Who captures the price rent? The impact of European Union trade preferences on export prices

Preferential trade agreements (PTAs) aim at increasing trade flows via the incentives created by preference margins; this is the difference between the preferential tariff and the tariff of the main competitors. However, an additional impact that is often omitted in PTAs evaluations is the possibility that the wedge between preferential and most favoured nation (MFN) tariffs may induce a preference rent that translates into larger prices for preferential exporters. This paper analyses empirically whether preferential exporters capture this preference rent using a unique dataset of imports in the European Union at a highly disaggregated level linked to information on the preferential regime used and the tariff applied. Our main findings suggest that on average an exporter obtains a larger price margin under a preferential regime than under MFN. However, this preference rent is only partially appropriated by exporters with a pass-through coefficient from preference to price margins that oscillates between 0.17 and 0.8, depending on the size of the margin and the type of product.     

Trade creation,trade diversion,and the general equilibrium effects of regional trade agreements: a study of the European Community–Turkey customs union

This paper presents an industry-level analysis of trade flows in order to estimate the trade effects of Turkey’s customs union with the European Community (EC). The paper is able to distinguish between trade creation and trade diversion by employing tariff data on each good to measure the impact of not only the tariff level but also the difference between tariffs applied to imports from Europe and the most-favored nation tariffs applied to imports from other non-preferential trading partners. The paper estimates the general equilibrium effects of the customs union in addition to the effects of eliminating tariffs on the EC’s exports to Turkey. It concludes that the customs union has generated more than twice as much trade creation as trade diversion but that the overall impact of the customs union has been relatively small.     

Firm-level Utilization Rates of Regional Trade Agreements: Importers’ Perspective

This study provides evidence of firm-level utilization of regional trade agreements (RTAs) using transaction-level import data for Thailand. Two stylized facts are presented: some firms use RTA schemes in imports from RTA partner countries, whereas others do not; among firms that import from RTA partner countries under RTA schemes, some use RTA schemes for all transactions but others use them only for some transactions. To interpret these observations, we focus on the role of importers’ demand size. Specifically, we reveal that import firm-product-level RTA utilization rates are higher for larger-size importers in terms of demand, indicating that the difference in the share of utilization of RTA schemes across importers stems from the difference in the importers’ demand size. We also find that the utilization rates are higher when the preference margin, defined as most-favored-nation tariff rate minus RTA rate, is larger.     

“碳关税”与中国外贸政策之应对

二氧化碳等温室气体排放导致气候变化问题日益受到人们关注。而美国为了在经济危机中寻找新的增长点,意图在新的节能经济中继续处于有利地位,也迫于其国内贸易保护主义的压力,于2009年6月22日通过《清洁能源安全法》。该法以限制温室气体排放、减缓全球变暖为由正式提出了对进口的高耗能产品征收"碳关税"。西方征收"碳关税"一旦成为现实,不仅会使西方国家在短期内达到贸易保护的目的,也会使其在节能环保的"低碳经济"时代保持经济和技术上的优势。本文首先对"碳关税"的由来以及西方国家的意图进行分析阐述,进而讨论其对中国外贸的不利影响,最后,从外贸政策的角度提出应对之策。     

Uniform versus Discriminatory Tariffs: When Will Export Taxes Be Used?

This paper examines the noncooperative interactions between two exporting countries and one importing country when all of them are seeking the optimal policies to improve their welfare. Whereas the importing country has the incentive to impose tariffs on the goods coming from the two exporting countries, the export policies chosen by the exporting countries depend on the tariff regime, whether uniform or discriminatory tariffs are used. It is argued that export taxes are chosen by both exporting countries in some cases, and that whereas the importing country prefers a uniform tariff regime, the exporting countries find a discriminatory tariff regime preferable.     

An eye for an eye? The trade and price effects of China's retaliatory tariffs on U.S. exports

We analyze the trade and price effects of China's retaliatory tariffs on imports from the United States in the period from January 2017 to May 2019. We apply the difference-in-differences approach to the up-to-date China Customs data on imports disaggregated by eight-digit HS product category and source country. We find large reductions in the value and quantity of imports from the US and an almost complete tariff pass-through onto import prices. These results remain robust to extensive changes in the specification and in data sample and to a variety of placebo tests using processing imports or exempted products that were originally included in the tariff lists but removed before implementation. We also find that the trade and price effects are heterogeneous across products, differing either in the end-use or in the ownership types of the importing firm. Similar to recent findings in the US (Amiti et al., 2019, Amiti et al., 2020), our estimates suggest limited terms-of-trade gain due to China's tariff hikes.     

MFN Status and the Choice of Tariff Regime

The gradualist approach to trade liberalization views the uniform tariffs implied by MFN status as an important step on the path to free trade. We investigate whether a regime of uniform tariffs will be preferable to discriminatory tariffs when countries engage in non-cooperative interaction in multilateral trade. The analysis includes product differentiation and asymmetric costs. We show that with the cost asymmetry the countries will disagree on the choice of tariff regime. When the choice of import tariffs and export subsidies is made sequentially the uniform tariff regime may not be sustainable, because of an incentive to deviate to a discriminatory regime. Hence, an international body is needed to ensure compliance with tariff agreement.     

Negotiated tariffs in free entry oligopoly under integrated markets

Using the Nash bargaining approach, this paper analyzes the negotiation of tariffs between two countries in free-entry oligopolies under integrated markets. Employing a symmetric model with linear demand and cost functions, the paper shows that for both countries Pareto-efficient negotiated tariffs are larger than the tariffs at the Nash equilibrium of a non-cooperative tariff game (tariff war) in which each country imposes its optimum tariff.     

Unprotective Tariffs,Ineffective Liberalization,and Other Mysteries: An Investigation of the Endogenous Dimensions of Trade Policy Formation in Australia

At the forefront of research on Australia's trade policies two items have attracted considerable interest: (1) the endogeneity of tariff concessions and (2) the impact of liberalization on imports. Studies that investigate the former examine the impact of import penetration on tariffs, and studies that explore the latter consider the effect of tariffs on import penetration. Despite the simultaneity of these variables, research lines (1) and (2) followed separate paths by only considering unidirectional causal relationships. And yet, these paths do converge. The meeting point: perplexing results! Tariffs are found to protect those industries that have the least use for protection, and liberalization is often determined to be entirely ineffectual in stimulating imports. The present article explains that the source of such puzzling results is found in the misspecification of the employed frameworks of analysis, which ignore relevant feedback effects. When reciprocal causation is addressed in the analysis, the estimated impact of import penetration on the tariff level increases by almost fivefold and that of tariffs on import penetration more than doubles.     

Anglo‐American trade costs during the first era of globalization: the contribution of a bilateral tariff series†

Previous scholarship has suggested that British trade was generally unaffected by foreign tariffs during the period from 1870 to 1913. This article focuses specifically on Anglo‐American trade, which was the largest bilateral flow of trade during the first era of globalization, and finds that tariffs were the sole intertemporal determinant of Anglo‐American trade costs. However, the determinacy of tariffs for Anglo‐American trade costs only becomes apparent when the tariff variable incorporates a measure of the bilateral American tariff toward Britain, which this article reconstructs. The article concludes by claiming that Anglo‐American trade represents a major qualification to any emerging consensus that foreign tariffs were of minor significance to the trade of late nineteenth‐century Britain.     

Tariff Pass-through in Wholesaling: Evidence from Firm-level Data in Japan✰

Tariff pass-through is critical for considering the benefits of trade liberalization, the beneficiaries, and the extent. This study empirically examines the tariff pass-through in wholesaling through the wholesale firm-level data in Japan. In particular, the study focuses on wholesalers’ margin ratio, that is, (sales – procurements) / sales. We address the endogeneity concerns on the measurement errors of the study variables of margin ratio and tariffs. Consequently, the study found that importing wholesalers significantly raised their margin ratio against tariff reduction. On average, a 1 percentage point reduction of tariffs raised the margin ratio by approximately 0.25 percentage point. This rise is equivalent to that of sales prices to procurement prices by about 0.34 %, indicating that Japanese wholesalers capture one-third of the tariff rent. However, the study also found that a tariff reduction lowers the margin ratio of wholesalers who procure their products from domestic producers.     

Policy analysis with Melitz-type gravity model: Evidence from Kyrgyzstan

Several governments worldwide aim at fostering agricultural productivity growth by providing investment support. However, the policy’s effect on trade for middle- and low-income countries has not been analyzed so far. This paper analyzes the impact of agricultural policies (credit subsidies and tariffs) on agricultural trade flows by modifying a Melitz-type structural gravity model for a small and open economy. According to the theory, trade flows are expected to increase with credit subsidies and decrease with partners’ applied tariff rates. We analyze bilateral agricultural trade flows between Kyrgyzstan and its 69 trading partners from 2007 to 2018 to test our theoretical findings. Applying the Poisson pseudo maximum likelihood estimator, we find that credit subsidies effectively increase international trade flows while applied tariffs imposed on agricultural products reduce Kyrgyzstan’s export substantially. These results can be applied to similar economies with publicly available data where small budgetary efforts drive trade expansion.     

India and the Tokyo round

The paper attempts to quantify the gains and the losses for India from the changes in import tariffs decided during the Tokyo Round of Multilateral Trade Negotiations. The study focuses on exports to the ECCC, Japan, and the US. It is conducted at the tariff line level and uses the actual tariffs resulting from the Tokyo Round. The evaluation is in terms of the static effect of the tariff changes. The results indicate that the gains for India from most-favoured nation tariff cuts far outweigh her losses due to the erosion of preference margins acquired under the Generalized System of Preferences.     

The impact of international agreements on domestic policy: An analysis of tariff policy in African countries

This paper estimates a fixed effects tariff model to study the impact of the tariff reform provisions of international agreements on domestic tariffs, using a sample of eight Sub-Saharan African countries. The structure of the model explaining domestic tariff changed from the preagreement period to the postagreement period. However, the results indicate that for the most part, efforts by governments to adhere to tariff agreements failed in all but a few countries. Even for the countries in which the agreements appeared to be successful, the significance of the results is relatively weak.     

价格贸易条件变动、进口关税削减与中国加入WTO的生产率效应

本文使用中国加入WTO之后的2002～2009年数据,构建面板数据模型来检验了价格贸易条件变动动和进口关税削减对产出和全员劳动生产率的影响。我们的检验结果表明,价格贸易条件的改善显著地促进了我国生产率的增长,价格贸易条件对生产率的影响体现为一种结构效应和资源配置效应的综合。在结构效应和资源配置效应总体为正的情形下,价格贸易条件的波动才能体现出正的生产率效应。进口关税水平的削减对我国生产率的影响为负,因为削减进口关税税率所推动的进口贸易的增长,在很大程度上带来的负的竞争效应要大于其所带来的技术溢出效应。本文的研究对于我国进一步改革开放战略,尤其是对我国进行区域间的经贸合作或者建立自由贸易区都有着一定的启示。     

Clothes without an Emperor: Analysis of the preferential tariffs in ASEAN

This paper examines the current state of intra-ASEAN trade under the preferential regime of the AFTA. It partly addresses some data problems and employs a gravity model to arrive at alternative ways of gauging the importance of preferences in the absence of data on the actual utilisation of AFTA preferential tariffs. Our results show that although the range of products where AFTA might have an influence is limited, preferences seem to matter when the differential margin between the MFN and preferential tariff rates reaches a critical amount, allowing regional exporters to cover the costs of requesting preferences. However, at very high differential margins, the significance of AFTA preferences seems to wane. This indicates either the presence of non-tariff measures which prevent traders from exploiting the huge tariff discounts offered by the AFTA, and or, the propensity of ASEAN to extend high preferences on products where little or no intra-ASEAN trade takes place.     

IS THERE POLICY SPACE TO PROTECT SOUTH AFRICAN AGRICULTURE?

The aim of this paper is to assess the amount of “policy space” available to increase tariff protection in South African agriculture. To this end, formal definitions for agricultural produce, actual import data, applied tariff data and bound tariff rates and tariff quota information were used to investigate the extent to which it is possible and feasible to increase tariffs. The analysis shows that in general the policy space available to South African agriculture is limited because of, among others, WTO binding and treaty obligations under the EU and SADC agreements. Furthermore, it does not make policy sense to increase protection on most other products.     

Do regional trade agreements really help global value chains develop? evidence from Thailand

This paper examines the firm-level nexus between exporting and importing by using firm-level data from Thai customs. We differentiate firms’ imports according to the tariff regime used (e.g. regional trade agreements (RTAs)). Our finding is that imports under RTA regimes are not considerably associated with exports. Rather, greater exports are found in firms with larger imports under the most favoured nation or other preference regimes (e.g. duty drawback for raw materials imported to produce export products). One reason for the result in RTA imports is that active RTA importers mainly target the domestic market rather than the export market. If the main market is abroad, firms tend to use other preference regimes. Thus, the other preference regimes may contribute more greatly to the development of firm-level back-and-forth international transactions than RTAs do.     

Tariff valuation,transport cost and the establishment of trade preferences among developing countries

While there are various reasons for believing that the establishment of trade preferences among developing countries would convey important benefits, previous efforts along these lines have produced few concrete accomplishments. The preference-creating system proposed in this paper is based on the proposition that developing countries are often at a transport cost disadvantage in intra-trade and the following observations: (1) almost all developing countries employ a cost-insurance-freight (c.i.f.) valuation base for tariff assessment, and (2) tariffs in the developing countries are generally much higher than in developed countries and may range from 20 to 200% or more. From this, it is demonstrated that a situation exists in which the normal c.i.f. tariff base often has a potentially important discriminatory effect on intra-trade. Specifically, if customs duties are applied to an unfavourable transport margin, the tariff system will result in a higher duty collected on intra-trade than on shipments from a developed country. However, by shifting to a two-tier valuation base, the present system's discriminatory effects can be neutralized and preferences generated for developing countries. Simulations with international trade data support the proposition that the two-tier system has these desired effects.     

International trade and agricultural production: Evidence from the Southern African Development Community sub-region

Southern African Development Community (SADC) countries have undertaken substantial reforms in market liberalisation policies and regional integration initiatives. Theory suggests that trade can affect output through the exploitation of comparative advantage, increasing return to scale, liberalisation policies and technology. This work investigates the impact of agricultural exports to, machinery and chemical imports from and tariffs on agricultural products by total partners to the Southern African Customs' Union, SADC, sub-Saharan Africa and the rest of the world on agricultural production. Following Hausman tests, three panel fixed-effect models are estimated. The first is for aggregate machinery imports, chemicals imports and agricultural exports. The second is for disaggregated exports and imports according to the respective destination and source regions above. The third is for aggregate imports and disaggregated tariffs implemented by the various export destination regions toward the SADC. The results agree with the theory that international trade is good for development. Agricultural market expansion through export opportunities and access to inputs are significant sources of agricultural production enhancement in the SADC region. Tariffs barriers to agricultural exports are found to be significant impediments to agricultural production. However, the disparity of effects by export destination and the insignificance of the impact of trade with the rest of Africa are worth emphasising.