Smuggling and Bhagwati's Nonequivalence Between Tariffs and Quotas

The authors extend Professor Bhagwati's analysis about the nonequivalence between trade policy instruments when domestic production is monopolized and the terms of trade are endogenous, by allowing for smuggling. They show that the dominance of the ad valorem tariff over the quota is not robust. Tariffication can lower welfare even when the level of illegal imports is quite small. However, tariffication with a specific tariff is always beneficial because the specific tariff dominates the ad valorem tariff and the quota with or without smuggling. Smuggling (or the threat) also tends to lower the second–best tariff/quota, and increases welfare when imports are restricted by a quota, but lowers it under a tariff.     

State Trading and Tariff Rate Quotas: The Case of Korea's Rice Imports

This paper analyzes the effects of trade liberalization of tariff‐rate quotas under import “state trading enterprises” (STEs) in agriculture. An analytical framework is provided to determine the importance of which instrument is binding under competition (the in‐quota or out‐of‐quota tariff or the quota) and under the initial STE equilibrium. It also depends on whether or not the STE controls both the domestic market prices and owns/controls the import quota (and whether it is obligated to fill the quota or not). An empirical example of the rice STE in South Korea has simulations showing that an increase in imports can be achieved through a moderate expansion of the quota or a decrease in the out‐of‐quota tariff to the level where it becomes binding. However, a significant level of quota expansion induces the STE to switch to the autarky solution and social welfare declines.     

PERFORMANCE CONTINGENT PROTECTION*

In this paper we ask how to construct a tariff or quota schedule which depends on the behavior of a domestic monopsonistic monopolist in order to achieve the best tradeoff between two objectives of a government. We consider various political and economic tradeoffs which could face the policy maker: aggregate welfare versus industry profits, output and imports; and trade barrier revenue versus industry profits and domestic price. In all cases considered, performance contingent protection which takes the form either of a tariff which depends on domestic output or a quota which depends on the price charged is generally superior to a fixed tariff or quota and is sufficient to achieve optimality.     

Welfare‐Worsening Aid Flows To Small Countries: The Role of Nontraded Goods

This paper presents the circumstances under which foreign aid can immiserize a small, tariff‐distorted economy, highlighting the role played by the nontraded sector in generating this outcome. An inflow of aid, provided in the form of an increase in the capital stock, can reduce real income of a small, tariff‐distorted economy if: (i) the inflow results in an increase in the price of the nontraded good and the nontraded good and imports are sufficiently strong complements in demand; or (ii) if the inflow leads to a reduction in the price of the nontraded good and the nontraded good and imports are substitutes in demand, provided the degree of substitutability is not too large.     

Passthrough of Exchange Rate and Tariffs into Import Prices of India: Currency Depreciation versus Import Liberalization*

This paper examines the extent of passthrough of exchange rate and tariff changes into import prices using sectoral panel data (at the two‐digit SITC level) for the post‐reform period in India (1990–2001). After having controlled for unobserved effects that might have an impact on the import prices by using sector dummies, we find that on average exchange rate passthrough (ERPT) is a dominant effect compared to tariff rate passthrough (TRPT) in explaining changes in India's import prices. The sectoral panel results suggest that the passthrough of exchange rates and tariff rates varies across products. ERPT into import prices is significant in 12 industries, whereas TRPT is significant only in six industries, with full passthrough. However, ERPT is incomplete only in four industries, but TRPT is incomplete in 36 industries, which means that firms exporting to India more frequently adopt strategies to maintain their market share against tariffs than against exchange rate changes. The sectoral differences in passthrough seem to be related to the sector's share in total imports and the sector's effective protection rate. Hence, India's relatively high levels of protection have an impact on the behavior of foreign exporters.     

技术壁垒对出口产品价格梯度影响的模型构建与实证分析

技术壁垒一旦形成并且实施,壁垒对进口产品就产生了明显的数量控制机制和价格控制机制的双重作用.即它既具有配额的数量控制作用,又形成了一种特殊的价格调节作用,其作用类似于关税但有其特殊性,是一种复合机制.本文研究分析了技术壁垒引致出口产品价格变化的空间梯度场模型,并根据模型实证分析了技术壁垒对我国出口产品价格梯度的影响,提出了积极应对这种技术壁垒,提高我国出口产品国际竞争力的措施.     

Disguised Protectionism, Global Trade Rules and Alien Invasive Species

Current international law strongly favors policies designed to make imports safer (e.g., in terms of invasive species) over policies explicitly designed to discourage imports. We show that this preference may be counterproductive. A externality in trade is incorporated into a political-economy model of policy formation. Nations can address the externality by inspecting cargo and imposing a fine on contaminated imports. We compare the equilibrium when inspection is the only policy option relative to the equilibrium that emerging when nations may also manipulate the tariff. Ruling out the tariff causes socially excessive stringency in general, social welfare losses if domestic supply is highly inelastic, and in some circumstances an increase in the real tariff, measured as the difference between world and domestic prices.     

The effects of MFA quota elimination on Indian fibre markets

This article examines the effects of multi-fibre arrangement (MFA) quota elimination on Indian fibre market. The partial equilibrium Indian fibre model was developed using a theoretically consistent framework and incorporated regional supply response, substitutability between cotton and man-made fibres, and appropriate linkage between cotton and textile sectors. Baseline projections were developed for supply, demand and prices of cotton, man-made fibres and textiles under a set of exogenous assumptions. The effects of MFA textile quota eliminations were introduced into the model by conducting three scenarios, i.e. increasing textile exports by 10, 20 and 30% from the baseline level. The results suggest that on an average, cotton imports rise by 4–8% annually, while the man-made fibre exports from India decline with the opening of textile markets in the developed countries. The higher domestic cotton prices encourage acreage expansion in cotton in all the three regions in India, but not enough to meet rising mill demand under the scenarios of higher textile exports. The rise in cotton imports from India has little effect on world cotton prices.     

Heterogeneous impacts of the Section 301 tariffs: Evidence from the revision of product lists

In each of the three waves of the Section 301 tariffs on Chinese imports, the US government exempted some products on the originally proposed list from additional duties. Using these exempted products as the counterfactual, we identify modest but heterogeneous impacts of the tariffs on the value of US imports from China. We find a complete pass-through for the first and second waves of tariffs. However, unlike in previous studies, we estimate a very limited tariff pass-through of the third wave of tariffs. Finally, we find little import diversion for the US and significant export diversion for China.     

BILATERAL TRADE RELATIONSHIP BETWEEN THE UNITED STATES AND CANADA: IMPLICATIONS OF THE FREE TRADE AGREEMENT

This study's primary objective is to evaluate empirically the economic effects of the U.S.-Canada Free Trade Agreement (FTA). The paper emphasizes bilateral trade flows of agricultural and industrial products between the United States and Canada, given that the FTA removes tariff and non-tariff barriers. It evaluates the FTA's impact on the two countries' trade with third countries. The paper specifies a traditional log-linear trade model consisting of import demand and export supply equations for both agricultural and industrial products. It uses quarterly time-series U.S. and Canadian trade data for 1972–1985.
The study uses the two-stage least-squares estimator to estimate the models. The models had R coefficients ranging from 0.78 to 0.99, indicating that the models' explanatory variables explain most causes of variations in the dependent variable. This study reveals that U.S. imports of agricultural and industrial products from Canada were more sensitive than were Canadian imports not only to import and domestic prices but also to world prices. This is because Canadian consumers have less domestic substitutes than do their U.S. counterparts. Also, Canada has a smaller internal market than does the United States. The study estimates that U.S. imports from Canada will increase $2.8 billion while Canadian imports from the United States will increase $1.2 billion. The impact on the two countries' trade with third-party countries will be insignificant.     

Should special agricultural safeguard be ignored? An evaluation for dairy trade

This study measured the impact of special agricultural safeguards (SSG) on dairy products imports by the US and Japan. It was observed that dairy products have been the most affected by this protectionist measures, and that these countries are relevant importers that impose SSG. The tariff lines subject to SSG were selected, and the period of analysis was from 1995 to 2015. The results showed that the impact of SSG applied by the US was much higher than for Japan. The overall estimated value of imports that did not happen due to the application of SSGs was approximately USD 2 billion. Specifically for the Brazilian economy, the condensed milk not exported to the US due to SSG applied cost the country BRL 345 million in GDP value and almost 4.5 thousand jobs. These results might be underestimating these effects, since the SSG tariff was not subject to calculation in several years.     

Quantitative restrictions and Indian imports

Many governments in LDCs tend 3o rely heavily on import control for achieving adjustments in the balance of payments. The empirical analysis of imports of these countries has failed to address the issue of quantitative restrictions satisfactorily. In this paper, a set of disaggregated import demand equations are specified which attempt to capture the government's decision regarding quota restrictions. The model postulates that the overall level of imports is determined by expected foreign exchange availability while the composition of imports (once the level has been decided) is based on political and economic priorities and on relative prices.     

Managed trade: The US–Mexico sugar suspension agreements

Under the 1994 North American Free Trade Agreement, Mexican sugar producers were ultimately granted free access to the US sugar market, while all other suppliers, including US refiners, were subject to supply quotas. Following a surge in imports of Mexican sugar, the American Sugar Coalition initiated anti‐dumping and countervailing duty (ADCVD) proceedings against Mexico in early 2014. In December 2014, the ADCVD cases were halted as a result of two suspension agreements negotiated between the US and Mexico. This paper contributes to a small number of empirical studies that have estimated the impact of suspension agreements. We measure the impacts of the ADCVD filings and the suspension agreements on US domestic raw and refined prices, the raw‐to‐refined margin and the quantity and composition of sugar imports from Mexico. Results suggest US raw sugar prices increased by 3¢ per lb. (14%) under ADCVD proceedings, equivalent to an ad valorem tariff between 40% and 50%, while the suspension agreements increased US raw sugar prices by 5¢ (70% tariff equivalent). US refined sugar prices increased by similar amounts under the ADCVD proceedings and the suspension agreements (4.5¢ per lb.). Ultimately, both the ADCVD proceedings and the suspension agreements significantly reduced sugar imports from Mexico. US sugar refiner economic welfare hinges critically on the quantity and composition of raw sugar imports. As such, refiner revenue, following the ADCVD filings and suspension agreements, is estimated to have declined by 16%, relative to a free trade environment.     

Importing under trade policy uncertainty: Evidence from China

This paper empirically explores the adjustment of imports to reductions in trade policy uncertainty (TPU), taking into account that firms may face large sunk costs when purchasing foreign goods. We investigate how product-level Chinese imports react to tariff binding arising from China's accession to the WTO, by distinguishing both country-related and firm-related margins. Our main results suggest that a decline in TPU allows access to a greater variety of foreign goods, that are also associated with higher quality. At the same time, tariff binding leads more Chinese producers and trade intermediaries to start importing, thus allowing a greater number of firms and consumers to enjoy potential gains from imports. Finally, we document heterogeneous TPU effects across firms with different ownership, as well as across products with different end use, revealing interesting insights into the context of global value chains.     

Variable Labor Supply,Terms of Trade Shocks,and Domestic Prices: A Note

This paper develops a two-good, small-country, general-equilibrium trade model with endogenous labor supply, where trade is restricted by a tariff or an import quota. Within this framework, it is shown that, contrary to Anam (1989), under an import quota domestic and world prices may vary in the same direction. This is due to the possibly positive employment effects of terms of trade shocks. In such a case, compared to fixed labor supply, variable labor supply is likely to make the domestic prices less sensitive to foreign price volatility. Received June 13, 2001; revised version received November 14, 2001     

Stackelberg竞争条件下的最佳福利关税与最大收入关税

文章考察Stackelberg竞争条件下的最佳福利关税与最大收入关税。分析表明,最佳福利关税与最大收入关税的相对大小主要取决于产品之间的相互关系和国内外企业的成本差异。当产品是互补品时,最佳福利关税总是小于最大收入关税;当产品是替代品时,最佳福利关税与最大收入关税的关系,既取决于产品间的替代程度又取决于国内外企业间的成本差异。产品的替代程度较弱时,最大收入关税总是大于最佳福利关税;产品的替代程度较强时,若国内外厂商间的成本差异越小,则最佳福利关税越有可能超过最大收入关税。     

Dynamics of economic efficiency in tariff and trade

When the efficiency losses or gains as a result of an ad valorem import tariff are accounted for, the exisiting literature compares the equilibrium states before and after the tariff. However, after the imposition of an ad valorem tariff, the cost of the foreign producer to sell in the domestic market jumps upwards by the extent of the ad valorem tariff. This affects the quantity of imports, and the market is no longer in the initial equilibrium. The market then adjusts and after some efficiency loss, a new equilibrium state is arrived at. The mechanism of price adjustment has a basis of lack of coordination among buyers and sellers at the exisiting prices. The economic efficiency loss when the market is out of equilibrium is not taken into consideration in the literature, while deriving an optimal ad valorem tariff rate. In this article, an optimal ad valorem tariff schedule has been derived. From optimality, it should be construed that the economic efficiency losses get minimised when the market is adjusting and also during the equilibrium. A revenue constraint has to be met in addition.     

Rent Sharing In the Multi-Fibre Arrangement: Theory and Evidence From Us Apparel Imports From Hong Kong*

Available estimates of tariff equivalents and welfare costs of MFA quotas are based on the premise of perfect competition in both product and license markets, and the assumption that exporting countries receive all the scarcity rent. We test if US apparel imports from Hong Kong conform with this competitive model by looking at whether the license-price-inclusive Hong Kong price, adjusted for tariffs and transport costs, is equal to the US price. We deal with the homogeneous product case and correct for both aggregation and quality differences. We find that US importers seem to retain a substantial portion of the quota rents.     

TRADE CREATION AND DIVERSION EFFECTS OF THE U.S.-CANADIAN FREE TRADE AGREEMENT

This study empirically estimates and evaluates the economic benefits of the U.S. and Canadian Free Trade Agreement (FTA). Most past studies rely on aggregate data. The analysis here emphasizes the trade effects of removing tariff and nontariff barriers on each commodity group classified by the Standard International Trade Classification. Estimating the amount of trade expansion under FTA for both countries involves using the import demand elasticities from a dynamic demand model. Results show that U.S. imports from Canada are more sensitive to domestic, import, and world prices than are Canadian imports from the United States. U.S. imports from Canada would increase roughly £3.257 billion compared to the £2.432 billion increase for Canadian imports from the United States .     

The exchange rate pass-through into import prices: the case of Japanese meat imports

Japan is a traditional net importer of food products in general and meat products in particular. Japanese meat imports come from a few countries thus making Japan potentially very sensitive to the swings in one or a few bilateral exchange rates. One of the key contributions of this article is the use of commodity (meats in this case) imports weighted exchange rates in the analysis. The standard practice in previous international agricultural trade studies related to either exchange rate pass-through or pricing to market was to use the aggregate trade weighted exchange rates usually provided by the Central Bank authorities or sources. Beef and poultry import prices indicate partial exchange rate pass-through while import prices of pork indicate zero exchange rate pass-through, primarily due to gate price policy system applied to pork imports. In terms of competitiveness, these results suggest relatively more competitive markets among poultry importing firms, somewhat competitive markets among beef importing firms, while competitiveness of pork importing firms could not be assessed due to existing import policies.