Tariff Barriers Research Articles

Impact of ECFA on Trend of Exchange Rate between NTD and RMB Based on Grey Prediction Model

Beginning from 2001 in which both Taiwan and China joined World Trade Organization (WTO), a large number of Taiwanese manufacturers have moved their plants across Taiwan Straight to China in search for cheaper labor force regardless of the political tensions between two countries. With the gradual easing of cross-strait political tension after the inauguration of pro-China president of Taiwan, the Taiwan Government starting from 2009 has been promoting the "Economic Cooperation Framework Agreement" (ECFA) through which the government claims the cross-strait economic and trade relations could be further enhanced and Taiwan could avoid being “marginalized” from the regional economic system. Additionally, as the two countries gradually lift restrictions on the investment and remove tariff barriers the cross-strait economic is bound to be more closely and the trade exchanges are set to skyrocket. However, since the bilateral trade or investment is generally through the U.S. dollar the fluctuation in currency exchange rate may serve as one of the important factors when the business makes the investment decision. Therefore, this paper applies Grey prediction method of Grey theory to the forecast of the exchange rate between NT dollar and RMB on which Taiwan enterprises could depend when formulating their investment strategies of investing more in China or Taiwan.

The Discriminatory Nature of Specific Tariffs

This paper quantifies the distortions from specific tariffs levied by the EU. The most-favored-nation (MFN) specific tariffs levied by the EU translate into higher tariff barriers for poor countries exporting low price goods. We show that for poor countries, these higher tariff barriers from specific tariffs offset the gains from preferential tariffs. We apply a two-stage analysis to show that the specific tariffs levied by the EU on its agricultural imports wash away more than half of the welfare benefits enjoyed by the Sub-Saharan African countries from EU preferential tariffs. Our results provide the first quantitative estimate of the distortions associated with specific tariffs.

TARIFFS AND IMPORTS MISINVOICING UNDER OLIGOPOLY

Mismatch of trade statistics between developed and developing countries indicate a substantial misinvoicing of trade figures, primarily by developing country traders. This is due to the inflexible exchange rate regimes, severe import restrictions and export subsidies prevailing in Less Developed Countries (LDCs). In this paper, we focus on import underinvoicing due to high tariff barriers in a market where domestic producers compete with importers. Specifically, we examine how tariff levels, market structure and government intervention (in the form of intensity of monitoring and severity of penalties) affect the levels of underinvoicing. We also look at the optimal levels of import tariff and instruments of government intervention in these circumstances.

Polsko-chińska współpraca gospodarcza po przystąpieniu Polski do Unii Europejskiej

The aim of the article is to analize polish-chinese economic relations after polish accession to the European Union structures. Studies carried out in the first part of the article concern trade rates between the two countries. Results show that polish import from China exceed export. The negative trends persist for many years and are continually deepening. From the geographical side, polish import from China flows mainly from the east coast part of China including Peking and Ningxia province. Polish export to China flows mainly to eastern and northern parts of the country. Concerning the commodity structure of the Polish-Chinese exchange, after the polish accession to the UE, polish products turned to be seen as high-quality as well as cheaper than in other UE countries. In 2009, electromechanical products accounted for more than 50% of the imported wares. Metallurgical, electromechanical and chemical products summed up to more than 76% of the polish export to China. The next part of the article analizes chinese investments in Poland and polish investments in China. In the end of 2007, chinese investments in Poland exceeded 120 mln USD. The biggest investments in Poland include building distribution center of GD Poland, Min Hoong Development company and TTL Poland – production center of TV LCD. In 2006, the polish investments in China reached 174 mln USD, investments included building Chinese-Polish Joint Stock Shipping Corporation “Chipolbrok” as well as Shanghai-Gdynia International Transportation Agency Co., Ltd. The last part of the article moved on to the topic of economic cooperation and barriers in access to Chinese market that include tariff and non- tariff barriers. To non-tariff barriers belongs: bureaucracy, weak protection of intellectual property rights as well as communication (language barrier).

Bad Problem Getting Worse: Regional Trade Agreements and the Future of the Multilateral Framework on Competition Policy and Law

At present, Regional Trade Agreements (RTAs) have proliferated extraordinarily in the world trade landscape. Some trade diplomats are coming to recognize the greater significance of regional competition policy and law and are arguing that RTAs are likely to prevent to create anti-competitive cross border merger and acquisition business practices by firms. They advocate that competition-related provisions should be included in the framework of RTAs. Consequently, the adoption of these provisions in RTAs is expanding and becoming a trend in the regional trade landscape. On the contrary, trade scholars have long debated how regionalism may be able to contribute to the multilateral trading system. Due to the priority of market opening objectives in the trade liberalization process, they believe that lowering tariff barriers and removing a variety of non-tariff barriers are the principal issues to be addressed and that the implications of competition policy and law in enhancing trade welfare effects is not directly relevant to the objective pursued. Based on the relationship between regionalism and multilateralism in the contemporary trade discourse, this article discusses the prospects for the multilateral framework on competition policy and law and asks whether there is a link between these and at least the beginnings of a regulatory process at global level.

Can new legislation in importing countries represent new barriers to the development of an international ethanol market?

The use of ethanol as a fuel has been attracting increasing attention in countries that are interested in reducing their dependence on imported oil and lowering their greenhouse gas emissions. Despite this growing interest, the global ethanol market is still incipient because of the small number of producing countries, the lack of technical standardization and the existence of tariff and non-tariff trade barriers. New laws have taken effect in 2010 in the United States and the European Union imposing domestic requirements for sustainable production of ethanol. Although these are generally positive developments, they can create greater difficulties for the development of an international ethanol market. This work examines the technical barriers posed by these new laws and how they can be resolved under the auspices of the World Trade Organization. In addition, this work analyses the Brazilian and Caribbean cases discussing to what extent these new technical barriers will affect ethanol production and exports arising from these countries.

Non-Tariff Measures: What Do We Know, What Might Be Done?

With the reduction in tariff barriers, Non-tariff and behind-the-border measures (NTM and BTB) have increased in importance. This paper surveys the state of knowledge with the view to drawing implications for policy suggestions to reduce those NTM barriers that are welfare reducing. Following a description of data bases and their shortcomings, the paper reviews the state of understanding on the effects of NTMs on trade flows. The more difficult issue of translating these effects into welfare implications are covered next. The paper concludes with different approaches at reducing NTMs.

Bangladesh’s Export Opportunities in the Indian Market

This article investigates new opportunities that are emerging for Bangladesh with regard to her trade with India. In spite of the growing bilateral trade deficit, value of Bangladesh’s exports to India increased by about three times over the last five years. Examination of the dynamics of Bangladesh–India bilateral trade reveals that the number of products in Bangladesh’s export basket has registered significant increase, while at the same time, composition of the country’s exports to India has also shifted towards newer and non-traditional products. RCA analysis shows that export items with RCA > 1 in India, which include raw jute, chemical fertilizer, cement, RMG, leather, battery, textile fabrics and some other items, have significant export opportunities and have a combined potential market of US$ 2 billion in India. On the basis of examination of various tariff and nontariff barriers to trade with India, the article attempts to assess the economic implications of India’s sensitive list as it applies to Bangladesh, and argues that elimination of this list is not likely to have an adverse impact on India’s revenue earnings. The article also comes up with a number of recommendations to deal with the NTBs faced by Bangladesh in her trade with India, particularly in areas related to constraints arising from lack of trade facilitation.

Structural Estimation and Solution of International Trade Models with Heterogeneous Firms

We present an empirical implementation of a general-equilibrium model of international trade with heterogeneous manufacturing firms. The theory underlying our model is consistent with Melitz (2003). A nonlinear structural estimation procedure identifies a set of core parameters and unobserved firm-level trade frictions which best fit the geographic pattern of trade. Once the parameters are identified, we utilize a decomposition technique for computing general-equilibrium counterfactuals. We illustrate this technique using trade and protection data from the Global Trade Analysis Project (GTAP). We first assess the economic effects of reductions in measured tariffs. Taking the simple-average welfare change across regions the Melitz structure indicates welfare gains from liberalization that are nearly four times larger than in a standard policy simulation model. Furthermore, when we compare the economic impact of tariffs with reductions in estimated fixed trade costs we find that policy measures affecting the fixed costs of firm entry are of greater importance than conventional tariff barriers. (JEL

Structural estimation and solution of international trade models with heterogeneous firms

We present an empirical implementation of a general-equilibrium model of international trade with heterogeneous manufacturing firms. The theory underlying our model is consistent with Melitz (2003). A nonlinear structural estimation procedure identifies a set of core parameters and unobserved firm-level trade frictions that best fit the geographic pattern of trade. Our estimation model is consistent with the specified general equilibrium model, and we conduct general equilibrium counterfactual analyses to illustrate model responses. We first assess the economic effects of reductions in measured tariffs. Taking the simple-average welfare change across regions the Melitz structure indicates welfare gains from liberalization that are four times larger than in a standard trade policy simulation. Furthermore, when we compare the economic impact of tariff reductions with reductions in estimated fixed trade costs we find that policy measures affecting the fixed costs are of greater importance than tariff barriers.

Measuring Protection in Indian Industries

Liberalization has been a key ingredient of recent economic policies in India and elsewhere, based upon the notion that removing restrictions on domestic economic activity as well as on the trade relations with other countries has a beneficial impact on the economy. Studies attempting to measure tariff and non-tariff barriers have shown gradual decline in tariff and non-tariff barriers [World Bank (1989), Aksoy & Ettori (1992), Goldar and Hasheem (1992), Gang and Pandey (1998), Hasheem (2001), Pandey (2004)]. In this paper, the authors have made an attempt to quantify the trade barriers operating in Indian industry in order to understand whether protection levels actually decrease following trade liberalization. The authors have also computed several measures of trade liberalization covering tariff barriers � effective rate of protection and import penetration rates under different phases of trade reforms.

Child Labor and Trade Liberalization in Indonesia

We examine the effects of trade liberalization on child work in Indonesia. Our estimation strategy identifies geographical differences in the effects of trade policy through district level exposure to reduction in import tariff barriers. We use a balanced panel of 261 districts, based on four rounds (1993 to 2002) of the Indonesian annual national household survey (Susenas), and relate workforce participation of children aged 10-15 to geographic variation in relative tariff exposure. Our main findings show that increased exposure to trade liberalization is associated with a decrease in child work among the 10 to 15 year olds. The effects of tariff reductions are strongest for children from low skill backgrounds and in rural areas. Favorable income effects for the poor, induced by trade liberalization, are likely to be the dominating effects underlying these results.

Child Labor and Trade Liberalization in Indonesia

We examine the effects of trade liberalization on child work in Indonesia. Our estimation strategy identifies geographical differences in the effects of trade policy through district level exposure to reduction in import tariff barriers. We use a balanced panel of 261 districts, based on four rounds (1993 to 2002) of the Indonesian annual national household survey (Susenas), and relate workforce participation of children aged 10-15 to geographic variation in relative tariff exposure. Our main findings show that increased exposure to trade liberalization is associated with a decrease in child work among the 10 to 15 year olds. The effects of tariff reductions are strongest for children from low skill backgrounds and in rural areas. Favorable income effects for the poor, induced by trade liberalization, are likely to be the dominating effects underlying these results.

Some New Insights into the Effects of the EU-South Korea Free Trade Area: The Role of Non Tariff Barriers

The present study proposes an updated and extended quantitative assessment of the EU-South Korea FTA, through a new version of MIRAGE CGE model. Several distinctive contributions are offered. Firstly, the quantitative assessment takes into account non-tariff barriers (NTBs) as well as tariffs. Second, it considers trade liberalization of goods, services as well as FDI (establishment). A third contribution is that simulations of policy changes are closely aligned with the actual agreement for each industry and service category. Finally, this article relies on recent techniques for calculating the tariff equivalents of NTBs following Kee et al. (2009). The main findings show that the EU may increase trade performance in several industries (chemicals, machinery, other manufactured and food products) as well as in specific services to a lesser extent (business, insurance and transport services ). On the other hand, Korea takes advantage of the agreement for specific manufactured products (textiles, leather/clothing, cars and other transport equipment).

ECONOMIC INTEGRATION IN EAST ASIA: WHY WE NEED TO ACCELERATE REGIONAL INTEGRATION AFTER THE ECONOMIC CRISIS OF 2008-09

World trade dramatically expanded after the Second World War under the GATT system, which was succeeded by the World Trade Organization. The GATT sought a multilaterally increased world trade system. However, this system developed with a process of integration through regional agreements. This article focuses on microeconomic agents which promote regional economic integration and studies what agents have promoted the postwar integration. Researching into the theories of economic integration, this article focuses on the behavior of multinational corporations whose objective is to internalize their trade at the open markets. The multinationals seek economic integration because they want to completely cross tariff barriers, quotas and foreign exchange restrictions. This study tries to understand, from a political-economic point of view, the possibility of East Asian economic integration after the economic crisis of 2008-09.

Bad Problem Getting Worse: Regional Trade Agreements and the Future of the Multilateral Framework on Competition Policy and Law

At present, Regional Trade Agreements (RTAs) have proliferated extraordinarily in the world trade landscape. Some trade diplomats are coming to recognize the greater significance of regional competition policy and law and are arguing that RTAs are likely to prevent to create anti-competitive cross border merger and acquisition business practices by firms. They advocate that competition-related provisions should be included in the framework of RTAs. Consequently, the adoption of these provisions in RTAs is expanding and becoming a trend in the regional trade landscape. On the contrary, trade scholars have long debated how regionalism may be able to contribute to the multilateral trading system. Due to the priority of market opening objectives in the trade liberalization process, they believe that lowering tariff barriers and removing a variety of non-tariff barriers are the principal issues to be addressed and that the implications of competition policy and law in enhancing trade welfare effects is not directly relevant to the objective pursued. Based on the relationship between regionalism and multilateralism in the contemporary trade discourse, this article discusses the prospects for the multilateral framework on competition policy and law and asks whether there is a link between these and at least the beginnings of a regulatory process at global level.

Corruption and Bilateral Trade Flows: Extortion or Evasion?

Abstract We analyze the impact of corruption on bilateral trade, highlighting its dual role in terms of extortion and evasion. Corruption taxes trade, when corrupt customs officials in the importing country extort bribes from exporters (extortion effect); however, with high tariffs, corruption may be trade enhancing when corrupt officials allow exporters to evade tariff barriers (evasion effect). We derive and estimate a corruption-augmented gravity model, where the effect of corruption on trade flows is ambiguous and contingent on tariffs. Empirically, corruption taxes trade in the majority of cases, but in high-tariff environments (covering 5% to 14% of the observations) their marginal effect is trade enhancing.

How the Creation of the Caribbean Single Market and Economy (CSME) will Strengthen Caribbean Economies

The current institutional arrangements which govern the Caribbean Single Market and Economy are fully realized based on attempts of preceding Caribbean economic integration. The first significant attempt was disastrous. With myopic dreams of unification, the West Indies Federation was formed in 1958 and consisted of 10 British West Indian territories, where Trinidad and Tobago, Jamaica, and Barbados were the principal members. Most of the Leeward and Windward islands, which were then under British control, were also apart of the federation. The seat of government was in Port of Spain, Trinidad who was then, slated for independence in 1962. Consequently, the federation saw little hopes of surviving its troubled infancy because it was an institution built on self interest, rather than symbiosis. Before Trinidad left, however, Jamaica, the most populous and prosperous member, voted (1961) to leave the federation, fearing that it would have to shoulder the burdens of the economically underdeveloped members. Trinidad and Tobago, inevitably, followed suit and the federation disintegrated in May, 1962. Further attempts date back 1968, with the establishment of the Caribbean Free Trade Area (CARIFTA) to serve the purpose of only removing the tariff and other barriers to intra regional trade in goods. This resulted in a reticent ten percent (10%) growth in intra- regional trade of the Caribbean economies. The integration process was later intensified through the Treaty if Chaguaramas which outlined directives to create a Common Market in the region. Added to the existing agenda of supporting liberalization on trade in goods, was the establishment of a common external tariff, intended to provide protection to regional industries. The 1973 treaty contained further provisions for the removal of restrictions in the establishment of businesses, provisions of services, the movement of capital and the coordination of economic policies. These stipulations barely made a difference to the volume of intra- regional trade which still lingered at 10% mark of total trade. It failed to catalyze new investments and though it intended to support regional import substitution, it miserably addressed evolving and pressing issues concerning international competitiveness and export penetration. In the following years the Caribbean economies, under the auspices of multilateral lending institutions, implemented structural adjustment programs that targeted of economic, financial and trade liberalization which surpassed their commitments as expressed by the treaty of Chaguaramas. By the end of the 1980’s, through precipitating trading blocs and the inception of economic globalization, there was ubiquitous face-lifting of economies. This accommodated the working of free and private market forces to construct robust capital and other factor flows, and to endorse an export oriented growth and international competitiveness. Henceforth, at Grand Anse Grenada, 1989, Heads of Government, being properly convinced of the necessity to reinforce and extend the Caribbean Community in all of its dimensions, decided to convert the limited Common Market as conceived in 1973, into a Single Market and Economy in as short a time as possible.

Tariffs and Imports Mis-Invoicing Under Oligopoly

Mis-match of trade statistics between developed and developing countries indicate a substantial mis-invoicing of trade figures, primarily by developing country traders. This is due to the inflexible exchange rate regimes, severe import restrictions and export subsidies prevailing in LDCs. In this paper we focus on the import under-invoicing due to high tariff barriers in a market where domestic producers compete with importers. Specifically, we examine how tariff levels, market structure and government intervention (in the form of intensity of monitoring and severity of penalties) affect the levels of under-invoicing. We also look at the optimal levels of import tariff and instruments of government intervention in these circumstances.

Global software engineering and the Brazilian perspective

Since the rise of the Internet in the 1990s, we have entered the era of Global Software Engineering (GSE). High-tech companies are now located in nearly 100 nations. Many Latin America nations have flourished in this new era: Costa Rica lured Intel, Argentina lured EDS (now HP), and Brazil has lured many global high-tech firms and many investments in the IT sector. The rules developed by the Brazilian government in order to reduce tariff barriers, exclude the market reserve and reestablish the National Computer Policy have actively added to the position of Brazil as an interesting option to receive foreign investments in the high technology sector. The government’s goal of supporting industries already based in Brazil and the need to create an attractive environment for the foreign capital led to the creation of the Computer Tax Incentive Law (Laws 8248/91, 10176/01, and 11077/04). This law allows companies to invest in research and development projects (previously approved) rather than pay these funds as income taxes. This measure strongly bolstered the creation of new software companies and also attracted new companies to Brazil that produce computer goods in several regions of the nation today. Among those companies are several software development centers of large foreign companies, which saw a way of reducing costs