The Global Costs of Protectionism
This paper quantifies the wide-ranging costs of potential increases in worldwide barriers to trade in two scenarios. First, a coordinated global withdrawal of tariff commitments from all existing bilateral/regional trade agreements, as well as from...
Main Authors: | , |
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Format: | Working Paper |
Language: | English |
Published: |
World Bank, Washington, DC
2017
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Subjects: | |
Online Access: | http://documents.worldbank.org/curated/en/962781513281198572/The-global-costs-of-protectionism http://hdl.handle.net/10986/29013 |
Summary: | This paper quantifies the wide-ranging
costs of potential increases in worldwide barriers to trade
in two scenarios. First, a coordinated global withdrawal of
tariff commitments from all existing bilateral/regional
trade agreements, as well as from unilateral preferential
schemes coupled with an increase in the cost of traded
services, is estimated to result in annual worldwide real
income losses of 0.3 percent or US$211 billion relative to
the baseline after three years. An important share of these
losses is likely to be concentrated in regions such as East
Asia and Pacific and Latin America and the Caribbean which
together account for close to one-third of the global
decline in welfare. Highlighting the importance of
preferences, the impact on global trade is estimated to be
more pronounced, with an annual decline of 2.1 percent or
more than US$606 billion relative to the baseline if these
barriers stay in place for three years. Second, a worldwide
increase in tariffs up to legally allowed bound rates
coupled with an increase in the cost of traded services
would translate into annual global real income losses of 0.8
percent or more than US$634 billion relative to the baseline
after three years. The distortion to the global trading
system would be significant and result in an annual decline
of global trade of 9 percent or more than US$2.6 trillion
relative to the baseline in 2020. |
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