Disentangling the Pre and Post-crisis Era Protectionism in Latin America: An Empirical Approach

Mar Muerto

Congreso; Seventeenth World Congress of the International Economic Association; 2014

International Economic Association

This paper updates the stock of discriminatory policy instruments in Latin American countries and explores the determinants of tariff and non-tariff measures. Using pre and post-2008 crisis trade and protection data, the level of tariff barriers and the Anti Dumping (AD) initiations are explained by macro and micro variables. The study finds that Intra-industry trade (IIT) is an important source of revenue for governments. The results indicate that the crisis did not increase protectionism in countries where powerful exporters demand cheap imported inputs, but it did where this lobby is not powerfully enough to overcome the need to raise public revenues. It also finds that governments are enthusiastic to favor their exporters by reducing tariffs on inputs used by (upstream) home exporters in order to enhance their competitive position with foreign users. Concerning non-tariff barriers determinants, all the countries in the sample show a positive relationship between AD initiations and the tariff level. This could indicate that tariff and non-tariff instruments as protectionist measures are both complementary. Finally, an appreciation of the currency against the currency of their trading partners makes an AD initiation more likely to occur in some countries of the sample. However, the crisis has not reinforced the relationship between an appreciation/devaluation on the probability of an initiation of an AD procedure.