Local Content Requirements: A Global Problem

Gary Hufbauer, Jeffrey Schott, Cathleen Cimino (), Martin Vieiro and Erika Wada
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Cathleen Cimino: Peterson Institute for International Economics
Martin Vieiro: Peterson Institute for International Economics
Erika Wada: Peterson Institute for International Economics

in Peterson Institute Press: All Books from Peterson Institute for International Economics

Abstract: In the wake of the Great Recession of 2008–09, 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). As a result, economists underestimated the incidence of new protectionism because 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 "Buy American" restrictions on government procurement.

Date: 2013
ISBN: 978-0-88132-680-2
Note: Policy Analyses in International Economics 102
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