This document discusses protectionism between developed and developing countries. It notes that while developed countries have lowered tariffs, they increasingly rely on non-tariff barriers like technical standards to protect strategic industries and jobs. Developing countries face pressure to open their markets more than developed countries. The document argues that current international trade rules are not equally applied and developed countries have more autonomy in decision making compared to developing nations.

1. Protectionism and Developing
Countries
Nicolas FOUCRAS Phd
University TEC de Monterrey
nicolas.foucras@itesm.mx

2. Protectionist and neo-protectionist measures adopted by ICs
and DCs between 2008 and 2013
1st: Russia and then Argentina, Germany, UK, China, Brazil,
Italy, France, Japan, Indonesia, USA…
Main problem to make an evaluation of protectionism: there is not
any consensus about the definition (about what should be qualified as
a protectionist measure)

3. “National security” = Main arguments to justify
protectionism used by ICs and DCs (Cateora y al. 2013)
=> Protection against dangerous products for health, social,
environmental or cultural reasons
• Toys imported from China using paint harmful to health according to
US authorities (declared that the paint was “not suitable for
children's toys“)
• Mexican trailers can not enter the US national territory;
Justification: they do not meet US environmental standards
• Chinese solar panels: USA and EU declared that the products do not
respect technical norms so they could affect the national security

4. • Quotas for foreign music or movies in EU or Quebec;
argument = Protection of the national culture
• Many ICs implement technical control to slow down
imports from DCs (to pass through a series of
checkpoints on its way to the national market =>
consequence: it delays imports)
• They also adopt sanitary, environmental and labor
measures that enable to filter imports from DCs
USA adopted several unilateral and sudden measures
affecting Mexican imports: avocado, shrimps,
tomatoes, tuna…

6. • Other protectionist measure = Dumping:
– It is true that DCs are using dumping to conquest the
international market and to boost their industrialization
process (1st it destroys local production and once
competition disappeared they can increase the price) =
predatory pricing
– ICs implement more and more anti-dumping measures
to protect manufacturing sector/employment (it allows
a country to reestablish tariff)
– DCs say ICs are overusing this mechanism to protect
their national economy and in most of the cases it is not
justified

7. – Problem = method of calculation to prove dumping is
doubtful
Dumping = to sell bellow the costs of production
But: how to calculate the costs? Most ICs evaluate costs
taking as a reference countries like Scandinavian where
costs are very high => easy to accuse of dumping any
import product

8. • Other measure to protect the economy: ICs
launch campaigns of patriotic consuming (“By
US products”)
Objectives:
– To try to convince people that domestic products are the
best
– To guide consumer behavior
– To establish rules of acquisition for public/governmental
expenditures (For instance: infrastructure projects:
highway, airport, hospital, school…)
• ICs subsidies sectors to improve their
competitiveness (ex: automobile, agriculture, craft
industry)= form of protectionism (they create
distortions of competition in favor of ICs products
because they lower costs of production; for
instance assuming costs of R&D)

9. ICs have lowered their tariff rates since several decades however
they use more and more non-tariff barriers
Meanwhile, there was an adjustment for DCs (1990s): they reduced
their tariffs. Actually it is not so positive for them because it represents
important public loss due to the fact that it was almost the unique tax
revenue for the Governments
=> GATT/WTO negotiations have eliminated the most important
fiscal sources for DCs

10. Why trade is not fair? ICs are slightly open
compared to DCs
• ICs tend to open to international competition only the
most competitive sectors; “opening rate” of USA or
European countries is only 20% (OECD)
=> macroeconomic indicators are not too
dependent on international trade: national economic
structure is more important (higher political control
over the current situation and the future)
• Meanwhile most of the DCs have a high opening
rate due to international pressures (Chile and
Mexico: opening rate is 80% against GDP in 2015)

11. • MINT are much more open than BRICS (except China: 60%
due to the activities concentrated in SEZs): 60% Vs 20% (India
or Brazil):
– Paradigm is different: BRICS decided to insert step by step
(pragmatism) with the purpose to ensure the economic
survival of strategic sectors in terms of development or
because they represent an important part of the
population (banking, defense, high technology,
manufacturing sector in general, agriculture, small structures
of distribution…)
They also have the political capacity to resist foreign
pressure (capacity to create forces to counterbalance:
alliances and strong State activism)
Case of India: Government slow-down the
entry of the hypermarket and supermarket
chains that will threaten the small and local
structures as well as agriculture that are
employing many people

12. – MINT suffer more international pressures:
• Close to core markets: USA or EU
• Weak governments (closer to external actors
than their own society) (important centrifugal
forces)
• They have turned to be very strategic spaces
for the proper functioning of the international
market and global value chains: manufacturing
or natural resources => lost autonomy of decision

13. Opening commercial index: value exports + imports against
GDP => How important is international trade for a country?
(2010)
For European countries: it
appears to be important
however it is mostly an
intra-reagional trade. It is
not trade with the rest of
the world (around 20%)
They privilege consolidation of
the national economy

14. • Actually rules are not the same for everyone:
– The probability to forgive a protectionist measure or a bad
behavior adopted by an IC is higher than one adopted by a DC
– If we observe the debt crisis: international pressure to
implement austerity measures depends on the country’s
weight in the international economy (LAC or Africa or even
Greece Vs USA, UK, France or Germany which debt is >60%
GDP) (even Germany is not respecting the Stability Pact which it
used to enforce in 1998 in all the Euro Zone: one of the
commitment was to maintain debt <60%)
– ICs suffer less pressure due to the fact that they represent un
critical mass for the proper functioning of the
international economy
 ICs have more capacity to make autonomous
decisions (able to retain more national
sovereignty)
– Generally, ICs do not follow the rules that they inforce to DCs;
they do not respect the Washington Consensus* that they
imposed to many DCs directly or through international
organizations

15. *The Washington Consensus refers to a set of
specific economic policy prescriptions based on the
neoliberal paradigm and considered as necessary to
promote development in DCs and their “good
integration into the globalization” during 1980s
and 1990s
The term was introduced in 1989 by economist John
Williamson
It was supported by ICs (USA and West European
countries), prominent economists (Friedman and
Hayek) and IOs (such as the WTO, IMF and WB)
Examples of policy prescriptions:

16. 1. Fiscal policy discipline: to avoid large fiscal
deficits
2. Interest rates: they have to be market
determined (it affects Development banks which
have low rates to maintain access to financial
market for key social sectors: agriculture, small
business sector, craft industry…)
3. Trade liberalization: liberalization of imports and
elimination of quantitative restrictions
4. Liberalization of FDI (cancel any obstacle)
5. Privatization of state enterprises…

17. Activity:
• Form groups of 3
• Answer the question (10 minutes):
Why countries adopt protectionist measures?
• Make your presentation

18. Why DCs are using protectionist measures?
• To respond to protectionist measures adopted by ICs
• To protect sensitive sectors (agriculture; bank;
manufacture, small retailers, defense…)
• To protect infant industry (to favor industrial upgrading)
• To control national price
Argentina: Kirchner adopted high tariffs on export of
agricultural products ( to slow down exports)
 More products remain in the national economy
 It allows to maintain low prices (other consequence for
the rest of the world: less agricultural products =>
increase price)

19. Why ICs are protectionist?
• To maintain food and energetic security (they do
not want to depend on DCs for such strategic goods)
=> high subsidies to agriculture which is a form of
protectionism
• To preserve employment (to avoid a political cost)
• To maintain or to increase competitiveness (they
want to preserve the control over high tech sector and
other manufacturing sectors: defense, technology,
pharmaceutical, aerospace, automobile,…) …
=> to maintain political power

20. In many ICs there is a bad
perception about
globalization (Italy, USA,
Japan, France): it is
perceived as a threat to
employment (society is
very suspicious when you
talk about opening the
economy to global
competition)
= public opinion is
reflected in the trade
policy of ICs and it
explains as well why ICs
are slightly open
≠ in DCs: there is the
belief that globalization
will create job
If we analyze the
public opinion

21. G20
Hard core of the future global
government?

22. • Created in 1999 by G7
• Goal at the beginning: To give an appropriate response to
Financial Crisis in DCs that could affect the global stability
(Mexico 95; Asia 97; Russia 98; Brazil 99; Argentina 2001)
To face instability of the International Monetary System (IMS)
i.e. To help IMF to stabilize global financial market
• This role has grown after the 2008 crisis (which is a crisis
originated in the ICs) as well as the number of countries:
– Creditors were invited (BRICS)
– MINT countries (except Nigeria): because they are key
countries for international economy due to their important
role in the global value chains (they received important FDI
from ICs during past 2 decades)
• The way to operate: promoting discussion (it does not create a
hard law) + formulate proposals and coordinated actions

23. Structure
• 20 members (EU appears as a full member)
• Rotary Presidency (1 year) (2012: Mexico; 2013:
Russia; 2014: Australia; 2015: Turkey; 2016:
China)
• Composition
– Director of the IMF
– President of the WB
– Ministers of Finance
– Presidents of Central Banks
– Delegates of each Government
– After 2008: Head of States and Head of Governments
Population:

24. Special invitations
• Traditionally other actors are participating in pre-
summit meetings :
– Chair of the ASEAN
– Chair of the African Union (AU)
– A representative of the New Partnership for Africa's
Development (NEPAD):
• Economic development program of the AU
• Economic co-operation and integration among African countries
– Director of the International Labor Organization (ILO)
– Director of the Organization for Economic Co-operation and
Development (OCDE)
– Representatives of the UN
– Representatives of the WTO
– Spain is a permanent non-member

26. Characteristics of the MINT Vs BRICS
Rapid growth
Accelerated integration into
the international economy
MINT
BRICS
Much more pragmatic with
regard to their integration
into the globalization

27. During the last decades the international panorama has
changed: now BRICS appear to be among the first economies
=> justifies their membership into the G20

28. MINT economies will appear among the
most important in the next future
according to WB and Goldman Sachs

29. 2 perspectives to explain G20:
• Hegemonic: ICs gather with other countries to legitimize their
decisions and their model of international economy
=> Goal = to save the hegemonic model established in 1944
and to preserve the current order
• Cooperative:
– It reflects a change in the hegemonic global governance
implemented by ICs in 1944
– It reflects the mutual influence/interdependence and ICs
accept this new situation
– It reflects a better equilibrium in the decision-making
process
– Goal: To organize the redistribution of powers between ICs
and DCs

30. Towards a Polycentric pattern that will
balance/threat the US hegemony?
• Zakari: consolidation of the BRICS reflects a process of
redistribution of power that is inevitable
• However it is difficult to talk about a “counter-power”
because there is not any real unified front representing
the “South” and able to counterbalance effectively the
hard core (Foucras)
• However on a long-term vision many agree that China
could threat the US hegemony if there is no change in the
current trend

31. Global issues negotiated and objectives (priority is
different depending on the country):
• The debt crisis and lack of liquidity for productive sectors and Gvts
• The financial regulation and transparency (fight against Tax havens,
tax evasion and corruption)
• Macro-policy cooperation (Goal: to coordinate public decisions to
foster international stability)
• The promotion of multilateral trade (to face the current difficulties in
the WTO)
• To develop energy sustainability and to consider what many call the
Green growth (to fight global warming)
• To coordinate policies and strategies to face unemployment in ICs
• To reduce Food insecurity in DCs and LDCs (to stabilize the situation
and to control migration)
• To reform the International Financial Architecture (IMF quotas)

32. There are parallel summits
• B20: “20 Business” represents business community
• L20: “Labor 20” represents Labor Unions
• T20 “Think 20” “the world’s leading think tank’s
representatives”
• C20 represents Civil society
• Y20 represents youth

33. Diferent subgroups are participating:

34. There are important efforts/desires;
however…

35. • G20 and other global initiatives (and all the international
architecture) have not been able to anticipate and to resolve
the different crisis and externalities:
– Poverty, Exclusion and Migration
– Concentration of the wealth among few people => growing
inequality (i.e. problem of global wealth distribution)
– Unemployment and Informal economy
– Pollution and global warming
– Deterioration of the access to food and water
– The lost of sovereignty/democracy (power transference from
societies to global actors)
– Violence and transnational crime…
Welfare deterioration (individual is a means and not the final
purpose)
 Human survival is at risk (Tiberghien)
• It has focused above all on rescue programs to save the
global banking failures (short term vision)

36. Wealth Distribution among countries
• 200 years ago, ICs were only 3 times richer than
poor countries
• By the 1960s, they were 35 times richer
• Today, the multiplier is 80

37. “The richest 300 people have more money than the poorest 3
billion people combined” (UNICEF)

38. The current situation of the global order;
or global equilibrium depends on:
• Few that are consuming in access (USA and part of Europe) =>
it means high debt (government, household and firms)
• Many societies are transferring their gains to ICs
DCs depend on the level of consumption in ICs (their
production/export level) => they are willing to transfer and to
rescue these economies
Transfer of the wealth from DCs to ICs
Affects the potential growth and social development of DCs
• However the situation is changing progressively: new social
class in DCs wants to consume and governments are more and
more worried about domestic consolidation first=> there is a
growing retention

39. Debt is very concentrated in ICs => flow of
money is from south to north

40. Consumer market is concentrated among
ICs

42. What are the obstacles for the construction of a new
economic governance with more justice for DCs?
• Distributional dilemma: to change the order means a
redistribution of powers: it will lead to a new
political/military equilibrium in favor of China and others
opposition from the main powers and risk of conflicts
• Strong opposition from actors gaining more from the lack
of governance (ICs, financial market, Banks and MNF)
• Multipolarity: many actors and interests (State and Non-
State actors)  it is difficult to reach consensus and to take
decisions

43. • New potential hegemon (China) reluctant to take
responsibilities (there is an important cost to manage
global/common goods: peace and trade); very slow to
assume its role as were USA at the beginning of the last
century
• USA’s domestic politics: efforts to slow the post-
hegemonic transition (political cost)
• China, USA; EU… depend on the stability of the actual
order as their destiny is linked to the US economy and
the USD (straightjacket) . Ex: China is depending on its
exports to USA and EU => it agrees to support the
current order
• Financial markets fear any reform or change in the
global order (uncertainty)

44. • ICs do their best to slow the consolidation of the
global governance (i.e USA does not want to
institutionalize G20 or to reform the IMF)
=> Difficult to consolidate global governance that would allow:
– Better protection of everyone's interest
– Better transparency
– Better fair trade
– Reduced uncertainty
– Redistribution of power according to the new outlook

45. Activity:
• Form groups of 3
• Answer the questions (15 minutes):
– What is the strength of the BRICS?
– What is the weakness of the BRICS?
– Do you think they are able to change the current order?
Why?
• Make your presentation