Duty Drawback Research Articles

The trade effect of regional trade agreements in the presence of duty drawbacks

AbstractBefore regional trade agreements (RTAs) come into force, some firms enjoy duty‐free imports using other tariff regimes such as a duty drawback (DD) regime. For such firms, the use of RTA tariff regimes will not provide additional benefits in terms of duty exemption. In this study, we examine the trade effects of RTAs in the presence of a DD regime. We theoretically demonstrate that firms that switch from a DD to an RTA regime will either increase or decrease their imports. Subsequently, we empirically analyse the effect of this switching on imports using firm‐level trade data from Thailand. The empirical results show that switching firms either increase or do not change their imports. Our data also suggest that this increase in imported inputs is used to produce goods for the domestic market, not the export market. We also reveal that relatively small‐sized firms tend to switch to the RTA regime, while relatively large‐sized firms continue importing under the DD regime even after the entry of RTAs into force. With these results, we discuss the implication for the magnitude of trade creation effects of RTAs under the presence of DD regimes.

The role of customs brokers in Ukrainian business

The analysis of the regulatory and legal bases of the activity of customs brokers allows us to state that the constitutional and codified level of regulation of the activities of enterprises that provide intermediary services in the field of customs affairs is represented by general regulatory acts, that is, those that are intended for all subjects of entrepreneurial activity and that determine their legal status without taking into account individual features. After all, the interests of businessmen at customs are usually represented by customs brokers, so most often it is between brokers and customs that controversial issues arise, so the analysis of the status of a customs broker requires a detailed study.
 As for special regulatory acts that reflect the peculiarities of the legal status of customs brokers and customs carriers, they are presented at the sub-legal level. The requirements for customs brokers, their rights, and the main duties of a customs broker and the specifics of functioning in the conditions of changing legislation, especially after a full-scale invasion, which prompted a reassessment of export-import relations and the work of customs in general, were also revealed. The responsibility of customs brokers in case of their violation of the requirement to disclose information and commercial secrets was also investigated.
 The status of a customs broker is varied. In addition to being an intermediary between the exporter or importer and the government institution, broker also performs the tasks of preparing, signing and submitting documents, classifying or evaluating things, calculating and paying customs duties, registering exports, import permits, preparing and issuing certificates, advising on export and import regulations and procedures, verifying transactions to ensure compliance.
 The customs broker is also responsible for product categorization, analysis and information on pricing or cost structure for exports and imports, assistance in choosing the mode of transport that will be used for the delivery of things, downtime control, onward shipment, conclusion of insurance contracts, etc. The customs broker is in charge of obtaining a refund or duty drawback in the case of an overpayment or other miscalculation. broker can execute the needed activities and guide through the procedure to obtain tax benefits and avoid incurring fines due to procedural errors.

Policy Series Effects on Bangladesh Readymade Garments Exportation

Abstract This paper examines the effects of industrial policies series taken since 2005 on the ready-made garments in Bangladesh, including formation of export processing zones, taxation facility, flat-rate duty drawback facility, FDI with equity participation and so on. Difference in Differences technique is employed and a panel dataset of industrial policy and export data of 75 companies from 1991 to 2020 are used to evaluate the quantitative effects. Empirical findings show that the industrial policies have had a significant positive impact on the RMG export, and that RMG exports increase on an average 10.68% after industry policy 2005 introduced. This paper contributes by providing empirical evidence for the industrial policies effect on Bangladesh exportation. JEL Classification numbers: L52, L53, F14. Keywords: Industrial Policy, RMG industry, MFA phase out, DID.

Duty Drawbacks, Imported Inputs Duties and Exports: Evidence from Firm-Level Data from Colombia

Using a generalized difference-in-differences approach, this study draws on a firmcountry-product-year level database covering imports and exports from Colombia to study how duty exemptions on imported goods affect export performance. The impactwas estimated depending on the intensity exposure using the Colombian duty drawback policy —Plan Vallejo. Results suggest that input-duty reduction leads to rises in the export quantities and number of varieties, especially for products not benefited by the policy; however, the scheme allows firms to accentuate the negative impact of customs duty increases. The estimated tariff revenue leakage of the duty exemptions is non-negligible in terms of the country’s GDP.

Export Fraud in India

AbstractWe investigate tax fraud in a major export-promotion program in India – the Duty Drawback scheme – which enables exporting firms to claim a cash rebate proportional to the value of their exports, at a product-specific drawback rate. We detect fraud based on two approaches. First, we show that bilateral trade asymmetries between reported exports by India and reported imports by trading partners of the same trade flows are systematically correlated with the rate of drawback, suggesting that exporting firms over-report exports to unduly gain duty drawback. Second, we find evidence of excess bunching in the distribution of unit values reported by India at kinks in the per-unit drawback schedule, relative to the distribution of unit values reported by importing countries. Our results suggest that fraud currently detected by customs represents only 3.8%–6% of actual fraud.

Impact of GST on motor and pump exports in India

PurposeThe impact of Goods and Service Tax (GST) on the motor and pump exports in the Coimbatore region is measured in this study using various parameters and scales. The data collected from exporters were used to identify the pros and cons of GST, stating their opinions on variables considered by the researchers through extensive literature on GST and exports.Design/methodology/approachThe data were collected from 220 motors and pump exporters through a field survey from the month of January to September 2021. The impacts have been measured using principal component analysis (PCA) and confirmatory factor analysis (CFA). The factor analyses and CFA will derive the positive and negative impact of GST determined through critical empirical evidence in this study. Also, the problems faced by the exporters allied to GST, which the authors could not include in the questionnaire due to certain reasons, are concisely apportioned and discussed.FindingsThe study depicts the major advantages of GST, such as harmonized system, long-run performance, reduction in logistics cost, check-post operation, bonds and ease of doing business. Also, it highlights the disadvantages of GST, such as biases in the indirect tax system, the reimbursement of duty drawback being late or pending and document filing was still a tedious job under the GST regime.Originality/valueThe unavailability of considerable literature on the impact of GST on Indian exports signifies the novelty of this research. So far, this is the first empirical attempt to measure the impact of GST on exports which is a unique and original attempt to highlight the problem that lies under the GST regime and the necessary reforms the tax structure needs in the context of Indian exports.

Two tier model of exports drawback fraud detection system using intuitionistic fuzzy game theory

In the era of electronic governance, electronic filing of import bills of entry documents and export bills documents is in place. All countries are thinking to eliminate the non-tariff barrier globally and the concept of liberalization is being introduced. Import duty is imposed when any imports take place. The drawback is considered as the incentive given to the exporters by the government of a country to encourage exports. The drawback is calculated based on the declared value of exported items, item-wise/quantity-wise. Many unscrupulous exporters overvalue the exported goods to get the higher incentive. So, determining the actual valuation of exported goods is a very challenging task for customs officials to prevent drawback frauds. Customs officials are in the process of valuation of exported goods with their discretion/skills from time to time for detecting drawback frauds and prevent government losses by scrutiny exports documents, invoices, and examining the goods. In this paper, a two-tier duty drawback fraud detection system using intuitionistic fuzzy theory and game theory. In tier-1, an intuitionistic fuzzy approach has been applied to determine the sensitivity of goods whereas, in tier-2, a game theory has been used to maximize the payoff of respective country governance.

Implications of Free Trade Area For Poverty, Household Welfare And Economic Development In Nigeria

Purpose of the study: The study aims to investigate the implications of free trade areas for poverty, household welfare and economic development in Nigeria. Methodology: This study employed a fully modified least squares (FMOLS) regression technique. The income per capita and unemployment out of many macroeconomics indexes were employed in this study to measure welfare and poverty implications of free trade area respectively. To enable the study, determine the policy and decision-making implications of the free trade area on Nigeria economy, historical data were drawn from the central bank statistical bulletin for 27 years. Main findings: The estimated results revealed that the income per capita (welfare) model demonstrated a fair view of free trade scenarios as indicated by the explanatory variables; export contributions to gross domestic product and foreign direct investment contributed positively to the welfare of the individual. Besides, the study also found foreign direct investment and export contributions to gross domestic product to have a negative relationship with unemployment, which implies a reduction in the unemployment rate in Nigeria. Research implications: This study documented that households’ welfare will be increased by free trade area, while unemployment will also be reduced by participating in free trade area. Based on study findings, policies makers, academia, researchers, the and government will find the study relevant in making policies that promote foreign direct investment, export contributions to the growth of the economy and gross domestic product such as reduction in tariff, simplifying trade regulations, increasing the availability of credit to exporters, creations of duty drawback, improving cooperation among economic actors and overall structural changes which will have positive implications on the households welfare, poverty and economic development. The novelty of the study: The relevance for free trade area as one among economic policies to promote the welfare and reduce poverty among nations is gaining momentum globally especially African continent. Given the paucity of studies on this area, the study is undertaken as a framework to determine what the implications of free trade areas will be among the African continent.

GST-Triggered Issues That Confront the Country’s Textile Sector

Implementation of GST in a country like India is easier said than done. Now GST is a reality. The dust has settled down and some call in a pyrrhic victory. But the GST plant has grown new shoots. Rising imports have been eating into the profit of the SME players. Import barriers have been whittling down. So have the export incentives. Hence the researcher concludes that the government ensure that delays in the release of ROSL are avoided. ROSL disbursements and IGST refunds stifle the capital inflow for the units. The schemes are laudable but their inefficient implementation plays the spoilsport. None can pardon the delay that accompanies the disbursements of ROSL and refunds of IGST. The government should ensure that such delays do not hurt the textile players given that the GST regime has lent more transparency to the sector’s operations. Input tax credit or ITC is available in respect of all the tax paid on capital goods. Hence the units should import state-of-the-art technology to manufacture textile goods. The GST regime has almost done away with the duty drawback system. This will go a long way in promoting the export of textile products.

Expired Measures, Excess Duty Drawbacks and Causation: The Appellate Body Report in EU–PET (Pakistan)

AbstractThe Appellate Body report in EU–PET (Pakistan) raises distinct questions regarding the need for findings in relation to expired measures, the conditions under which duty drawback schemes may constitute subsidies and the causation methodology to apply under the SCM Agreement. We conclude that the report offers no clear guidance on whether the function and design of WTO dispute settlement require or preclude findings in case of expired measures. We welcome the Appellate Body's conclusion that, in case of duty drawback schemes, the financial contribution element of the subsidy is limited to the excess remission or drawback of import charges. Finally, although the Appellate Body rightly found that authorities are free to choose the methodology for the causation analysis provided that the analysis is complete and objective, the methodology used by the investigating authority in this case shows a number of deficiencies that were not recognized by the Appellate Body.

The Hidden Cost of Supply Chain Disruptions: Case Study of the UK’s Automotive Sector

As the world economy has become increasingly integrated the spectre of transnational supply chains has become a central feature of globalisation. The smooth and unfettered working of transnational supply chains has facilitated efficiency increasing changes to business operations (such as just in time inventory management). The automotive sector worldwide has been at the forefront of internationally integrated supply systems. The European Union (EU) has, in part, been structured to reduce friction in Europe-wide supply chains through the single market. Transnational supply chains are at the heart of United Kingdom (UK) – EU trade, and the UK’s departure from the EU’s single market (Brexit) will increase friction in international trade. This case study of the UK’s automotive sector uses a social network approach to analyse supply chain linkages between the UK, EU and other trading partners, and how these could be impacted as a result of Brexit. We use data from Trade in Value Added (TiVA) and World Input-Output Database (WIOD) to map supply chains, estimate total value-added in exports and examine how Brexit is likely to impact the competitiveness of UK exports. Results confirm that the UK’s automotive sector is closely integrated with the EU. To offset the loss of UK’s export competitiveness after Brexit, trade facilitation measures complemented with a duty drawback scheme could be an option in the short run. Policy measures are, however, unlikely to replace the benefits of duty-free and frictionless access enjoyed under single market trading arrangements. This suggests that the UK automotive sector, which is primarily comprised of globally active firms, may have to reconfigure supply chain arrangements and in the long run alter how decisions pertaining to locations are made. Keywords: Brexit, global value chains, input-output linkages, WIOD.

Implementation of Customs Advance Ruling (AR) Facility as a Trade Facilitation Measure in Bangladesh: Prospect in Retrospect

The WTO Trade Facilitation Agreement (TFA) and the WCO Revised Kyoto Convention (RKC)have clearly prescribed their Members to implement Advance Ruling (AR) facilities for avoidingdisputes between the Customs authorities and trade communities. If the future disputes can betreated before the arrival of imported or exportable goods at the borders, cross-border trade willbe facilitated reducing the cost and time of both the traders and customs. The developedcountries have been using the AR facilities for a long time to avoid future disputes, while thedeveloping countries are yet to initiate the journey in full swing. Because of the absence of AR,the customs authorities of the developing countries are bogged down in dealing with the courtcases originated from the disputes at the borders. Again, the traders are facing unwanted hasslesat borders that increases time and cost of doing business. Bangladesh implemented Customs ARon tariff classification in 2016. This article endeavors to examine the AR regime of Bangladesh.In particular, it analyzed the context that prompted Bangladesh customs not to implementing ARin its full scope i.e. for valuation, origin, duty drawback, etc. The limited interests of businessestowards Customs AR are also explored in this study. The study finds that the traders are highlybenefited from AR. However, as the AR facilities are given only for classification, and there aresome other platforms for having remedy for classification, the facilities could not attract thetraders as it was expected.

The Effect of Duty Drawback on Export Promotion in Korea: A Comparative Analysis of the Simplified Fixed Drawback and the Individual Drawback

The Effect of Duty Drawback on Export Promotion in Korea: A Comparative Analysis of the Simplified Fixed Drawback and the Individual Drawback Seo-Young Lee a a Department of International Trade, Mokwo 의 이용 수, 등재여부, 발행기관, 저자, 초록, 목차, 참고문헌 등 논문에 관한 다양한 정보 및 관련논문 목록과 논문의 분야별 BEST, NEW 논문 목록을 확인 하실 수 있습니다.

Expired Measures, Excess Duty Drawbacks and Causation: The Appellate Body Report in EU – Pet (Pakistan)

The Appellate Body report in EU – PET (Pakistan) raises distinct questions relating to the need for findings in relation to expired measures, the conditions under which duty drawback schemes may constitute subsidies and the causation methodology to apply under the SCM Agreement. We conclude that the report offers no clear guidance on whether the function and design of WTO dispute settlement require or preclude findings in case of expired measures. We welcome the Appellate Body’s conclusion that, in case of duty drawback schemes, the financial contribution element of the subsidy is limited to the excess remission or drawback of import charges. Finally, although the Appellate Body rightly found that authorities are free to choose the methodology for causation analysis provided that the analysis is complete and objective, the methodology used by the investigating authority in this case show a number of deficiencies that were not recognized by the Appellate Body.

European Union – Countervailing Measures on Certain Polyethylene Terephthalate from Pakistan (EU–PET (Pakistan)), DS486

This dispute concerns countervailing measures imposed by the European Union (EU) on imports of Polyethylene Terephthalate (PET) from Pakistan. Pakistan has a ‘duty drawback scheme’ by which it remits import duties on input materials consumed in the production of a product that is subsequently exported. The European Commission considered that all duties remitted to a Pakistani PET producer and exporter named Novatex constituted a countervailable subsidy contingent upon export performance. Also, Pakistan has a programme through which it provides government-financed loans to certain qualifying companies. Pre-approved banks are prohibited from charging interest rates above a specified level. The European Commission considered that the loan conferred to Novatex under this programme constituted a countervailable subsidy.

Export Promotion Schemes and Export Performance in the East African Community: A Comparative Analysis

This study analyzed the impact of various fiscal incentives (export promotion schemes) in the East African Community on promoting exports in the region. The schemes in place are; the manufacturing under bond scheme, export processing zones and duty remission facility for Kenya; Duty draw back scheme, excise duty relief, export processing zones and VAT exemption scheme for Tanzania; for Uganda it has duty drawback, manufacturing under bond and foreign exchange liberalization schemes. These schemes are stated in the East African Community customs union protocol, 2005. Effectively, this study was to investigate the actual impact of these schemes for each country and carry out a comparison on which ones have performed better than which ones (if actually there is any performance). Using an augmented gravity model, results showed that duty drawback scheme was the most significant export promotion scheme in promoting export volumes in EAC partner states. The results showed that duty drawback scheme boosted the volumes of exports in both Uganda and Tanzania. In Kenya duty remission facility and export processing zones were the most effective export promotion schemes in promoting the volumes of exports. Export processing zones though effective for Kenya, the results showed opposite impact for Tanzania. Manufacturing under bond scheme, though being in existent in Kenya and Uganda for a very long time, was not effective in promoting volumes of exports in both countries according to the study results. Also, Value added tax remission and excise duty relief schemes are not effective in promoting the volumes of exports in Uganda and Tanzania respectively.

Emerging Scenario of Facilities and Concessions to Exporters in India-An Appraisal

Government of India like all other governments has been making sincere efforts to promote exports. After independence export promotion was given very low priority due to easy and adequate assistance from World Bank and other international institutions. After 1965 such assistance began to recede and as a result India had to depend on export promotion efforts to meet its development requirements. India then considered export promotion, as a major challenge to meet its import needs. Thus over the last couple of decades export promotion has assumed critical importance in Indian economy. The process of liberalization and globalization has further boosted the export promotion efforts. After economonic reforms, Government of India introduced various export promotion schemes like Duty Drawback, Special Economic Zone Scheme, Focus Product and Focus Market Scheme, Market Access Initiative Scheme etc to promote exports. Through this paper an attempt has been made by the researchers to study various export promotion schemes introduced from time to time to promote exports from India after economic reforms and their resultant impact.

Effect of Korea’s Export Assistance System on Export Promotion

This paper examines whether or not the export assistance system has contributed to export promotion in Korea. The current study starts from examining the stationarity of the concerned variables. The unit root tests show that all variables are not I(0) Time Series. Instead, they are I(1) Time Series. According to Johansen cointegration test, the concerned variables are not cointegrated. Thus, this study estimated OLS (Ordinary Least Square Method) based on the first differenced data. The empirical evidence shows that export insurance and trade exhibition did not have a significant effect on exports. That is, the export insurance system and trade exhibition system have not contributed to export promotion in Korea. The empirical evidence shows that duty drawback did have a significant effect on exports. That is, the efficiently managed duty drawback system may contribute to export promotion significantly in Korea

Trade Liberalization and Productivity Performance: Evidence from the Australian Passenger Motor Vehicle Industry

This paper contributes to the ongoing debate about the effects of trade liberalization on productivity performance of the Australian passenger motor vehicle industry, which has experienced significant liberalization over the years. Our analysis indicates that trade liberalization had a negative impact on productivity growth, at least in the immediate post-liberalization period. Empirical results suggest that economies of scale and tariff protection improve productivity, while industry assistance (such as the local content and duty drawback schemes and production subsidies) retards productivity. Policy implications of these findings are that there are dividends in terms of improved productivity by encouraging economies of scale, providing tariff protection and lowering industry assistance.

Duty Drawback and Regional Trade Agreements: Foes or Friends?

The nature of international trade has changed dramatically. Today, intermediate goods account for nearly 60% of the world merchandise trade, with the import content of the average export amounting to 40%. Global value chains increase the importance of duty drawback--a common practice of refunding duties on imported inputs either incorporated in finished goods for export or re-exported in the same state. Despite their great role in promoting overseas sales of products, drawback programmes have been handled under regional trade agreements (RTAs) in different ways due to a divergence of opinion on their pros and cons. This article provides a legal assessment of drawback schemes as permitted and prohibited within preferential trade areas. The main conclusion is that the no-drawback rule contained in many RTAs can have negative implications for non-parties, lacks justification under World Trade Organization's rules, and needs to be liberalized. The Author 2013. Published by Oxford University Press. All rights reserved., Oxford University Press.