Local Content Requirements

Local Content Requirements

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In the wake of the Great Recession of 2008a€“09, economists feared that protectionist policies might sweep the world economy, echoing the wave of tariff escalations during the Great Depression of the 1930s. To some surprise, officials were more restrained and largely avoided traditional forms of protection (tariffs and quotas), leading some observers to underestimate the incidence of new protectionism. In fact, policymakers increasingly turned to more opaque behind-the-border nontariff barriers (NTBs). Using a combination of statistical analysis and case studies, the authors show that local content requirements (LCRs), a form of NTB, have become increasingly popular. How much was global trade actually reduced on account of LCRs? A conservative estimate might be $93 billion. Case studies featured cover the healthcare sector in Brazil, wind turbines in Canada, the automobile industry in China, solar cells and modules in India, oil and gas in Nigeria, and a€œBuy Americana€ restrictions on government procurement in the United States.Automobile Prices The averagepriceofChineseautomobilesis probablyhigherasaresult of LCRsand related policies. To estimate the impact, we compared the 2010 prices of four popular models (the Toyota Yaris, the Ford Focus, the VWPassatanbsp;...

Title:Local Content Requirements
Author:Gary Clyde Hufbauer , Jeffrey J. Schott
Publisher:Peterson Institute for International Economics - 2013-10-07


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