Prof. Simon J Evenett, FOI Roundtable presentation - 16 October 2013

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Presentation on the relevance of crisis-era protectionism for cross-border investment by Prof. Simon J Evenett from the University of St Gallen.

OECD-hosted Freedom of Investment (FOI) Roundtable:
www.oecd.org/daf/inv/investment-policy/foi.htm

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Prof. Simon J Evenett, FOI Roundtable presentation - 16 October 2013

  1. 1. CRISIS-ERA MURKY PROTECTIONISM AND CROSS-BORDER INVESTMENT Simon J. Evenett University of St. Gallen, Switzerland October 201 3 1
  2. 2. PURPOSE OF THIS PRESENTATION To examine the relevance of crisis-era protectionism for cross-border investment. To highlight the importance of non-traditional trade distortions since the onset of the recent global economic crisis. 2
  3. 3. 21 ST CENTURY PROTECTIONISM Modern international commerce involves four modes of supplying foreign markets. Policy does not just out foreign suppliers but also seeks to alter outcomes in markets at home and abroad. Need an updated definition of protectionism that covers all of this:Differential Treatment Standard. Some protectionism is more “transparent” than others—leading to the latter to be labelled “murky protectionism.” 3
  4. 4. REPORTING LAGS MATTER IN ASSESSING PROTECTIONISM 4
  5. 5. HALF OF CRISIS-ERA PROTECTIONISM INVOLVE TARIFFS OR TRADE DEFENCE 5
  6. 6. TYPES OF BEGGAR THY NEIGHBOUR MEASURE USED
  7. 7. SELECTIVITY RETURNS— MEASURES TARGET FEW SECTORS 7 Source: Aggarwal and Evenett (2012).
  8. 8. PROTECTIONIST IMPULSE LEADS TO WTO CIRCUMVENTION 8
  9. 9. RELEVANCE OF MURKY PROTECTIONISM TO INVESTMENT DECISIONS Subsidies and the pace of capacity reduction and corporate restructuring. Expropriations. Export taxes. Export incentives and trade finance. Local content/performance requirements. Added dimension: sectoral targeting and resurgence of interest in industrial policy. 9
  10. 10. UPDATE ON ONGOING DOCUMENTATION OF LOCAL CONTENT REQUIREMENTS Research over the summer has identified 143 suspicious measures. 32 sectors affected—oil and gas, automobiles, and other energy sectors most affected. Public procurement-related measures also found. 43 states responsible, only 6 industrialised countries. BRICs responsible for 43 out of 143 cases. Nigeria and Indonesia responsible for another 31 cases. Many measures “justified” with reference to non-trade objectives, although logic often unclear. 10
  11. 11. CONCLUDING REMARKS Investment decisions are driven by expected profitability—and governments have plenty of levers of profits. Since the onset of the global economic crisis governments have not confined themselves to traditional means to tilting the playing field. Policy has become murkier—less transparent, covered by weaker WTO disciplines. More analysis on impact on investment flows needed—start in sectors that have seen the most sustained intervention. 11
  12. 12. FOR MORE INFORMATION SEE THE GLOBAL TRADE ALERT WEBSITE Data on this website is available free. Information can be extracted by sector, by trading partner, and by policy instrument. Nearly 4,000 reports on state measures Available. 12
  13. 13. G20 VERSUS NEXT 10 MID SIZED TRADING NATIONS 13

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