The Political Economy of Nontariff Trade Barriers in Emerging Economies

Article excerpt

This article examines the counterpoint to recent economic reform programs: policies that potentially defy the reform process. Policy "reversal" is particularly evident in the area of trade liberalization where nations reduced tariffs while simultaneously introducing nontariff barriers (NTB), particularly the widespread antidumping (AD) measure. This research seeks to identify the determinants of these new "postliberalization" trade policies by combining dominant interest group approaches with more state-centered explanations in an examination of two vigorous NTB users, South Africa and Mexico. The results of nested probit analyses suggest that private interests dominate the process in Mexico, while both interests and the state's overall strategic development objectives shape trade policy outcomes in South Africa.

Keywords: economic reform; Mexico; nontariff barrier; South Africa; trade policy

In the final decades of the twentieth century, many developing nations initiated and realized marketoriented economic reform. One cornerstone of the reform process was trade liberalization, and average tariff rates dropped considerably. Yet as tariff rates decreased, the provision of trade protection through nontariff barriers (NTBs) has continued to increase markedly throughout the developing world. While scholarship has focused on the paths to and the effects of reform, we know very little about the important and perhaps surprising counterpoint to these programs - nations' actions to slow or even reverse processes of economic restructuring. What are the determinants of the recent "reregulation" of trade policy? Utilizing a theoretical framework that emphasizes the roles of both powerful interest groups and the state, this research seeks to answer this question by examining trade policy implementation in South Africa and Mexico, which have recently become among the most vigorous users of NTBs in the world.

An important theoretical debate exists between scholars emphasizing how interests influence the implementation of major economic policy and others who suggest that the state may play a more active role in shaping policy outcomes. Trade researchers in particular have tended to privilege society-centered approaches that emphasize the role of interest groups in policy making. Moreover, there is a widespread perception in the era of economic reform that the policy implementation options open to governments are increasingly limited as the state's active role is strongly discouraged and perhaps even punished by international financial institutions, other powerful national governments, and/or private creditors. While the extant research reflects a bias toward interests' role in conditioning policy implementation across the globe, the role of the state may be underestimated, particularly in large emerging economies. Anecdotal evidence suggests strongly that some governments play more proactive "developmental" roles. By integrating these theoretical literatures, we can determine if these new nontariff policies are much more than just rents paid by the highest or most powerful bidders, particularly in the early years after initial economic restructuring.

The rise of NTUs as a possible counterpoint to trade liberalization is best illustrated by the recent widespread use of the antidumping (AD) measure. Until recently a rarely utilized NTB outside of a handful of developed nations, these measures now affect tens of billions of dollars in trade each year in both developed and developing nations, equal to roughly one-quarter of worldwide imports (Hindley and Messerlin 1996; Niels 2000). Recent scholarship has underscored both AD's new status as a significant barrier to trade and how little we know about these policies in the developing world (Mankiw and Swagel 2005; Prusa 2005). Furthermore, developing nations have recently become the most vigorous users of these measures, and this research addresses directly the puzzle of who or what is shaping AD policy in emerging economies in the postliberalization era. …