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A Proposed Code to Discipline Local Content Requirements

Author

Listed:
  • Cathleen Cimino

    (Peterson Institute for International Economics)

  • Gary Clyde Hufbauer

    (Peterson Institute for International Economics)

  • Jeffrey J. Schott

    (Peterson Institute for International Economics)

Abstract

The global economic crisis in 2008 produced pledges from countries around the world to avoid new barriers to trade and investment. These commitments were largely honored when it came to tariffs and quotas, but not when it came to nontraditional forms of protection, including behind-the-border, nontariff barriers such as local content requirements (LCRs). This Policy Brief analyzes the impact of the widely used requirements that local suppliers of goods, services, and even entire projects be favored. It explains why the steps to prevent such protectionism have been effective and further recommends a new World Trade Organization (WTO) code to constrain the use of LCRs, enhance transparency, expedite dispute resolution, and impose penalties for noncompliance.

Suggested Citation

  • Cathleen Cimino & Gary Clyde Hufbauer & Jeffrey J. Schott, 2014. "A Proposed Code to Discipline Local Content Requirements," Policy Briefs PB14-6, Peterson Institute for International Economics.
    • Handle: RePEc:iie:pbrief:pb14-6
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    File URL: https://www.piie.com/publications/policy-briefs/proposed-code-discipline-local-content-requirements
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    References listed on IDEAS

    as
    1. Wolfe, Robert, 2013. "Letting the sun shine in at the WTO: How transparency brings the trading system to life," WTO Staff Working Papers ERSD-2013-03, World Trade Organization (WTO), Economic Research and Statistics Division.
    2. Gary Clyde Hufbauer & Jeffrey J. Schott & Cathleen Cimino & Martin Vieiro & Erika Wada, 2013. "Local Content Requirements: A Global Problem," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6802, October.
    3. Gary Clyde Hufbauer & J. Bradford Jensen & Sherry Stephenson & Julia Muir & Martin Vieiro, 2012. "Framework for the International Services Agreement," Policy Briefs PB12-10, Peterson Institute for International Economics.
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    Cited by:

    1. Shiliang Cui & Lauren Xiaoyuan Lu, 2019. "Optimizing Local Content Requirements Under Technology Gaps," Service Science, INFORMS, vol. 21(1), pages 213-230, January.
    2. Weldegiorgis, Fitsum S. & Dietsche, Evelyn & Franks, Daniel M., 2021. "Building mining's economic linkages: A critical review of local content policy theory," Resources Policy, Elsevier, vol. 74(C).
    3. Kimiagari, Salman & Mahbobi, Mohammad & Toolsee, Tushika, 2023. "Attracting and retaining FDI: Africa gas and oil sector," Resources Policy, Elsevier, vol. 80(C).
    4. Kalyuzhnova, Yelena & Azhgaliyeva, Dina & Belitski, Maksim, 2022. "Public Policy Instruments for Procurement: An Empirical Analysis," Technological Forecasting and Social Change, Elsevier, vol. 176(C).

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