Abstract
This article evaluates the impacts of the imposition of tariffs on the Brazilian soluble coffee mainly by European countries as of the 1990s. More particularly, it verifies whether the imposition of discriminatory trade tariffs by the European Union and of non-discriminatory ones by some Eastern European countries reflects on the international demand for this commodity. For this purpose, dynamic models of global demand for Brazilian soluble coffee were estimated for the 1995-2003 period using data from the International Coffee Organization. Findings suggest that existing tariffs significantly account for the reduction of Brazilian share of soluble in the world market.
Highlights
This article evaluates the impacts of the imposition of tariffs on the Brazilian soluble coffee mainly by European countries as of the 1990s
Revista de Economia Política 30 (2), 2010 its world market share from 5% to 10%; Malaysia started exporting to 7% of the global market; Spain and the Following the increase in soluble coffee exports worldwide, there was a decrease in prices paid to Brazilian exporters in the international market as result of increased competition
This study aims to verify whether those tariffs can account for the relative loss this commodity suffered in the world market3 and to discuss the fall in the welfare caused by discriminatory ones
Summary
We supposed that Brazil — despite its relative loss in the world market — has comparative advantage in producing soluble coffee insofar as it is the world’s largest producer and exporter of the arabica green coffee and one of the largest exporters of the robusta green coffee, the main input of soluble coffee. Vietnam largely accounted for the increased supply of the main input of soluble coffee in the international market, producing the robusta coffee nearly exclusively. This country increased its production by 10 millions bags between 1995 and 2004, being the largest world exporter of this variety, accounting for 43% of the world market in 2001. As the international prices of green coffee decreased, so did the international price of the soluble coffee exported by Brazil, but at a higher rate This suggests a reduction in the profit margins made by Brazilian producers of soluble coffee and increased competition in the world market of soluble coffee.
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