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Beggar-Thy-Poor-Neighbour: Crisis-Era Protectionism and Developing Countries Beggar-Thy-Poor-Neighbour: The most vulnerable trading nations on Earth – the Least Developed Countries and countries from sub-Saharan Africa – have long been Beggar-Thy-Poor-Neighbour: encouraged by Western donors, international development organisations, and economists to integrate their economies into world markets. This volume examines the extent to which such integration was frustrated by Crisis-Era Protectionism and protectionist measures taking since the onset of the Great Recession. Drawing upon the data compiled by Global Trade Alert, an independent Developing Countries protectionist monitoring service, the policy stance towards Least Developed Countries and sub-Saharan African nations – both beggar-thy-neighbour and liberalising – are characterised and their effects analysed by experts knowledgeable about both of these groups of developing countries. The 15th GTA Report Implications for policymaking at the national and international level, including at the G20, are explored. Edited by Simon J. Evenett GLOB L Centre for Economic Policy Research TR DE 77 BASTWICK STREET • LONDON EC1V 3PZ • UK a a TEL: +44 (0)20 7183 8801 • FAX: +44 (0)20 7183 8820 • EMAIL: [email protected] LERT WWW.CEPR.ORg CEPR Press CEPR Press Beggar-Thy-Poor-Neighbour: Crisis-Era Protectionism and Developing Countries The 15th 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 © CEPR Press, 2014 Beggar-Thy-Poor-Neighbour: Crisis-Era Protectionism and Developing Countries The 15th 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 Director Richard Baldwin Research Director Kevin Hjortshøj O’Rourke Contents Foreword vii 1. Beggar-thy-poor-neighbour: The incidence of protectionism in LDCs and Sub-Saharan Africa 1 Simon J. Evenett Part One: The Impact of Protectionism on Developing Countries 2. Free trade, protectionism and the balance of trade: New empirical insights 13 Evans S. Osabuohien, Uchenna R. Efobi and Ibunkun Beecroft 3. Trade measures of OECD countries and the decline in exports of African countries: Is murky protectionism responsible? 25 Adugna Lemi 4. Protectionist trade policy instruments in the global economic crisis: An impact analysis from Africa-EU and Africa-US trade relations 47 Olayinka Idowu Kareem 5. SADC Crisis-era trade policy and its effects on intra-regional trade and investment 63 Albert Makochekanwa and Emson F. Chiwenga 6. The economic crisis and the protection of domestic workers: The case of the Foreign Workers First Out policy in Malaysia’s manufacturing sector 71 Bethuel K. Kinuthia, Remco H. Oostendorp and Jacob A. Jordaan Part Two: Country Specific Data on the Incidence of Crisis-Era Protectionism on the Least Developed Countries and on Africa Afghanistan 85 Angola 89 Bangladesh 93 Benin 98 Bhutan 102 Burkina Faso 104 Burundi 106 Cambodia 109 Central African Republic 112 Chad 114 Comoros 117 Democratic Republic of the Congo 120 Djibouti 124 Equatorial Guinea 126 vi Beggar-Thy-Poor-Neighbour: Crisis-Era Protectionism and Developing Countries Eritrea 129 Ethiopia 131 Gambia 136 Guinea 139 Guinea-Bissau 142 Haiti 144 Kiribati 146 Lao People’s Democratic Republic 148 Lesotho 150 Liberia 152 Madagascar 155 Malawi 158 Mali 162 Mauritania 165 Mozambique 169 Myanmar 173 Nepal 177 Niger 180 Rwanda 182 Samoa 185 Sao Tome and Principe 187 Senegal 189 Sierra Leone 193 Solomon Islands 197 Somalia 199 Sudan 201 Timor-Leste 206 Togo 208 Tuvalu 212 Uganda 214 United Republic of Tanzania 218 Vanuatu 223 Yemen 225 Zambia 228 Foreword Global Trade Alert (GTA) was established in 2009 because of the widespread concern that governments would respond to the global financial crisis with 1930s-style across-the board tariff increases. Fortunately, such tariff increases have not materialised, but the work done by GTA has revealed very clearly the widespread implementation of a range of other discriminatory measures, for example industry-specific subsidies and bailouts. Such measures can have a significant impact on the exports, growth and employment levels of a country’s trading partners. For the developing and poor economies, the impact can be substantially greater. Supporting the integration of the poorest nations into the world economy has rightly been a long-standing objective of international development policy. Such integration would, it was argued, improve the allocation of resources, create opportunities to export and to participate in cross-border supply chains, encourage the upgrading of technology, improve productivity growth and reduce poverty. As the global economic crisis unfolded in 2008 and 2009 there were widespread fears that the clock would be turned back on the integration of developing countries into the global economy. It continues to be a cause of major concern today, and especially for many African economies and the least developed countries (LDCs) that have a weak capacity to absorb shocks from the outside, including those generated by trading partners tempted by protectionism. It is important to understand the impact of crisis-inspired protectionism on these countries. GTA has collected a large amount of information on government measures that affect (both beneficially as well as adversely) the commercial interests of African economies and LDCs. GTA also commissioned several studies by independent researchers that were presented at a conference involving policymakers in Accra in June 2012. Drawing upon the data collected by GTA, this volume includes original analyses of the impact of this protectionism on African economies and LDCs. The result is, we hope, an original and important analysis of the impact of crisis-inspired protectionism on African economies and LDCs. We are very grateful to the UK Department for International Development (DFID) for financing this component of GTA’s work and to the other financial supporters of the Global Trade Alert project, including the Canadian International Development Research Centre (IDRC) and the University of St. Gallen. The activities that led to this volume would not have been possible without the enthusiastic cooperation of the African Center for Economic Transformation (ACET), under the very able leadership of Dr. K.Y. Amoako. In addition, Dr. Nicolas Depetris Chauvin, Senior Adviser at ACET, provided crucial intellectual support for the project, and the conference in Ghana was expertly organised by Mrs. Sheila Ochugboju. Thanks are also due to colleagues
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