Regular readers know how much I like to obsess over the meaning of "protectionism" and the purpose of trade agreements. Sweden's National Board of Trade has a great new report that delves into these questions. Here's an excerpt:
As mentioned, the approaches to protectionism vary widely between different institutions. (See table 1 for an overview). However, the two core features of protectionism that most of the surveyed institutions highlight are (1) discrimination and (2) trade-restrictiveness. To a large degree, these two approaches overlap. Tariffs both discriminate against foreign economic operators and restrict trade. There are, however, instances in which the two approaches differ. Export subsidies discriminate against foreign operators but do not restrict imports. Conversely, there are a range of TBT and SPS measures that restrict trade without necessarily discriminating between foreign and domestic economic operators. ...
Another important dimension of protectionism that several (but not all) of the surveyed institutions highlight, is the extent to which public measures distort markets.
Ultimately, the Board regards a discrimination approach as the most suitable to frame issues related to protectionism. Of all the approaches (1-6), a discrimination approach offers the best combination of normative legitimacy (non-discrimination is a central WTO legal concept) and practical application (it does not require advanced quantitative analysis). In addition, there is a clear element of implied intent whenever foreign economic operators receive a less favourable treatment than domestic operators. Non-discrimination requirements also infringe less on countries’ sovereignty or “policy space”, since they insist only that laws and regulations be applied equally to foreign and domestic economic operators. Consequently, this approach also has a strong ethical foundation that many can embrace both inside and outside the trade community.
Another distinction has to do with whether an approach is “narrow” (is restricted to one type of trade flow) or “broad” (includes all/several types of trade flows). This dichotomy corresponds to the discussion in section 2.1 of the need for an updated conception of trade. In line with our comprehensive perspective on trade, the Board advocates a broad approach to protectionism.
