Promoting exports directly

Context

The logic of trade liberalization is that tariffs should be as low as possible to avoid any element of discrimination. But where significant import protection aims, governments can consider offsetting the discrimination against exports with administrative measures to provide imported inputs at world prices or with subsidies. Directly promoting exports in this way may also help to form a constituency for continued protection.

Counter-claim

Such measures may come to be seen as a long-term alternative to further import liberalization. It is a difficult alternative to cuts in import protection. It raises administrative problems and often requires significant budgetary resources. Like any other selective intervention, it will also encourage rent seeking. The risk of trade disputes and of countervailing duties in importing countries has made direct export promotion increasingly unattractive.