Analyzing trade policies: The case of contemporary protectionism in MERCOSUR

Abstract

This paper explores the macro and microeconomic determinants of tariff and anti dumping (AD) initiations for the four founding members of MERCOSUR using pre and post-2008 crisis trade and protection data. Among other findings, the study reveals that Intra-industry trade is a source of revenues for governments and that crisis did not increase protectionism in countries where powerful exporters demand cheap imported inputs, but it did where this lobby is not powerful enough to overcome the need to raise public revenues. Concerning non-tariff barriers, the countries in the sample show a positive relationship between AD initiations and the tariff level. This could indicate that tariff and non-tariff instruments are both complementary. Finally, an appreciation of the currency makes an AD initiation more likely to occur in some countries of the sample. However, the crisis has not reinforced the relationship between an appreciation/depreciation on the probability of an initiation of an AD procedure.