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Perverse Consequences of the GATT: Export Subsidies and Switching Costs

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  • Hartigan, James C

Abstract

GATT permits its members to retaliate against unfair trade practices committed by its signatories. However, GATT imposes requirements on this retaliation. These include establishing injury to the pertinent industry in the offended country, requiring that the unfair practice be currently in existence, and mandating that duties not exceed the dumping or subsidy margin. Because the injury requirement gives the foreign government a period lead in introducing the export subsidy, the home government is unable to completely restore the competitive balance when switching costs are present because of these restrictions. Thus, GATT may induce the behavior that it seeks to deter. Copyright 1996 by The London School of Economics and Political Science.

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  • Hartigan, James C, 1996. "Perverse Consequences of the GATT: Export Subsidies and Switching Costs," Economica, London School of Economics and Political Science, vol. 63(249), pages 153-161, February.
    • Handle: RePEc:bla:econom:v:63:y:1996:i:249:p:153-61
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    Cited by:

    1. Fabrice Defever & José‐Daniel Reyes & Alejandro Riaño & Miguel Eduardo Sánchez‐Martín, 2019. "Special Economic Zones and WTO Compliance: Evidence from the Dominican Republic," Economica, London School of Economics and Political Science, vol. 86(343), pages 532-568, July.
    2. Jens Metge, 2007. "Protecting the Domestic Market: Industrial Policy and Strategic Firm Behaviour," Levine's Bibliography 122247000000001622, UCLA Department of Economics.
    3. Elder, Erick & To, Ted, 1999. "Consumer switching costs and private information," Economics Letters, Elsevier, vol. 63(3), pages 369-375, June.
    4. Greaney, Theresa M., 2000. "Righting past wrongs: can import promotion policies counter hysteresis from past trade protection in the presence of switching costs?," Japan and the World Economy, Elsevier, vol. 12(3), pages 211-227, September.
    5. Jan Haaland & Ian Wooton, 1998. "Antidumping jumping: Reciprocal antidumping and industrial location," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(2), pages 340-362, June.
    6. Adel Ben Youssef & Gueorgui Ianakiev, 2009. "Intégration du marché européen de la Défense et politiques d’offsets : une analyse en termes de coûts de changement et d’externalités technologiques," Post-Print hal-01082243, HAL.
    7. Jens Metge, 2007. "Protecting the Domestic Market: Industrial Policy and Strategic Firm Behaviour," Discussion Paper Series dp467, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.

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