The dire prospects of global warming have been increasing the pressure on policymakers to use trade policy as a mitigation tool, challenging trade economists canonical “targeting principle.” Even though the justifications for this stance remain as valid as ever, it no longer seems feasible in a world that is already engaging actively in using trade policy for climate purposes. However, the search for second-best solutions remains warranted. In this paper, we focus on the climate benefits of tariff reform for a broad sample of Latin American and Caribbean countries, drawing on Shapiros (2021) insights about the environmental bias of trade policy. Using a partial equilibrium approach and GTAP 10-MRIO data for 2014, we show that even though there is evidence of a negative bias toward “dirty goods” in half of the countries studied, translating this into actionable tariff reforms is plagued by interpretation and implementation difficulties, as well as by jurisdictional and efficiency trade-offs. There are also questions about their efficacy in curbing greenhouse gas emissions.

The dire prospects of global warming have been increasing the pressure on policymakers to use trade policy as a mitigation tool, challenging trade economists' canonical ‘targeting principle’. Even though the justifications for this stance remain as valid as ever, it no longer seems feasible in a world that is already engaging actively in using trade policy for climate purposes. However, the search for second‐best solutions remains warranted. In this paper, we focus on the climate benefits of tariff reform for a broad sample of Latin American and Caribbean countries, drawing on Shapiro's (2021, The Quarterly Journal of Economics, 136, 831) insights about the environmental bias of trade policy. Using a partial equilibrium approach and GTAP‐MRIO data for 2014, we show that even though there is evidence of a negative bias towards ‘dirty goods’ in half of the countries studied, translating this into actionable tariff reforms is plagued by interpretation and implementation difficulties, as well as by jurisdictional and efficiency trade‐offs. There are also questions about their efficacy in curbing greenhouse gas emissions.

The relationship between Korea and Latin American and the Caribbean has come a long way. As the two economies embraced trade with one another in the early 1990s, their connection went from being irrelevant to being a wealth machine. Bilateral trade grew at an impressive annual rate of 11.5%reaching a record high in 2021. The trade boom was followed by US$26 billion in investments by Korean firms in the region since 2000. Despite this meteoric rise, lingering trade barriers remain, and new challenges are emerging from a string of disruptive shocks to the global economyprotectionist backlashes; growing and interrelated sanitary, food, energy, and climate crises; and a fast-moving “digital transformation.” This monograph argues that, despite the challenges, both economies have a set of policies, institutions, and comparative advantages that, if reinforced and leveraged by trade and cooperation, can turn these shocks into bilateral and global opportunities for inclusive and sustainable growth.

Online Technical Appendix to “The Reorganization of Global Value Chains: Whats in it for Latin America and the Caribbean?” It describes in more detail the data sources, the empirical strategy; and presents a series of robustness checks.

As Latin America and the Caribbean bounce back from a sanitary crisis of historic proportions, the search is on for policies that can accelerate recovery while boosting long-term growth. In a scenario of tight fiscal constraints, trade and integration (T&I) policies seem to fit this description. There are particularly high expectations in some policy circles that the benefits of T&I policies will be boosted by an impending reorganization of global value chains. Yet little is known about the relevance, shape, and impacts of this reorganization. Will this lead to reshoring, nearshoring, or some slightly modified version of the status quo? Will this benefit the region? This paper takes a stab at answering these questions. It begins with a critical review of the most frequently cited drivers of the reorganization. This is then followed by an analytical exercise that uses the 20182019 US import tariff hike as a quasi-natural experiment. The results seem more consistent with modest trade and investment gains for the region, associated with incremental rather than major adjustments to global value chains. It concludes by arguing that whatever the future brings, minimizing trade and investment costs is likely to remain the regions dominant strategy.