asotsiatsii [Journal of the New Economic Association], Vol. 4, No 3, pp.173-183.
Williams, G.W. and Hanselka, D., 2020. The Economic Benefits of U.S. Avocado Imports from Mexico. [pdf] Available at: <https://mhaia.org/wp-content/uploads/2022/03/Report-National-and-State-Economic-Benefits-of-Avocado-Imports-from-Mexico-2020-Update-Final.pdf> [Accessed 24 April 2023].
World Trade Organization, 2022. Report of the TPRB from the Director-General on Trade-Related Developments. [pdf] Available at: <https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/TPR/OVW16.pdf&Open=True> [Accessed 24 April 2023].
Yanbykh, R., Saraikin, V. and Lerman, Z., 2020. Changes in Russia’s agrarian structure: What can we learn from agricultural census? Russian Journal of Economics, 6 (1), pp.26-41.
1.jpg)
