Trade and Transitions: A Comparative Analysis of Adjustment Policies

292 Pages·1990·1.21 MB·English

by  Marsha Chandler

Trade and Transitions

Trade and Transitions
A Comparative Analysis of
Adjustment Policies

Michael J.Trebilcock,
Marsha A.Chandler
and
Robert Howse

London and New York
First published 1990
by Routledge
11 New Fetter Lane, London EC4P 4EE
This edition published in the Taylor & Francis e-Library, 2003.
Simultaneously published in the USA and Canada
by Routledge
a division of Routledge, Chapman and Hall, Inc.
29 West 35th Street, New York, NY 10001
© 1990 Michael J.Trebilcock, Marsha A.Chandler and Robert Howse
All rights reserved. No part of this book may be
reprinted or reproduced or utilized in any form or
by any electronic, mechanical, or other means, now
known or hereafter invented, including photocopying
and recording, or in any information storage or
retrieval system, without permission in writing from
the publishers.
British Library Cataloguing in Publication Data
Trebilcock, Michael J. (Michael John), 1941–
Trade and transitions: a comparative analysis of
adjustment policies.
1. Developing countries. Exports to developed countries.
Politico-economic aspects
I. Title II. Chandler, Marsha A., 1945– III. Howse,
Robert, 1958–
382.6091724
ISBN 0-203-16792-9 Master e-book ISBN
ISBN 0-203-26296-4 (Adobe eReader Format)
ISBN 0-415-04977-6 (Print Edition)

Library of Congress Cataloging in Publication Data
Trebilcock, M.J.
Trade and transitions: a comparative analysis of adjustment
policies/Michael J.Trebilcock, Marsha A.Chandler, and Robert
Howse.
p. cm.
Includes bibliographical references.
ISBN 0-415-04977-6
1. Trade adjustment assistance. I. Chandler, Marsha A., 1945–
II. Howse, Robert, 1958– . III. Title.
HF1421.T74 1990
382'.63–dc20 90–34976
CIP
Contents
List of figures and tables vii
Preface ix
Acknowledgements xii
List of abbreviations xiii
1 A conceptual framework for evaluating alternative
trade-related adjustment policies 1
I The dynamics of change 1
II Competing perspectives on trade and adjustment
policies 9
III Alternative policy responses to trade-related
adjustment costs 16
IV Conclusions 40
2 Trade protection instruments 42
I Introduction 42
II The economic costs and benefits of trade restrictions 51
III Conclusions 75
3 Industrial subsidies as a response to sectoral decline 77
I Outline of chapter 77
II A framework for analysis of subsidy policy 78
III Empirical evidence of subsidization 87
IV The political determinants of subsidization and the
prospects for international discipline of subsidies 109
4 Labour market adjustment policies 115
I Introduction: economic change and employment 115
v
Contents
II The spectrum of labour adjustment policies 122
III Country profiles 160
IV Labour adjustment, political reality and
economic change 166
V Conclusion 168
5 The politics of adjustment 171
I Introduction 171
II The public choice approach 172
III The institutional approach 180
IV Public choice, institutionalism and the
possibilities for reform 185
V The idea of non-incremental reform:
re-evaluating the margins for change 186
VI Conclusion 191
6 The reform agenda 193
I The nature of the crisis 193
II The margins of rational choice 195
III The sources of domestic political dysfunctions 197
IV Domestic institutional reform 204
V From domestic to international reform:
reconceiving the relationship between domestic
interests and international co-operation 211
VI The Tokyo Round approach to adjustment
pressures: the relationship between trade and
industrial policy misconceived 216
VII Underlying institutional/structural impediments
to negotiating on industrial policy 217
VIII Institutional/structural impediments to an
effective safeguards regime 219
IX Reforms to address institutional/structural dysfunctions 220
X Conclusion 226
Bibliography 228
Index 271
vi
Figures and tables

Figures
1.1 Shift in employment structure by industrial
sector, 1946–2000 4
4.1 Sweden: number of individuals benefiting from
various labour market policy measures 155
Tables
2.1 Export restraint arrangements, 1987–88 47
2.2 Industrial countries: anti-dumping investigations
and actions, 1981–87 48
2.3 Industrial countries: countervailing investigations
and actions, 1981–86 49
2.4 Recourse to Article XIX of GATT, 1978–87 50
2.5 Effective levels of protection in the textile and
clothing industries 52
2.6 Annual rents to the US textiles and apparel
industries due to import barriers 54
2.7 Annual rents to foreign textile and apparel
producers due to import quotas 54
2.8 Domestic employment gains in textiles and
apparel due to import barriers 56
2.9 Annual domestic consumer losses due to textile
and apparel import barriers 58
2.10 Effective levels of protection in the footwear industry 60
2.11 Annual rents to domestic footwear producers
due to import barriers 60
2.12 Annual rents to foreign footwear producers due
to import barriers 61
vii
Figures and tables
2.13 Domestic employment gains due to footwear
import barriers 62
2.14 Domestic consumer losses due to footwear
import barriers 63
2.15 Gains to domestic automobile manufacturers due
to protection from imports 66
2.16 Annual rents to Japanese automobile producers
due to barriers to US markets 67
2.17 Domestic employment gains due to automobile
import barriers 68
2.18 Annual domestic consumer losses due to
automobile import barriers 69
3.1 Industrial subsidies as percentage of GDP 88
3.2 Federal government assistance to the Canadian
textile, clothing and footwear industries 97
3.3 Government assistance to the automobile
industries in selected OECD countries 1975–85:
selected firm-specific subsidies 100
3.4 Concessions made by other parties as conditions
for US government backing of the Chrysler
bailout 101
3.5 Summary of proposals for government-assisted
adjustment in the US steel industry 105
4.1 Changes in production and employment in
selected industries and countries: two year rate
change between 1980 and 1982 117
4.2 The private and social costs of adjustment 118
4.3 Total labour market expenditures as a
percentage of GDP, 1987 131
4.4 Government employment promotion and income
maintenance expenditures as a percentage of
total labour market expenditure, 1987 132
4.5a Features of programmes to assist displaced
workers by selected countries 136
4.5b Distribution of UI benefit in Canada, 1981 139
4.6 Trade adjustment assistance: certification by
major industry, cumulative April 1975 to April
1983 141
4.7 Canada institutional and industrial training:
programme expenditures in summary 146
4.8 Public and private sector employment, 1965–80 156
4.9 Spending on selected manpower adjustment
policies in selected countries in the period
1960–77 162
viii
Preface

This study examines how a number of industrialized countries—namely,
Canada, the United States, the United Kingdom, France, West Germany,
Japan, Sweden and Australia—have, over the past two decades or so,
grappled with adjustment pressures induced by competitive inroads made
by foreign imports in a number of sectors (steel, coal, automobiles,
shipbuilding, textiles, clothing and footwear) that have been under stress
in many of those countries. In many cases over the period, these
adjustment pressures have become severe, with newly-industrialized
countries (NICs) emerging as major trading powers, two oil price shocks
and two world-wide recessions, increased exchange rate volatility and
increasingly rapid reallocation of corporate capital as capital markets
have become increasingly globalized. These pressures have increasingly
strained the global trading order and threatened its future stability, as
evidenced by the rise of the so-called ‘New Protectionism’. Evaluation
of the effectiveness of past policy responses to these adjustment pressures
and proposing new domestic and international policy directions for
addressing such pressures in the future is the central agenda of this
study.
It is perhaps worth noting at the outset what we regard as the distinctive
features of our analysis of possible policy responses to trade-induced
adjustment pressures. First, the study adopts a comparative perspective in
its empirical evaluation of alternative adjustment policies and reviews the
experience in a number of sectors in a number of major OECD countries,
thus allowing more robust inferences to be drawn as to the likely impact
and implications of particular domestic adjustment policy choices. Second,
the study does not confine its normative perspective to economic efficiency
concerns, but recognizing that other legitimate values are at least as much
at stake, evaluates the case for trade restrictions or alternative adjustment
policies in import-impacted sectors against multiple normative
perspectives, including efficiency, utilitarianism, distributive justice and
communitarianism. Third, the book does not confine itself to a single
class of policy responses to adjustment pressures, for example trade
restrictions, but reviews (both positively and normatively) alternative
ix