Tariff Equivalents Research Articles

Economic impacts of the European Union carding system on global fish trade

Due to the rise in illegal, unreported, and unregulated (IUU) fishing, the sustainable management of fishing resources is in jeopardy. The European Union (EU) is the first regional player to establish stringent guidelines to prevent, deter, and eliminate IUU fishing. The EU carding system administers the mandate for requiring a catch certificate. Using a system of yellow and red cards, countries that export fishery products to the EU are encouraged to lessen IUU fishing in their waters. The yellow card acts as a formal warning, whereas the red card results in an import ban. This study examines the impact of fishery exports to the EU under the carding system. Findings from the structural gravity models show that fishery exports from yellow- and red-carded countries to the EU fall by an average of 23% and 83%, respectively. The computed marginal effects suggest that the yellow and red cards be tariff equivalents of 5% and 43%, respectively. The IUU regulation, as a trade-restrictive technical measure, is an example of effective, legitimate efforts to combat IUU fishing and ensure sustainable fisheries worldwide.

Economic sanctions and agricultural trade

AbstractEconomic sanctions are more popular than ever. But do they affect agricultural trade? Combining two new datasets and capitalizing on the latest developments in the empirical structural gravity literature, we investigate the effects of sanctions on international trade of agricultural products. We find that trade sanctions impede agricultural trade, whereas other sanctions do not show any significant impact. Complete trade sanctions have led to about a 67% decrease in the agricultural trade between the sanctioned and sanctioning countries, or a corresponding tariff equivalent of 25%, and we also obtain significant estimates for partial sanctions. At the industry level, we find substantial heterogeneity depending on the sanctioning and sanctioned countries, the type of sanctions used, and the direction of trade flows. The 2014 sanctions on Russia substantially decreased Russia's agricultural trade, mainly due to reduced trade with the EU but also due to reduced trade with other countries. Although no definitive evidence exists that sanctions alter the actions of governments of receiving countries, this paper provides broad evidence that sanctions hamper agrifood trade and hurt producers, consumers, and real output.

Lowering Regulatory Trade Costs

AbstractNegotiations on ‘deeper’ trade agreements and estimates of tariff equivalents have increased the awareness that regulatory trade costs are (too) high. This paper discusses ways to effectively lower such costs, reviewing the potential role of trade agreements and international regulatory cooperation, and the approaches that have been taken in different world regions. Attention is also paid to cost reduction via global technical standardization. Key issues are how to reduce the prevalence of national standards setting and how to best promote international standards. In both dimensions, Europe is argued to play a frontrunner role.

Economic and environmental impacts of agricultural non-tariff measures: evidence based on ad valorem equivalent estimates

Non-tariff measures as hidden barriers to agricultural trade would not only result in production and welfare distortions due to the international relocation of activities along the agricultural value chain, but also yield subsequent consequences to both the scale and distribution of carbon emissions from the agri-food system. This paper estimates ad valorem equivalents of non-tariff measures using a gravity model in combination with detailed bilateral trade data of 2001-2019, and incorporates the estimations in the Global Trade Analysis Project model and a multi-regional input-output table of Eora26 to quantify economic and environmental impacts of non-tariff measures. We show that while tariff equivalents are on average positive for all types of non-tariff measures, there are substantial heterogeneities across countries and products. The extra trade barriers imposed by these measures would increase the scale of domestic agriculture-related sectors for most agriculture importing countries, and vice versa for major exporters. Meanwhile, they would reduce the global welfare at amount of 16 millions US dollars on average and in particular, the welfare of key imposers and targeting markets of non-tariff measures. Carbon emissions from the agri-food system tend to increase about 1% around the world, especially due to the larger food processing industry in developed countries. Our paper confirms that non-tariff measures lead to both welfare distortions and carbon emissions in the agri-food system. It thus calls for urgent needs to promote further reforms of the agricultural trade regime and the policy coordination across countries to facilitate agri-food system transformation with more integration and sustainability.

The Potential Economic Effects of a Korea-GCC FTA

Purpose-Currently, the Korean government has not officially taken a position on the Korea-GCC FTA negotiations due to the Middle East s complicated political and economic situation. However, this study attempts to analyze the potential economic effects of an FTA between Korea and GCC member countries, taking into account the possibility of a resumption in the future. Design/Methodology/Approach-Using a global, multisector, computable-general-equilibrium (GTAP) model and GTAP database Version 10A (the most recent), this paper undertakes the identification of the economic impacts of a Korea-GCC FTA. The baseline scenario was designed using the World Bank s macroeconomic data, such as real GDP, population, labor, and capital from 2015 to 2019 to calculate future estimates. Policy scenarios were established by a (1) 90% reduction in tariffs on goods, (2) a 50% reduction in ad valorem tariff equivalents on services, (3) a 0.15% increase in TFP (total factor productivity), and (4) lastly, the above three scenarios were combined to see the effects of a Korea-GCC FTA. Findings Simulation results showed that real GDP in Korea (0.11%) and GCC member countries (0.13% ~ 0.46%) increased, indicating that a Korea-GCC FTA would have a positive impact on economic growth on both sides. The impact on welfare also reveals similar results to GDP, showing the largest increase in Korea (about USD 2.2 billion), followed by Saudi Arabia and UAE (about USD 2 billion and USD 1.6 billion, respectively). When looking at the effect of Korea s exports by industry, exports of automobiles and parts increased the most (about USD 1.5 billion), followed by the electronics (about USD 1.19 billion), machinery (about USD 1.05 billion), steel (about USD 1 billion), and petrochemical (about USD 420 million) industries, suggesting that overall exports are expected to increase in Korea s manufacturing industry. In the case of the petrochemical industry, exports to countries other than GCC member countries are expected to increase by approximately USD 3.9 billion, which is the largest benefit. Research Implications-This study suggests the justification and necessity of an FTA. Overall, positive effects will be expected in terms of real GDP, welfare, exports, and imports. In addition, if Korea and GCC member countries sign an FTA, exports of Korea s major manufacturing sectors will increase, and GCC member countries will see an increase in oil (crude oil) and gas exports, creating a win-win situation. As the industrial structure between the two sides is complementary, a synergy effect can be expected, and an FTA with GCC countries rich in natural resources such as oil and gas can enhance energy security.

Evaluating the Impacts of Food Safety Policies on Japan’s Rice Imports Based on the Simultaneous Buy and Sell System

This study evaluated the impacts of food safety policies on Japan’s Simultaneous Buy and Sell rice imports through measuring tariff equivalents of food safety policies. In order to construct an estimated model, a Japanese consumer’s utility function is introduced and developed with consumer’s preference parameters and elasticity of substitution. In the empirical study part, Japan’s positive list system and rice traceability were analyzed and assessed as critical food safety policies. Results showed that after the implementation of the positive list system, consumers’ preference for foreign rice and the substitution elasticity diminished. This decreasing tendency was quite similar to the results after the enforcement of rice traceability. The tariff equivalents of food safety policies on imported rice fluctuated around ¥50 yen/kg from fiscal year 2000 to 2005 and decreased because of the global grain price hike after 2006. The tariff equivalents soared in 2010, which was induced by the traceability regulation, and then dulled during Japan’s earthquake and tsunami in 2011. Subsequently, after the recovery from natural disasters, the tariff equivalents of food safety policies became higher. Therefore, food safety policies had made imported rice less attractive, weakened the competitive power of rice exporting countries, and had statistically significant impacts on Japan’s rice importation.

The costs of regulatory barriers to trade in services: New estimates of ad valorem tariff equivalents

This paper estimates policy-induced trade costs in five services sectors for 46 countries using structural gravity. Despite services trade having tripled in the last two decades, the results show that trade costs remain high. The estimates highlight potential for services trade liberalisation and can support trade policy modelling.

A Comparison of Approaches to Modelling Non-Tariff Measures

Non-tariff measures (NTMs) are a prominent feature of many recent free trade agreement (FTA) negotiations. The implementation of NTMs within computable general equilibrium (CGE) models has been relatively simple to date, with modelers generally incorporating NTMs as tariff equivalents via export or import taxes or as import-augmenting technological (iceberg) change. Our study compares and contrasts two new methods with the traditional mechanisms used. The first new method is the willingness to pay method developed by Walmsley and Minor (2020); and the second, introduced here, provides a new mechanism for adjusting the exporters’ production costs directly, referred to as the export cost method. We find that the choice of mechanism can have important consequences for the estimated impact of changes in NTMs, with mechanisms that raise productivity leading to larger changes in real GDP than those that treat NTMs as associated with economic rents or demand shocks. We emphasize the importance of careful consideration being given to the nature of the NTMs being investigated, the econometric estimates of the associated trade costs, and the CGE model mechanisms being used to assess the impacts of changes in NTMs.

Revisiting time as a trade barrier: Evidence from a panel structural gravity model

AbstractIn this paper, we revisit the evidence on the effects of time spent on border‐crossing procedures for international trade using a theory‐consistent structural gravity model. We exploit a rich panel dataset including domestic trade flows and employ a recent econometric estimator that exhibits favorable asymptotic properties for inference. The results indicate a significant negative effect of the time required for border procedures that is driven by the time needed for document preparation. We find that an additional day spent on those procedures corresponds to an ad valorem tariff equivalent of 0.4 percentage points. The parameters of our structural model are used to simulate three counterfactual scenarios, quantifying the effect of past and potential future trade facilitation efforts for middle‐, low‐, and high‐income countries. Full endowment general equilibrium effects suggest that in times of stagnating multilateral and bilateral trade liberalization efforts, unilateral implementation of trade facilitation carries the potential to induce an alternative stimulus for trade and welfare, especially for low‐ and middle‐income countries.

Economic Sanctions and Agricultural Trade

Combining two new datasets on sanctions and agricultural trade and implementing step-by-step the latest developments in the empirical structural gravity literature, we investigate the effects of sanctions on international trade of agricultural products. We find that trade sanctions have been effective in impeding agricultural trade, while other sanctions do not show any significant effects. The complete trade sanctions in our sample have led to about a 73% decrease in the agricultural trade between the sanctioned and sanctioning countries, or a corresponding tariff equivalent of 38.8%, but we also obtain significant estimates for partial sanctions. At the industry level, we find substantial heterogeneity depending on the sanctioning and sanctioned countries, the type of sanctions used, and the direction of trade flows. Focusing on the sanctions on Russia, we find that these sanctions substantially decreased bilateral trade of Russia, mainly due to reduced trade with the EU.

Tariff quota administration in China's grain markets: An empirical assessment

AbstractIn 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.

Non-tariff barrier on chicken imports into Russia: Impact on production, trade and prices

We analyze the Russian restriction on chicken imports as an example of a non-tariff barrier (NTB). Cointegration test results support the hypothesis that the NTB limited trade. We calibrate an equilibrium market model to cointegration results to assess the market impact. The tariff equivalent of the Russian chicken NTB is estimated to be 30−40% depending on the representation of consumer demand. Removing the NTB decreases domestic production by 4–5% and domestic price by 27%–34%, while imports increase by 326–423 thousand tons annually in 2015–2019.

일방적 통상정책의 국제적 확산과 무역구조의 변화에 관한 연구 (A Study on Unilateral Trade Policy and International Trade Structure)

일방적 통상정책의 국제적 확산과 무역구조의 변화에 관한 연구 (A Study on Unilateral Trade Policy and International Trade Structure)

The effect of sanctions on Russian agricultural imports

This paper contributes to the methodology of trade policy analysis, specifically to the assessments of non -tariff measures. To quantifying the effects of these measures, the proportion between the variables of two gravity equations, describing the situation before and after the embargo is used. The ratio of imports per unit of the supplier’s GDP over the two compared periods (2013 and 2017) is different for two groups of trade partners, one of which includes free-trade partners while the other spans the rest of the world (with some exceptions). In the presence of the embargo the gap in the average imports per unit of the supplier’s GDP between the two groups is wider. This is a consequence of the emergence of a new trade barrier. This gap allows us to indirectly quantify the trade bans via their tariff equivalent. In this study the methodology is applied to the case of food and agricultural imports. Fish, as well as other products outside chapters 1–24 of Harmonized commodity description and coding system, are excluded. The hypothesis of the study is that the impact of the embargo on the food and agricultural imports does not exceed that of tariff and phytosanitary measures. The study rejects this hypothesis and concludes that the embargo establishes a prohibitive level of protection.

Торговые взаимодействия регионов КНР с Россией: эффект границ

The paper analyzes the dynamics and structure of trade interaction between Chinese regions and Russia using official Chinese data and assesses the border effects for export and import flows. The analysis shows that Chinese imports from Russia exhibit a much more uneven distribution across Chinese regions than exports. The results of the gravity model estimation indicate that the size of the border effect for exports of Chinese regions to Russia was larger compared to trade barriers with other countries. At the same time, the hurdles impeding the access of Russian production to Chinese regional markets expressed in the ad-valorem tariff equivalent were higher than for other countries. The estimates reveal that Russian exports to Chinese regions have been experiencing higher barriers in recent years than Chinese regional exports to Russia. The findings suggest that leveling barriers would reinforce the access of Chinese coastal regions to the Russian market, making exports to Russia even less evenly distributed across Chinese regions. A substantial reduction of barriers is likely to increase Russian imports in China thanks to the growing flows of Russian goods to virtually all Chinese regions. Accordingly, Russian exporters need to diversify their supply across Chinese regions so as to bypass the middlemen and tap new regional markets in China

An analysis of the effects of electronic commerce on the Korean economy using the CGE model

The purpose of this paper is to analyze the economic effects of foreign direct online purchasing on the Korean economy using computable general equilibrium and to analyze the future growth of electronic commerce. We assumed that foreign online direct purchasing has reduced transaction costs in two ways: reduction of tariff equivalents and a decline in direct import prices. Simulation results showed that the reduction of both tariff equivalents and import prices due to an increase in foreign direct online purchasing increased the public welfare of the Korean economy. We also found that the reduction of import prices had a greater impact on the welfare increase than did the tariff reduction. Therefore, electronic commerce has a positive impact on the Korean economy, and we expect that businesses in the field will be diversified and prosper in the future.

A new dawn for MENA firms: service trade liberalization for more competitive exports

ABSTRACTWhile micro-level empirical evidence has emerged to highlight the positive effect of services deregulation on the productivity and exports of manufacturing firms in developing countries, the MENA region has been neglected in the literature. The current paper fills the gap by exploring the effect of service protection on the extensive and intensive trade margins of manufacturing and services firms in selected MENA countries for 2013. The service protection variable is constructed using two different measures: the service trade restrictiveness index and the tariff equivalent of services, weighted by the input-output technical coefficient of service sectors. Our results show that service protection is a fixed export cost, exerting a negative and significant effect on the extensive margin, without having a significant effect on the intensive margin of the firm. We also find that the burden of service barriers falls on small firms that struggle to enter international markets, and on firms operating in high value-added sectors such as ‘motor vehicles’.

External & Intraregional Interactions of the Russian Far East: Comparative Assessment

This paper argues that East Asia is becoming an increasingly important trade partner for Russia due to the need of the latter to diversity its external economic relations. The Russian Far East (RFE) shares a long border with the countries of North-East Asia, and its economic development is largely determined by the scale of cross-border economic activity. We use regional and international data to evaluate the trade relations of RFE with domestic and foreign markets over a ten-year period. The results indicate that RFE regions trade more intensively with the domestic economy than with adjacent countries. Over the entire sample period, RFE regions faced lower border hurdles in their trade with the rest of Russia than with the three Northeast Asian countries. In other words, trade between RFE and Russia was subject to a tariff equivalent of 44% relative to the trade within RFE. By contrast, the cost of trade with Northeast Asia was 57% higher than intraregional RFE trade. These tariff equivalents were not constant over time. In the years 2004–2010, border effects were higher with NEA again recording barriers that raised costs by 67%. In the period after 2010, barriers have decreased. In the case of NEA, the decline was 20 percentage points, while for Russia it was half that amount. We found that for RFE barriers have been on the decline but apparently the border costs in trade with NEA have been falling more drastically than with Russia.

The Historical Evolution of Alternative Metrics for Developing Countries’ Food and Agriculture Policy Assessment

The demand for quantitative assessments of the impacts of food and agricultural policies has grown steadily in the past four decades. From the application of social cost-benefit analysis to investments in developing countries in the 1970s to the use of increasingly sophisticated general equilibrium models today, the menu of available techniques for policy assessment has expanded rapidly. In addition, both partial and general equilibrium models have been developed to analyze world markets for agricultural commodities and the effects of government policies on such markets. Alongside the modeling of markets and the quantitative impact of policies, several indicators have been developed that build on trade policy measures, including effective protection and tariff equivalents. One example is the producer subsidy equivalent. This has been used by the OECD to estimate the level of support provided by government policies to the agricultural sector. The indicators have more recently been applied to developing countries as a form of benchmarking to give a snapshot of the transfers among stakeholders inherent in such policies.

Measuring Japan's technical barriers to trade based on the China's fruit exports to Japan

The study analyses the influence of technical barriers to agricultural trade carried out by Japan on China’s fruit exports. In order to measure the tariff equivalents of technical barriers, the price wedge method is utilized. Based on the utility function specified in the study, the constructed model is adopted to evaluate the elasticity of substitution between the imported fruits and Japanese domestic fruits, and the consumers’ preference parameters for different kinds of fruits. Sample data are chosen from the beginning of 2002 to the end of 2015. Based on the estimated preference parameters and elasticity of substitution, the results show that Japanese consumers prefer domestic fruits to the imported fruits. Besides, the results reveal that although the substitution and preference parameters are higher for the improved quality of imported fruits in the context of the positive list system, the scales of tariff equivalents of technical barriers are larger than the regular custom tariffs, and the technical barriers would cause extra huge costs for the imported fruits. Especially, in the three consecutive years after the implementation of the positive list system, tariff equivalents of technical barriers almost reached 150%, and then gradually decreased in the following years.