Policy Responses to Shifting Comparative Advantage: Designing a System of Emergency Protection

Abstract

Often procedures exist through which industries may petition their government for protection, contingent on the satisfaction of specific preconditions. The goal of this paper is to provide some guidance to policymakers wishing to create a system of contingent protection. The two major components of such a system are the preconditions and the instrument of protection to be applied. To be effective, efficient, and equitable, contingent protection needs to be nondiscriminatory and compensate affected exporters. As the existence of specific preconditions will create incentives to satisfy them, the scope for such "indirect" lobbying for protection must be minimized.