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Micro and Macro Determinants of trade temporary barriers: the Brazilian case over the last two decades

Author

Listed:
  • Marcel Vaillant

    () (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Marcelo Olarreaga

    () (University of Geneva and CEPR)

Abstract

When the process of trade liberalisation started in Brazil in the late 1980s, a regime of temporary trade protection was put in place. This paper describes the use of TTB by Brazilian’s authority over the last two decades. We found them to be highly concentrated in a few sectors and to heavily rely on antidumping measures, rather than countervailing or safeguards measures. We also develop a simple empirical model to explain the micro and macroeconomic determinants of TTBs in Brazil. After controlling for the political strength of each HS six-digit sector in Brazil, as well as the time invariant characteristic of each trading partner and the level of domestic economic activity using fixed effects, we found that low import prices are not an important determinant of TTB in Brazil even though more than ninety percent of TTB that were put in place over the last two decades were antidumping cases. TTBs are more likely to be observed when imports are large. But, perhaps more interestingly, in sectors with low MFN tariffs and where MFN tariffs are falling, which suggest that MFN tariffs and TTBs are substitutes. Finally, changes in the bilateral exchange rate are important determinants of TTBs, with appreciations of the domestic currency making the imposition of restrictive TTBs more likely.

Suggested Citation

  • Marcel Vaillant & Marcelo Olarreaga, 2011. "Micro and Macro Determinants of trade temporary barriers: the Brazilian case over the last two decades," Documentos de Trabajo (working papers) 0711, Department of Economics - dECON.
  • Handle: RePEc:ude:wpaper:0711
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    References listed on IDEAS

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    Cited by:

    1. Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2013. "Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery," Working Papers 2/13, Sapienza University of Rome, DISS.
    2. Emiliano Magrini & Pierluigi Montalbano & Silvia Nenci, 2013. "Are the EU trade preferences really effective? A Generalized Propensity Score evaluation of the Southern Mediterranean Countries' case in agriculture and fishery," Working Papers 2/13, Sapienza University of Rome, DISS.

    More about this item

    Keywords

    Temporary Trade Barriers; Brazil; Exchange rate;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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