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Empirical Methods in International Trade

Essays in Honor of Mordechai Kreinin

Edited by Michael G. Plummer

Internationalization of the world economy has made trade a key factor in the growth potential of nearly every nation’s economy. Hence, economists have become increasingly interested in the determinants of international trade and competitiveness. Empirical Methods in International Trade captures the many aspects of this trend in globalization through practical techniques well-founded in economic theory. The authors, comprising some of the most influential applied international economists of their generation, use cutting-edge models to develop empirical approaches to critical aspects of economic interchange. These approaches are developed and explained carefully with the goal of making them accessible to a wide audience.
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Chapter 9: The WTO Agreement on Safeguards: An Empirical Analysis of Discriminatory Impact

Chad P. Bown and Rachel McCulloch


Chad P. Bown and Rachel McCulloch 1. INTRODUCTION The Uruguay Round Agreement on Safeguards (AS) represents an effort to improve the safeguards process and thereby encourage countries to choose this option over anti-dumping and ‘gray-area’ measures such as bilaterally negotiated export restraints. In contrast to anti-dumping, which is designed to protect domestic firms from injury due to ‘unfair’ trade, safeguards provide temporary relief to domestic industries that suffer ‘serious injury’ due to fairly traded imports. In contrast to anti-dumping and gray-area measures, safeguards are intended to limit imports across the board rather than from particular exporters, and the AS explicitly reaffirms the principle of most-favored-nation (MFN) treatment in application of safeguards. However, the AS also authorizes explicit discrimination among exporters in specified circumstances. Moreover, implementation of safeguards (SG) according to the procedures laid out in the AS may entail implicit discrimination among exporters to the SG-protected market. This chapter offers a first empirical analysis of the way safeguards initiated under the AS have been implemented in practice. The non-discriminatory treatment of trading partners, known as mostfavored-nation treatment, was a fundamental principle of the original GATT system (Article I) and has been carried over into the World Trade Organization. Its continuing appeal reflects both political and economic-efficiency considerations. Yet exceptions to treatment profoundly affect trade among members of the WTO. GATT Article XXIV permits the formation of preferential, that is, discriminatory, trading arrangements among groups of countries, and such arrangements now constitute an important feature of national trade policy. ‘Special and...

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