Tariff quota administration in China's grain markets: An empirical assessment |
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Authors: | Bowen Chen Nelson B. Villoria Tian Xia |
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Affiliation: | 1. Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, Urbana, Illinois;2. Department of Agricultural Economics, Kansas State University, Manhattan, Kansas |
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Abstract: | In 2016, the U.S. launched a trade dispute against China at the World Trade Organization, arguing that China has been restricting its grain imports via tariff quota administration. Despite sharp criticisms by the U.S., the extent to which the grain imports were restricted in China remains largely unknown, primarily due to that China's grain import behaviors are still under-researched. The U.S. grain export sector might actually gain little from China's grain trade liberalization in the short run, since China has become less import dependent on the U.S. through the pursuit of import diversification. In this context, this article aims to quantify impacts of the tariff quota administration on China's grain imports from its trading partners. We calculate ad valorem tariff equivalents of the tariff quota administration and then estimate import demand elasticities using a source differentiated import demand model. We find that the tariff quota administration might have reduced China's quota fill rates for the grain commodities by 10–35% during 2013–2017. In particular, the U.S. wheat exports to China were largely negatively affected. We also find that the tariff quota administration in China acts like a variable import levy—its import restrictiveness varies negatively with world prices, leading to lower import demand elasticities. |
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Keywords: | China grain markets import demand elasticity import restriction tariff quota administration F13 F14 F17 |
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