Tariff Reductions Research Articles

Assessing the effects of ROO and tariff margin on China-ASEAN free trade agreement utilization.

This study investigates the effects of rule of origin (ROOs) and tariff margin on China-ASEAN Free Trade Agreement (CAFTA) utilization. Using a sample of 40,474 product-level observations with China's imports from ASEAN countries during the period 2015 to 2021 and adopting the Logit model estimation methods, we found that larger tariff margin positively affects the use of CAFTA, whereas, the rules of origin show a negative effect on the CAFTA utilization. In order to assess the specific impact of two effects, we also calculate the relative contribution of these two effects to the CAFTA utilization by ASEAN countries, and the results show that the rules of origin play a more important role on the CAFTA utilization by each ASEAN country. Moreover, based on heterogeneity analysis, we also find that ROOs play an important role in the use of FTA by lower middle-income countries and the tariff margin play an important role in the use of FTA by upper middle-income and high-income countries. Based on the above findings, the study proposes some policy recommendations on how to increase the CAFTA utilization by reducing the ROO costs and accelerating tariff reductions.

The relationship between trade liberalization and gender disparity in education: Evidence from Pakistan

Purpose: Over the past few decades, there has been an increasing interest in understanding the relationship between trade liberalization and gender inequality in developing countries. In Pakistan, due to its social, demographic, cultural and economic problems, gender disparity in education (GDE) is still prevalent. This study examines the impact of trade reforms on gender disparity in education using micro data from Pakistan.
 Design/Methodology/Approach: The feasible generalized least-squares (FGLS) method is employed for empirical analysis. We used panel corrected standard errors (PCSEs) for robustness checks.
 Findings: The analysis reveals that a reduction in import tariffs is associated with GDE. Trade liberalization gives rise to gender disparities. We added several control variables to the baseline model for robustness checks. Regarding the control variables, average family wage income, family size, urbanization, female-to-male labor force participation and the female share of the total labor force are identified as important determinants of GDE in Pakistan.
 Originality or Value: This study contributes to the existing literature by studying the relationship between trade liberalization and gender disparity in education in Pakistan and employing a better measure of reductions in import tariffs for trade liberalization. We construct a provincial liberalization index. Second, this study takes into account the whole trade regime as a sample period (i.e., from 1990-2005) to assess the impacts of the trade regime as protection rates significantly reduced through this regime. Third, we measure the gender gap in education by comparing males and females' average years of schooling as opposed to previous studies that used secondary school enrolment ratios as a proxy for the gender gap in education. Fourth, we used panel data to explore the impact of trade liberalization on gender disparity in education for empirical analysis.

The Tariff Impact of the Regional Comprehensive Economic Partnership (RCEP) Agreement on Vietnam’s Seafood Export and Import

The Regional Comprehensive Economic Partnership (RCEP) has come into force in Vietnam in 2022, easing trade between Vietnam and member nations. This generates both expansion opportunities and intense competition for Vietnam’s seafood business, particularly export and import operations. To understand what this means for exporters, we relied on the World Bank’s WITS-SMART model for an analysis of the tariff effect of the RCEP on the export and import of Vietnamese seafood, which accounts for the largest proportion of exports. Our goal is to reveal the competitive advantages and disadvantages of Vietnam’s seafood trade with RCEP markets, including our recommendations for the industry to adapt to and capitalize on the foreign trade opportunities afforded by RCEP. RCEP, Tariff reduction, Foreign trade

How Does the Regional Comprehensive Economic Partnership Affect the Restructuring of Global Value Chains?

AbstractThis paper quantifies the way in which the Regional Comprehensive Economic Partnership (RCEP) affects the restructuring of global value chains (GVCs). It incorporates an input– output structure into a general equilibrium model, highlighting important differences between intermediates and final goods. Using tariff reduction schedules for the RCEP agreement and Asian Development Bank Multi‐Region Input–Output database, it evaluates the impact of the RCEP's tariff cuts on vertical specialization and the GVC position index of members. It shows that the RCEP significantly increased vertical specialization and the weighted average number of stages for members for primary factors of production and final consumption, which led to more complex and longer production chains. This was mainly due to the trade creation in intermediates imported from member countries and those outside it. This is an important finding, distinct from traditional trade models without an input–output structure.

Energy price shocks and stabilization policies in the MATRIX model

The recent surge in energy prices in Europe has prompted governments to introduce policy measures to support households and businesses. This paper uses the MATRIX model, a multi-sector and multi-agent macroeconomic model calibrated on the Euro Area, to analyse the economic and distributional effects of different macro-stabilization policies in response to energy price shocks. We find that, without policies, a surge in fossil fuel prices leads to higher inflation, lower GDP, and slow recovery. Generalized tax cuts and household subsidies have no significant effects, while firm subsidies promote a faster recovery at the expense of financial instability in the medium term, leading to a second slump. However, this second-round effect can be mitigated with proper fiscal-monetary policy coordination. If timely adopted, a government-funded energy tariff reduction is the most effective policy in mitigating GDP losses at relatively low public costs, particularly when coupled with an extra-profit tax on energy firms. Energy entrepreneurs benefit from rising fuel prices in all scenarios, but workers and downstream firms’ owners benefit more from energy tariff cuts and windfall profits tax.

수입물품에 대한 한중FTA와 APTA 원산지규정의 적용에 관한 연구

Purpose: This paper compares and analyzes the rules of origin for the Korea-China FTA and the APTA, which are in effect between Korea and China, and are often mistaken for the same agreement.
 Research design, data, and methodology: This paper uses comparative legal methods and case analysis focusing on the Korea-China FTA and APTA origin regulations.
 Results: There are differences in the tariff reduction method, target items, country-oforigin standards, and follow-up applications to the tariffs under the Korea-China FTA and APTA.
 Conclusions: The Korea-China FTA and APTA are similar, but there are some differences, so it is necessary to compare and choose which agreement is more advantageous when applying tariffs on imported goods.

Unleashing the potential: Exploring the relationship between trade liberalization and female labor force participation in Pakistan

Purpose: This study examines the impact of trade liberalization (TL) on female labor force participation (FLFP) during the trade regime period in Pakistan, using sectoral panel data of the manufacturing sector for the period of 1990-2005. Design/Methodology/Approach: We employed panel fixed effects (FEM) and Instrumental-variable (IV) regression models for empirical analysis. Findings: Our study reveals that trade liberalization and FLFP are associated. Trade liberalization increases FLFP in the manufacturing sector. The results of both measures of FLFP (i.e., the share of female employment, and female-to-male ratio) verify each other findings. Our findings are robust to the inclusion of various control variables. Furthermore, our IV analysis also confirms that liberalization has given rise to female employment in the manufacturing sector. Our policy implication is that the government should liberalize trade sectors that can help to enhance FLFP. Originality/Value: This study adds to the existing literature by exploring the association between TL and FLFP in the manufacturing sector of Pakistan by utilizing a better proxy of reductions in import tariffs for TL. The reduction of import tariffs is a policy-based measure that captures the pure impacts of trade policy as compared to outcome-based measures (i.e., trade ratios). We also consider the whole trade regime as a sample period (i.e., from 1990-2005) to examine the core impacts of the trade regime, as import tariffs drastically reduced during this period. Furthermore, we use two measures of FLFP for the analysis, i.e., the share of female employment, and the female-to-male ratio. Lastly, our use of sectoral panel data strengthens the empirical analysis.

An Appraisal on China’s Feed-In Tariff Policies for PV and Wind Power: Implementation Effects and Optimization

China’s FIT policies for PV and wind power are leading policies to promote the low-carbon transformation of the power system. We design composite models based on real options and the cost–benefit analysis, using the Evaluation Model of Implementation Effects and the Optimization Model for Policy Design to evaluate the design and implementation effects of FIT policies for PV and wind power. The results of the Evaluation Model of Implementation Effects are the following: (1) The economic and environmental competitiveness of developing PV and wind power projects under the parity policy raised significantly (2.524 to 3.136 times increase). (2) The last two-phase FIT policies fail to encourage power generation enterprises to carry out R&D activities, and supporting policies can be considered to offer incentives for R&D activities in upstream industries of power generation. (3) The substitution effect of green certificates on government subsidies is limited, and new market compensation mechanisms such as CCER can be introduced nationwide. The results of the Optimization Model for Policy Design are the following: (1) There is still space for a 10.306% to 22.981% reduction in feed-in tariffs during the parity policy. (2) Due to the risk of the mismatch in the cost attribute and uneven investment across regions, the parity policy is not suitable for long-term implementation, so the feed-in tariffs for PV and wind power should progressively be disconnected from feed-in tariffs for thermal power.

Intra‐ and extra‐regional trade costs: A comparative approach to Latin‐American performance

AbstractThe world expansion of trade in manufactured goods has been more dynamic than production over the last 25 years. The greater trade openness was due more to the growth of extra‐regional trade than to intra‐regional trade. Regions and trade agreements performed heterogeneously. Using a structural gravity model, we obtain that different mechanisms of trade liberalisation complemented each other, through the reduction of Most Favoured Nation (MFN) tariffs, the expansion and deepening of existing plurilateral agreements and the incorporation of new deeper agreements. The contribution derived from the reduction of MFN tariffs stands out, followed in importance by the component of preference for openness and trade facilitation. The contribution of the preferential channel via preferential trade agreements has been more important for extra‐regional than intra‐regional trade. For Latin America, heterogeneity is the fundamental characteristic, from the protectionism of Argentina and Brazil to a better openness performance of the countries of Central America and the Caribbean, and the members of the Andean Community (CAN) with an intermediate behaviour. Mexico, Colombia, Chile and Peru, economies from different regions, are the most open in Latin America. The concept of open regionalism is highlighted: without non‐discriminatory trade openness, there is no regionalism that can significantly reduce trade costs.

US-China Trade War Effects on The Economy of The United States

Several significant imports, including solar panels, washing machines, steel, and aluminum, saw tariff increases in the United States at the beginning of 2018.It soon became clear that China was the target of US trade restrictions, despite the fact that these tariffs did not discriminate based on origin. The United States then increased tariffs on tens of thousands of Chinese goods in 2018 and 2019, concentrating on imports worth approximately $350 billion. China targeted US shipments worth approximately $100 billion as a response to numerous tax waves. The two sides agreed to stop increasing tariffs in January 2020; however, as of 2021, the existing tariffs were still in effect. The trade war stands out as one of the broadest and most significant shifts in US trade policy, despite the fact that the United States has historically been at the forefront of efforts to promote global tariff reductions. As the trade war progressed, economists attempted to assess its economic effects. A timeline of the major events and a summary of the reasons for the trade war from experts and analysts are included in this article. The effects of the trade war on the US economy are also discussed in this article. The conclusion suggests that the conflict has already had different effects on the US economy.

Import Tariff Reduction and Fiscal Sustainability: A Macro-Econometric Modelling for Ethiopia

The main objective of this study is to examine the dynamic impact of import tariff reduction on major macroeconomic variables and its long-run implications for the fiscal sustainability of Ethiopia. In addition, it estimates the increase in the average consumption tax required to compensate for the possible tax revenue loss and fiscal sustainability. A Recursive Dynamic Computable General Equilibrium Model (RDCGEM) is used to assess the dynamic impact on macroeconomic variables of import tariff reduction and examine the increased consumption tax required. The study is novel as there are no studies in general, and for Ethiopia in particular in this regard. We use the available 2013/2014 base year macroeconomic data from national income accounts, fiscal accounts, and balance of payments accounts of Ethiopia. The RDCGEM is calibrated to the base year data, checked for correctness, and tested for robustness using sensitivity analysis. The model then is simulated for the import tariff reduction under the base case and under various tariff reduction scenarios based on which the macroeconomic impacts of tariff reduction are analyzed. Based on the RDCGM outputs, the fiscal sustainability impact of import tariff reduction is verified, and using a cointegration method, we examine the sustainability of fiscal policy. The results suggest a 95 percent import tariff reduction that negatively impacts the major macroeconomic variables. It also leads to long-term fiscal unsustainability. The joint reform of the country has relatively better impacts on major macroeconomic variables but slightly negative effects on household income and consumption.

Deployment of IoT-Based Smart Demand-Side Management System with an Enhanced Degree of User Comfort at an Educational Institution

Nowadays, the Internet of Things (IoT) has a wide impact on many potential applications. The impact of IoT on performing demand-side management (DSM) in an Indian educational institution has not been researched in depth before. In this research work, an IoT-enabled SDSMS (Smart DSM System) has been deployed with the main objective of minimizing electricity tariff and also to tweak the quality of user comfort. It can be feasible by prioritizing available renewable PV solar energy during peak hours in an Indian educational institution. DSM has been performed using day-ahead load shifting and rescheduling the different classes of institutional loads by applying hybrid BPSOGSA (Binary Particle Swarm Optimization and Gravitational Search Algorithm). The BPSOGSA performance on DSM has been evaluated based on electricity tariff, peak demand range, and PAR and compared with the outcomes of both binary conventional algorithms BPSO and BGSA, respectively. The proposed method enhances the degree of user comfort (DUC) by tripping the operation of non-critical institutional loads. Simulation results obtained using MATLAB corroborate that BPSOGSA outperforms both BPSO and BGSA under both DSM scenarios. Before DSM, Peak demand, PAR, and Electricity tariffs were found to be 1855.47 kW, 4.1286, and $2030.67 while after DSM, they reduced to 1502.24 kW, 3.263, and $1314.40 respectively. This indicates a 35.273% reduction in electricity tariff, a 19.037% scale down in peak demand, and a 20.97% reduction in PAR. Finally, the real-time IoT-based SDSMS hardware is implemented at the Renewable energy laboratory for real monitoring of energy consumption via the Blynk application.

Non‐tariff measures: What's tariffs got to do with it?

AbstractAfter successive rounds of tariff reductions by GATT/WTO members, non‐tariff measures (NTMs) have increasingly become the focal point of multilateral trade negotiations. It remains an open question whether the liberalization in tariff rates has subsequently been weakened or even erased by increases in NTMs. Using a product‐level global panel of WTO members over the period 1996–2019, this paper systematically examines the empirical link between various tariff measures and the imposition of NTMs. I find that bound or applied tariff reductions do not correlate much on their own with NTM incidence. The relevant trade policy margin for detecting a tariff–NTM nexus is instead tariff overhangs, the difference between WTO members' bound and applied tariff rates. Countries impose more NTMs when their sectoral applied tariffs are close to their respective bound rates, indicating that small tariff overhangs signal limited legal trade policy flexibility.

NO CREDIT, NO GAIN: TRADE LIBERALIZATION DYNAMICS, PRODUCTION INPUTS, AND FINANCIAL DEVELOPMENT

AbstractWe study the role of financial development on the aggregate implications of reducing import tariffs on capital and intermediate inputs. We document empirically that financially underdeveloped economies feature a slower aggregate response following trade liberalization. To quantify these effects, we set up a general equilibrium model with heterogeneous firms subject to collateral constraints and estimate it using Colombian plant‐level data. We find that low financial development substantially limited the gains from trade liberalization in Colombia in the early 1990s. More broadly, we find that low financial development substantially limits both the aggregate and welfare gains from tariff reductions.

Tariff Reductions, Heterogeneous Firms, and Welfare: Theory and Evidence for 1990–2010

Tariff Reductions, Heterogeneous Firms, and Welfare: Theory and Evidence for 1990–2010

Real-time monitoring of food price policy interventions during the first two years of COVID-19

COVID-19 has resulted in a shock to agrifood systems around the world, with the potential for low- and middle-income countries to be particularly affected. Although policy responses were more muted than during the 2007–2008 world food crisis, efforts to insulate from supply shocks and ensure local availability during COVID-19 have generally included export restrictions and import tariff reductions, among other responses. In an effort to enable rapid market monitoring and realignment, we develop a new indicator defined as a monthly nominal rate of protection “express” which seeks to indicate how policies enacted are affecting prices domestically in real-time in order to understand how they responded. This analysis examines changes to this indicator during the first two years of the pandemic in 24 low- and middle-income countries for the most-consumed staple cereals of the poor and food insecure. We show that gaps between domestic and international prices declined by a median of 20.3 percentage points compared to the same months in recent previous years. While policies were enacted to mitigate price increases that would have eventually been transmitted to poor consumers, other factors related to international demand and supply chain disruptions may also have contributed to the observed trend in the analyzed countries. Moreover, impacts on prices varied across countries and commodities, depending on region, net trade, and previous gap levels. Finally, this indicator can contribute to examining primary drivers of changes and conducting causal analysis to facilitate adequate agrifood policy responses to support economic recovery in the post-COVID-19 era.

Сравнительный анализ китайского и южнокорейского подходов к торгово-экономической интеграции в АТР

The article provides a comparative analysis of the Chinese and South Korean approaches to the development of integration interactions in the Asia-Pacific region (APR), as well as their changes from the end of the 20th century to the beginning of 2023. As a result, it is shown that from 2003 to 2017, the main priority of the PRC was the conclusion of bilateral free trade agreements with individual states ready to make concessions in order to gain expanded access to the Chinese market. However, starting in 2018, China has revised this strategy in favor of the development of multilateral trade unions. The main reason was the loss of the US leadership position in the determining the norms and rules of APR trade after the country’s integration policy revision. Unlike China, the Republic of Korea (ROK) is steadily developing a network of bilateral free trade agreements, which have already covered almost all major trading partners. ROK is wary of multilateral formats due to the need to reduce tariff and non-tariff barriers in foreign trade, which may lead to a decrease in the protection of national producers. Priority associations within the framework of the new Chinese paradigm are recognized as the Regional Comprehensive Economic Partnership (RCEP), to which Beijing and Seoul have been participants since its inception, as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Chinese application for accession to which was submitted in 2021. In this regard, this work assessed the prospects for expanding economic integration of China and ROK in the Asia-Pacific region through accession to the CPTPP. The stages of the accession process are identified, as well as the main obstacles to becoming full-fledged participants in the partnership. As a result, the hypothesis of the minimum chances of the PRC to obtain the member status is substantiated due to geopolitical problems, inconsistency of the country’s legislation with the rules of the CPTPP and high tariff protection of the country’s commodity market. In its turn, ROK meets almost all the requirements of the partnership, however, along with China, it will also not become its member in the medium term due to the more stringent conditions for the cancellation / reduction of tariffs within CPTPP compared to the RCEP

ПІДХОДИ ДО КАЛЬКУЛЮВАННЯ СОБІВАРТОСТІ В ЕЛЕКТРОЕНЕРГЕТИЧНИХ ПІДПРИЄМСТВАХ-ОПЕРАТОРАХ СИСТЕМИ РОЗПОДІЛУ В УМОВАХ ПОВОЄННОЇ ВІДБУДОВИ УКРАЇНИ

Approaches to costing are one of the most controversial issues among modern domestic and foreign scholars. This issue is particularly relevant in the context of Ukraine's post-war recovery. The purpose of the article is to study approaches to costing of electricity distribution system operators in the context of post-war reconstruction of Ukraine. The paper considers approaches to costing in electricity distribution system operators. Attention is focused on the sectoral pec uliarities of costing depending on the types of economic activity. It is established that the grouping of costs by items of distribution system operators is carried out with a view to forming tariffs for electricity distribution services. The research highlights the disadvantages of the cost-plus tariff setting system, which include the lack of incentives to invest in the modernisation of distribution networks beyond the approved investment programmes, the interest in increasing costs rather than efficiency, and the reduction of tariffs by regulators in case of efficiency gains. The essence of formation of the electricity distribution tariff by the RAB-regulation method is determined. Considerable attention is paid to the benefits of incentive-based regulation, which include the interest of DSOs in attracting investments in the development of distribution networks, ensuring consistency in pricing policy, the ability to forecast tariffs during the regulatory period, improving the quality of services, reducing inefficient costs, and transparent formation of permitted profits from licensing activities. When implementing incentive-based regulation, it is crucial to determine the real value of the DSO's assets used in regulated activities and the rate of return on the old and new asset base. A higher rate of return on the "new" asset base will be more relevant for finding sources of investment in the context of Ukraine's post-war recovery. The article analyses the composition of controlled and uncontrolled expenses for the formation of the regulated tariff. The paper proposes to accelerate the transition to incentive-based tariff regulation in the context of post-war reconstruction of Ukraine. In the context of post-war reconstruction of Ukraine, the DSOs need to accelerate the transition to incentive-based tariff regulation. This will allow attracting investments in the modernisation and expansion of engineering infrastructure on the basis of return on investment and return on investment, as well as receiving an additional percentage in the tariff for further modernisation of the power grids.

Розвиток машинобудування в Україні: тенденції і загрози

The article provides a comprehensive scientific and analytical justification of the causes and consequences of problematic functioning of machine-building industries in Ukraine. The negative impact of economic globalization (the manifestations of which were the expansion of free trade zones, that is, the reduction or abolition of tariff and non-tariff barriers between countries, the promotion of offshoring and the increase of tolling operations) on the quantitative and qualitative indicators of the activity of domestic machine-building enterprises, in particular: gross added value, production, export and import. The destructive transformation of the structure of the Ukrainian machine-building industry since 2014 in terms of machine-building industries is shown. The sharp reduction (almost by 50%) of high-tech exports from Ukraine and, at the same time, the growth of the share of products manufactured on the basis of raw materials are emphasized. A comparative (with some EU countries) assessment of investment and innovation processes in Ukrainian engineering was carried out, in particular, the technological structure of capital investments, production and export of innovative engineering products were investigated. The gradual transformation of the Ukrainian engineering industry from an integral strategic sector of the national economy to separate segments of the supply of intermediate consumption products and services to foreign markets has been established. It has been empirically proven that a direct consequence of the negative trends in the development of domestic machine-building industries was the deterioration of socio-economic indicators, in particular, a reduction in employment, a decrease in the level of labor productivity, and a decrease in wages. The urgent need for active actions of the state in the direction of ensuring the development of mechanical engineering in Ukraine (primarily its defense segment) in order to counteract the further "agrarianization" of the national economy, and instead to rebuild it on the basis of neo-industrialization and technological self-sufficiency, is substantiated.

ФРАГМЕНТАЦІЯ ГЛОБАЛЬНИХ ЛАНЦЮГІВ СТВОРЕННЯ ВАРТОСТІ ПІД ВПЛИВОМ ПОТОЧНИХ РИЗИКІВ

The article is devoted to the study of the characteristics of trade integration through global value chains. Factory closings and rising income inequality have contributed to the erosion of social support for globalization in advanced economies over the past decade. Considerations of national security and strategic autonomy have gained prominence, risking forming a more fragmented economic and political order. The development of global value chains was characterized by the following factors: an increase in the value of the final product due to the reduction of tariffs, the reliability of the transportation of goods across borders, and the effective coordination of geographically dispersed production enterprises thanks to the development of information and communication technologies, the wide access of companies not only to a large and cheap labor force but also to an expanded circle of potential customers. Offshoring not only lowered the marginal cost of production but also encouraged an increase in output to more effectively amortize the fixed costs associated with moving production overseas. The author noted that the integration and emergence of global value chains brought many benefits to consumers and producers. The development of the multilateral trading system sharply reduced the consumer price of intermediate goods and increased the range and quantity of goods produced. But there is also the reverse side of these processes, namely: dependence of countries on imports, including products that are the basis of the green and digital transition, increasing dependence on external demand; highly concentrated production of some types of products in specialized companies and countries; increasing the length of value chains, their complexity and, accordingly, potential vulnerability and susceptibility to shocks. The current economic and geopolitical environment creates challenges and risks for the development of global value chains. Among the main strategies for reducing risks, the strategy of diversification of resource sources was noted; (near-shoring), and (re-shoring). The advisability of applying a strategy to reduce the impact of risks on the activities of HLSW and ensure national security depends on many factors, so combinations are likely. Keywords: trade integration, global value chains (GVC), risks, economic security.