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Read the Full Report Not Just Victims The global economic crisis that began to unfold in 2007 hit Latin America hard, slowing down economic growth considerably. This volume shows that Latin America has not just been a victim of protectionism imposed by other Not Just Victims parts of the world, as some policymakers and commentators assert. Drawing upon the most extensive contemporary data set on crisis-era policy responses, the Global Trade Alert, this volume shows that many Latin Latin America and Crisis-Era American governments – in particular, Argentina and Brazil – have taken Latin America and Crisis-Era Protectionism numerous, occasionally creative steps to tilt the playing field in favour of domestic firms. Protectionism This volume documents those steps and discusses their rationale and whether these changes presage a marked shift in Latin American development strategy. As such, it will be of interest to policymakers, The 13th GTA Report officials in national governments and international institutions, university researchers and trade policy analysts, and those interested in Latin American development. Edited by Simon J. Evenett GLOB L TR DE Centre for Economic Policy Research 77 BASTWICK STREET • LONDON EC1V 3pz • UK LERT TEL: +44 (0)20 7183 8801 • FAX: +44 (0)20 7183 8820 • EMAIL: [email protected] WWW.CEpR.ORg Not Just Victims: Latin America and Crisis-Era Protectionism The 13th GTA Report Centre for Economic Policy Research (CEPR) Centre for Economic Policy Research 77 Bastwick Street London EC1V 3PZ UK Tel: +44 (0) 20 7183 8801 Fax: +44 (0)20 7183 8820 Email: [email protected] Web: www.cepr.org © Centre for Economic Policy Research, 2013 Not Just Victims: Latin America and Crisis-Era Protectionism The 13th GTA Report Edited by Simon J. Evenett GLOB L TR DE a LERT About Global Trade Alert (GTA) Global Trade Alert provides information in real time on state measures taken during the current global economic downturn that are likely to discriminate against foreign commerce. Global Trade Alert is: Independent: GTA is a policy-oriented and research initiative of the Centre for Economic Policy Research (CEPR), an independent academic and policy research think-tank based in London, UK. Simon J. Evenett, the co-director of CEPR’s International Trade and Regional Economics Programme, is the coordinator of the GTA. Comprehensive: GTA complements and goes beyond the WTO, UNCTAD, and OECD’s monitoring initiatives by identifying those trading partners likely to be harmed by state measures. The GTA considers a broader range of policy instruments than other monitoring initiatives. Accessible: The GTA website allows policy-makers, exporters, the media, and analysts to search the posted government measures by implementing country, by trading partners harmed, and by sector. Third parties can report suspicious state measures and governments have the right to reply to any of their measures listed on the website. Transparent: The GTA website represents a major step forward in transparency of national policies, reporting not only the measures taken but identifies the implementing country, trading partners likely harmed, and product lines and sectors affected. Timely: The up-to-date information and informed commentary provided by Global Trade Alert will facilitates assessments of whether the G20 pledge not to “repeat the historic mistakes of protectionism of previous eras” is met, and the bite of multilateral trade rules. For further information, visit www.GlobalTradeAlert.org About the Centre for Economic Policy Research (CEPR) The Centre for Economic Policy Research is a network of over 800 Research Fellows and Affiliates, based primarily in European universities. The Centre coordinates the research activities of its Fellows and Affiliates and communicates the results to the public and private sectors. CEPR is an entrepreneur, developing research initiatives with the producers, consumers and sponsors of research. Established in 1983, CEPR is a European economics research organization with uniquely wide-ranging scope and activities. The Centre is pluralist and non-partisan, bringing economic research to bear on the analysis of medium- and long-run policy questions. CEPR research may include views on policy, but the Executive Committee of the Centre does not give prior review to its publications, and the Centre takes no institutional policy positions. The opinions expressed in this report are those of the authors and not those of the Centre for Economic Policy Research. CEPR is a registered charity (No. 287287) and a company limited by guarantee and registered in England (No. 1727026). Chair of the Board Guillermo de la Dehesa President Richard Portes Chief Executive Officer Stephen Yeo Research Director Lucrezia Reichlin Policy Director Richard Baldwin Contents Foreword vii 1. Introduction: Crisis-Era Protectionism in Latin America in Context 1 Simon J. Evenett Section One: Studies of Protectionism in Latin America 2. Crisis-Era Protectionism in Latin America 15 Eduardo Bianchi 3. Policies and Instruments Employed By Argentina and Brazil 29 Carolina Szpak and Diana Tussie 4. Textiles and Footwear in Argentina 51 Carolina Szpak 5. Rationales for Crisis-Era Protectionism: The Cases of Argentina and Brazil 67 Eduardo Bianchi and Welber Barral 6. Is there a New Protectionism in Latin America? 79 Eduardo Bianchi Section Two: Country-Specific Information on the Incidence of Protectionism in Latin America Argentina 99 Belize 107 Bolivia 111 Brazil 115 Chile 122 Colombia 127 Costa Rica 132 Ecuador 136 El Salvador 141 French Guiana 145 Guatemala 147 Guyana 150 Honduras 153 Mexico 157 Nicaragua 163 Panama 166 Paraguay 169 Peru 174 Suriname 178 Uruguay 180 Venezuela 185 Foreword The global economic crisis that began to unfold in 2007 hit Latin America hard, as it did other parts of the global economy. Economic growth, unemployment, and poverty reduction goals were not met. Although responses differed, governments across the Latin American region devised comprehensive policy responses to this crisis, including in some cases measures that discriminated against foreign commercial interests. The effect of the latter – as in the rest of the world – was to shift the burden of adjustment to the crisis onto trading partners. Developments in Latin America and developments elsewhere that affect the region are important given the significant progress that many countries in the region had made in both regional integration and in integrating into global markets. Should the crisis presage a shift in policy stance towards protectionism and other beggar-thy-neighbour measures, then this might alter the trajectory that Latin American countries are likely to pursue over the coming decades. Much, then, is at stake. Certain Latin American governments have clearly made the connection between crisis-era policy developments, open markets, and the gains from globalisation. The Brazilian Finance Minister, for example, has asserted that the central banks of leading industrialised nations are effectively undertaking a “currency war” by taking steps that devalue their respective currencies. Such claims generated much debate, during which the record of Latin American governments during the crisis-era was scrutinised as well. The purpose of this volume is to better understand crisis-era decision-making in Latin America as it relates to policy choices that can affect the relative treatment of foreign commercial interests vis-à-vis domestic rivals. The emphasis here on the broader concept of relative treatment stands in contrast to analyses that confine analyses of protectionism to a limited set of policy instruments. This DFID- and IDRC-sponsored project involved not only the collection of information on government measures that affect (both beneficially as well as harming) the commercial interests of developing countries, but also the commissioning of several studies undertaken by independent researchers and presented at a conference involving policymakers in Lima, Peru in August 2012. The cooperation of Dean Alan Fairlie and his staff at the Pontificia Universidad Catolica del Peru in organising this conference was much appreciated, as was the support of the Latin American Trade Network (LATN). Particular thanks are due to Professor Eduardo Bianchi for helping to transform the papers prepared for and presentations given at the Lima conference for publication in this report. His diligence is only surpassed by his keen understanding of trade policy developments in Latin America. Phil Thornton did a great job copy-editing the chapters. We must also warmly thank Simon Evenett for his characteristic enthusiasm and boundless energy in driving the Global Trade Alert project forward. vii viii Not Just Victims: Latin America and Crisis-Era Protectionism Colleagues at the Centre for Economic Policy Research (CEPR) in London provided invaluable support and contributions throughout this project. Particular thanks go to Susann Herring and Anil Shamdasani. Thanks are also due for the sustained work of the researchers in the Global Trade Alert team and to the other financial supporters of the Global Trade Alert project, most notably the University of St. Gallen. As has been documented by Global Trade Alert and consistent with previous bursts of protectionism in the global economy, crises tend to induce considerable innovation in beggar-thy-neighbour policies and analysts should be at least open to the possibility that different means can be devised to advantage domestic interests over foreign competitors. There
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