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Journal of Economic Integration 2017 June;32(2) :283-323.
DOI: https://doi.org/10.11130/jei.2017.32.2.283
Trade Restrictions in Brazil : Who Pays the Price?
Sónia Araújo and 
Dorothee Flaig 
OECD, Paris, France
Corresponding Author: Dorothee Flaig ,Tel: +33145249564, Fax: +33144306159, Email: Dorothee.FLAIG@oecd.org
Copyright ©2017 Journal of Economic Integration
ABSTRACT
This study finds that a unilateral reduction in Brazil’s relatively high barriers to trade would increase its integration into the world economy and expand production and jobs. Using a multi-region Computable General Equilibrium model that is particularly well-suited to gauge the impact of trade policy shocks in global value chains, this study documents the effects of reducing important barriers to trade in Brazil: reducing import tariffs and local content requirements, and eliminating indirect taxes levied on exports. The largest gains in production and exports would accrue to manufacturing sectors, contradicting the widespread perception in Brazil that lifting trade protection would reduce the share of manufacturing in production. Moreover, deeper integration into global value chains would raise economic efficiency, and the higher share of foreign intermediate goods used in production would lead to lower prices, boost international competitiveness, and also benefit Brazilian households.

JEL Classification
F13: Trade Policy; International Trade Organizations
F47: Forecasting and Simulation: Models and Applications
F61: Microeconomic Impacts
F62: Macroeconomic Impacts
F66: Labor
Keywords: Trade Policy | Global Value Chains | Brazil | General Equilibrium Model
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