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How Should "Protection" be Evaluated in Art. III GATT Disputes ?

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  • Damien J. NEVEN

Abstract

This paper considers the economic analysis protection in Art. III GATT disputes. We first observe that the appropriate measure of protection and the level of protection that is acceptable have hardly been discussed in the case law and that panels tend to presume that a strong substitution between domestic and foreign products always lead to substantial protection. Next, we consider a stylised model of trade and find that the ability to raise price is a robust measure of protection and that protection falls significantly (for a given barrier) with the degree of product differentiation but also with the degree of rivalry. We also observe that the effects of non-tariff barriers on import values in ambiguous so that imports are not a robust measure of protection. Our findings suggest that the distinction drawn in the case law between "like" and "directly competitive and substitutable" products is not helpful. Finally, we suggest a method to evaluate protection in trade disputes which is inspired by the definition of the relevant market in antitrust.

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Bibliographic Info

Paper provided by Université de Lausanne, Faculté des HEC, DEEP in its series Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) with number 00.15.

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Length: 32 pages
Date of creation: Jul 2000
Date of revision:
Publication status: Published in European Journal of Political Economy, vol. 17 (2), June 2001, pp. 421-444
Handle: RePEc:lau:crdeep:00.15

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Postal: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Phone: ++41 21 692.33.64
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Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
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Keywords: protection; GATT; market definition;

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