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Protectionists: I hate these guys

October 22, 2018 - 15:35 -- Admin

People you don’t like – they’re everywhere

International Competition and Adjustment: Evidence from the First Great Liberalization
by Stephane Becuwe, Bertrand Blancheton, Christopher M. Meissner – #25173 (DAE ITI)

Abstract:

France and Great Britain signed the Cobden Chevalier treaty in
1860 eliminating import prohibitions and lowering tariffs with
Britain. This policy change was unexpected by French industry
and entirely free from lobbying efforts. A series of commercial
treaties with other nations followed in the 1860s lowering
tariffs with France’s largest trade partners. We study the
dynamics of French trade patterns using product level exports and
imports for France with all partners and at the bilateral level
before and after these tectonic trade policy shocks. We find a
significant rise in intra-industry trade in leading manufactured
products. Cotton, woolen and silk cloth “held their ground,”
rising imports being met with rising exports. Rather than
shifting or destabilizing French patterns of specialization,
liberalization allowed for an expansion of exports in
differentiated products. The findings are consistent with the
“smooth adjustment” hypothesis. The return to discussion of
higher tariffs from 1878 should not be regarded as a backlash to
international competition, but rather the outcome of
anti-competitive protectionist lobbying.