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The political economy of trade protection: the determinants and welfare impact of the 2002 US emergency steel safeguard measures

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  • R A Read

Abstract

This paper analyses the political economy of trade protection in the context of the factors determining the US Emergency Safeguard Measures for steel imposed March 2002. The paper identifies several factors in addition to the official justification stated problems of global over-capacity and the penetration of imports in the US market, namely the continued failure to restructure poorly performing firms, failure of previous attempts at protection and the influence of the domestic steel lobby and short-term political gains to the Bush Administration of protectionist action. The paper also reviews several ex ante and ex post empirical studies of the impact of the steel Safeguards on the steel industry and downstream steel-consuming activities. All of these studies find that the costs of the Safeguard Measures outweighed their benefits in terms of aggregate GDP and employment as well as having an important redistributive impact. The paper provides a brief summary of the subsequent WTO steel case and the final resolution of the dispute. The evidence suggests that the steel Safeguards owed more to political expediency than justification for protection under the WTO rules.

Suggested Citation

  • R A Read, 2005. "The political economy of trade protection: the determinants and welfare impact of the 2002 US emergency steel safeguard measures," Working Papers 564927, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:564927
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    File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/SteelSafeguard.pdf
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    References listed on IDEAS

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    1. Nicholas Perdikis & Robert Read (ed.), 2005. "The WTO and the Regulation of International Trade," Books, Edward Elgar Publishing, number 2940.
    2. Gary Clyde Hufbauer & Ben Goodrich, 2002. "Time for a Grand Bargain in Steel?," Policy Briefs PB02-01, Peterson Institute for International Economics.
    3. Gary Clyde Hufbauer & Ben Goodrich, 2003. "Steel Policy: The Good, the Bad, and the Ugly," Policy Briefs PB03-01, Peterson Institute for International Economics.
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    Cited by:

    1. Gründler, Klaus & Hillman, Arye L., 2021. "Ambiguous protection," European Journal of Political Economy, Elsevier, vol. 68(C).
    2. Sébastien Jean & Ariell Reshef, 2017. "Why Trade, and What Would Be the Consequences of Protectionism?," CEPII Policy Brief 2017-18, CEPII research center.
    3. Dorn, David & Levell, Peter, 2021. "Trade and Inequality in Europe and the US," CEPR Discussion Papers 16780, C.E.P.R. Discussion Papers.
    4. Hu, Arthur & Hu, Xingwei & Tong, Hui, 2022. "Globalization? Trade war? A counterbalance perspective," MPRA Paper 114871, University Library of Munich, Germany.
    5. Horst Raff & Nicolas Schmitt & Frank Stähler, 2018. "How Importers May Hedge Demand Uncertainty," Discussion Papers dp18-03, Department of Economics, Simon Fraser University.
    6. Bombardini, Matilde & Li, Bingjing, 2020. "Trade, pollution and mortality in China," Journal of International Economics, Elsevier, vol. 125(C).
    7. Bang, James T., 2007. "Determinants of the method of sale in privatization," Economic Systems, Elsevier, vol. 31(3), pages 272-291, September.
    8. Matilde Bombardini & Bingjing Li, 2016. "Trade, Pollution and Mortality in China," NBER Working Papers 22804, National Bureau of Economic Research, Inc.
    9. Chris Muris & Horst Raff & Nicolas Schmitt & Frank Stähler, 2023. "Inventory, Sourcing, and the Effects of Trade Costs: Theory and Empirical Evidence," CESifo Working Paper Series 10253, CESifo.

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