Tariff Preferences Research Articles

Superstar exporters: An empirical investigation of strategic interactions in Danish export markets

In many countries, exports are highly concentrated among a few “superstar” firms. We estimate the export decisions of superstar firms as the result of a complete information, simultaneous, discrete choice, static entry game. We employ a dataset on the universe of Danish trade transactions by firm, product and destination. We also obtain detailed information on applied, preferential tariff protection from the MAcMap-HS6 database. We find evidence of strong negative competitive effects of entry: in the absence of strategic competitive effects, firms would be 53.2 percentage points more likely to export to a given market. Next, we run two counterfactual exercises. We show that failing to account for the strategic interaction among superstar exporters leads to: (i) overstating the probability that firms would start exporting to a market following tariff elimination by a factor of two; and, (ii) overstating the probability that firms would stop exporting to a market if tariffs were imposed by a factor of more than five.

Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Markets

In many countries, exports are highly concentrated among a few superstar' firms. We estimate the export decisions of superstar firms as the result of a complete information, simultaneous, discrete choice, static entry game. We employ a dataset on the universe of Danish trade transactions by firm, product and destination. We also obtain detailed information on applied, preferential tariff protection from the MAcMap-HS6 database. We find evidence of strong negative competitive effects of entry: in the absence of strategic competitive effects, firms would be 53.2 percentage points more likely to export to a given market. Next, we run two counterfactual exercises. We show that failing to account for the strategic interaction among superstar exporters leads to: \emph{(i)} overstating the probability that firms would start exporting to a market following tariff elimination by a factor of two; and, \emph{(ii)} overstating the probability that firms would stop exporting to a market if tariffs were imposed by a factor of more than five.

Overcoming the Challenges in Documentary Procedures and Transparency in the Implementation of Effective Rules of Origin for the African Continental Free Trade Area

The United Nations Conference on Trade and Development (‘UNCTAD’) recently published a report on Economic Development in Africa. The purpose of this article is to consider the part of the report titled ‘Made in Africa: Rules of Origin for Enhanced intra-African Trade’, one of the main findings and make policy recommendations thereof. Preferential rules of origin are applied to goods by members of a contractual or autonomous trade regime in order to determine whether or not they qualify for preferential treatment and therefore beyond the scope of application of the general MFN principle. The ultimate test of effectiveness of rules of origin, therefore, depends on the so-called preference margin. The preference margin is the difference between the applicable most favoured nation tariff and the preferential tariff and the costs of compliance with the rules of origin that apply in terms of the specific free trade or preferential trade agreement area. However, Africa faces unique challenges in this regard. These are geographical, political and technological in nature. This article aims to contribute to the discussion of how, through creative and innovative use of rules of origin, Africa may begin to overcome these challenges to the implementation of the African Continental Free Trade Area (AfCFTA). Rules of Origin, AfCFTA, Africa, Development, Regional Value Chains

Learning to Use Trade Agreements

Free trade or preferential trade areas (PTAs) allow importers who belong to the area to export to each other while paying zero or preferential tariffs as long as Rules of Origin (ROOs) are met. Meeting them is costly not only in terms of production costs but also in terms of documentation costs. We ask if these fixed costs of documentation change over time with the experience of the firm in obtaining preferential tariffs. We explore this using a unique importer-exporter matched transaction-level customs data set on a group of Latin American countries. Our estimating equation is model-based and shows that these fixed costs depend on the history of preference utilization. Most of the effect comes from experience in the same product and same partner, with some spillover to other partners buying the same product. There is little learning from experience in other products and other partners. When considering products that have been under preferences for a while, some learning might have occurred prior to the start of our data. Using a natural experiment in Argentina, where some products were newly brought under preferences, we show that learning is indeed larger for such products. As facilitating preference use today also makes it easier to use preferences in the future, interventions early on in the life of the FTA to reduce such costs would be more effective.

Principles of Transformation in an Integrated Energy System when Applying the Concept of an Energy Hub

The cost of electricity and heat for the population, enterprises and organizations in Russia has increased several times in recent years. An urgent issue for consumers was the search for opportunities to save money when paying for energy. The heating fee is about a quarter of the total amount of the utility bill. The tariff, the cost of one unit of energy (Gcal/m2) spent on heating a room, increases annually. Accordingly, the amount of expenses for public services in each individual family or organization also increases. The principles of transformation of various forms of energy in an integrated energy system based on the concept of an energy hub are considered. It is proposed to use the capabilities of the MATLAB/Simulink software. The MATLAB/Simulink software library does not contain complex elements with a structure with multiple inputs and multiple outputs. Complex models of energy hub blocks form a special additional library. These models implement such functions as energy storage, energy conversion and summation of various types of energy. There are two types of energy transformation elements presented in the article. An illustrative example is presented that shows the economic effect of converting electricity into heat energy at preferential tariffs during the night period. The calculation of the quantitative potential of electricity for conversion is performed. Studies have shown that a flexible combination of various energy carriers using conversion and storage technologies preserves the potential for various system improvements: the total cost of energy can be reduced, the reliability of the power system is increased, network overload can be reduced, transmission losses are reduced.

Implications of Bangladesh’s Graduation from Least Developed Countries Status on Japanese Companies

In 2026, Bangladesh is expected to graduate from the Least Developed Countries status, which is reviewed by the Committee for Development Policy of the United Nations. While graduation has some advantages, such as improvement of the country’s external image, it also has some disadvantages, such as the inability to use the special preferential measures that are granted to countries with that status by the international community. This study discusses the implications and impacts of such changes in business environment of Bangladesh on Japanese companies through a questionnaire-based survey. As a result, the study demonstrates that Japanese companies that operate in Bangladesh and that benefit from special preferential tariffs have already begun to gather information and are even considering transferring their production bases. In order to avoid losing such foreign direct investment, Bangladesh is looking into free trade agreements (FTAs), however, in addition, authors believe it is necessary for Bangladesh to develop a friendly business environment that is comparable to that of neighboring Southeast Asian countries, to strengthen its industrial competitiveness, and to improve the level of trade diversification. The Japanese government also needs to make further efforts to deepen bilateral economic relations. This study intends to contribute to the debate regarding the graduation status of Bangladesh, and to the policies and strategies of governments and businesses.

Feasibility study and practical implementation of energy saving measures at the Main Pumping Station of the Ingulets Irrigation System

While ensuring stable water quality in the source of irrigation – the river Ingulets, technically justified the ability to save money to pay for electricity through the use of multi-tariff metering. Electricity metering at the Main Pumping Station is carried out using multi-tariff meters, where electricity tariffs differ significantly during the day: the difference between “peak” and “night” tariffs is such that it is almost 5 times lower than the “night” tariff. Ensuring savings on electricity bills can be achieved by "maneuvering" the operation of the pumping units of the Main Pumping Station, ie, to pump more water at night than during the day. For example, one pump-power unit of the Main Pumping Station remains in operation permanently, and in times with a preferential tariff for electricity payment (from 000 to 700 o’clock in the morning) another, or, if necessary, two or three units are additionally connected to work. At the same time, the Ingulets main canal, Yavkinsky main canal, Lyubynsky reservoir, fish ponds and ponds of the sugar factory should be used as regulating tanks. The economic effect of the introduction of multi-tariff electricity metering (reduction of public funds to pay for electricity for water pumping through the use of multi-tariff electricity metering throughout the irrigation period) from the additional inclusion of only one unit at night will be: 68 135,76 UAH. At the expense of the special fund (funds received for the provision of water supply services) on all electric motors installed smooth start systems (2013 y – 3 units, 2016 y – 5 units, 2017 y – 4 units). Due to the transition from 2011 y to a new regime of water quality formation, which ensured stable water quality in the Ingulets main canal regardless of the number of operating units (unlike the anti-river regulation, which was used earlier), it became possible to quickly adjust the operation of the Main Pump station as a single technical system with the introduction of multi-tariff electricity metering allows you to save significant funds to pay for electricity. In 2018 y, the largest annual savings of budget funds for the payment of electricity used for pumping water, 36.8 million hryvnias, was achieved in the years of research of the Main Pumping Station. Scientifically substantiated and confirmed in practice savings of significant amounts of budget funds in the application of multi-tariff metering of electricity at the Main Pumping Station of the Ingulets Irrigation System. Taking into account the trend of resumption of irrigation in modern conditions, it is necessary to return the multi-tariff metering of electricity, which was abolished in 2019 y.

Analysis of the impact of tariff preferences on the foreign trade of the Russian Federation and the Republic of Serbia

The article considers the dynamics and structure of foreign trade of the Russian Federation and the Republic of Serbia, as well as the impact of tariff preferences on foreign trade between two countries. The analysed measures were: dynamics of the Russian Federation’s exports to the Republic of Serbia, dynamics of the Russian Federation’s imports from the Republic of Serbia, tariff preferences applied between countries. The article provides statistical data on the dynamics and structure of foreign trade of the Russian Federation and the Republic of Serbia for 2010–2019 and their dependence on the application of tariff preferences, as well as indicators of trade between the EAEU and the EAEU member states with the Republic of Serbia for 2017–2019. The paper analyses the possible directions of Serbia’s participation in the EAEU and the European Union, assesses the benefits of creating a free trade zone between the EAEU and Serbia, as well as the costs of Serbia’s integration into the European Union. The importance of tariff preferences in the development of foreign trade relations between Russia and Serbia is shown.

Requesting Trade Sanctions? The European Parliament and the Generalized Scheme of Preferences

AbstractTrade policy is among the EU's major capabilities to promote fundamental rights in developing countries. Conditionality clauses thus accompany EU trade agreements and tariff preferences under the Generalised Scheme of Preferences (GSP). Yet while conditionality in trade agreements have come under the spotlight and the EP has stepped up its engagement in this area of decision‐making, the GSP has largely not been addressed in scholarly debate. This article fills this void in the literature by exploring the conditions under which the EP asks for trade sanctions on beneficiaries of the GSP. I argue that the EP invests political resources in a beneficiary when this country is salient under EU development cooperation. Hence, I observe a horizontal spill‐over effect whereby EP trade activities are driven by a country's salience in the area of development cooperation. However, this effect occurs only in the absence of security interests and the lack of development performance.

Factors of Financial Imbalance in the Compulsory Pension Insurance System: the Case of Russia

The aim of the article is to study the impact of tax and tariff policy on the financial balance of the compulsory pension insurance system in Russia, as well as to substantiate proposals for its financial stabilization. The authors analyzed the consequences of regression applied on wages while forming tariffs for pensions. The methods used in this study were economic, statistical and empirical methods, analysis and synthesis, abstraction, systemic-structural approach. The authors analyzed the influence of preferential tariffs for certain types of economic activity and the use of simplified tax systems for organizations on the income of the Pension Fund of the Russian Federation. The work contains the calculation of income shortfalls in the compulsory pension insurance system resulting from the use of regression and tax benefits when calculating insurance payments to the budget of the Pension Fund of Russia. The authors estimated the financial consequences of the pension valorization in the Soviet period and the pension indexation policy in Russia resulted in the rising costs of the Pension Fund of Russia. The conclusion is that the current procedure for determining insurance contributions to the Pension Fund of the Russian Federation, which provides for a large number of benefits, does not correspond to generally accepted world practice and creates major risks for the financial balance of the pension system. This may cause increasing poverty among seniors. Raising the retirement age did not solve the problem of balancing the pension system, but exacerbated it. The regression in the payment of insurance premiums led to a conundrum in Russia, when an increase in wages resulted in the decrease of the Pension Fund of the Russian Federation’s income. This is associated with the precarization of wages and the desire of business to minimize tax payments. The prospect of further research is to study the conditions for financial stabilization of compulsory pension insurance during the Russian economic crisis. The analysis showed that there is a need to create an independent actuarial center for setting tariffs for deductions to the Pension Fund of the Russian Federation, as well as the redistribution of areas of responsibility between the Pension Fund of the Russian Federation and the Ministry of Finance of Russia.

The Trade Effect of the EU’s Preference Margins and Non-Tariff Barriers

Nowadays, trade negotiations afford both liberalism- and protectionism-oriented policies. Indeed, in recent decades, the developed countries have been actively engaged in negotiating many preferential agreements to integrate developing countries (DCs) into world trade and encourage their economic growth, but many of these schemes contrast with the complex rules, often imposed on international markets, that still are an obstacle for exporters. Their presence and related costs reduce the importance of preferential trade agreements (PTAs) in increasing trade flows. This article attempts to assess the impact of preferential trade policies on trade flows controlling for different non-tariff barriers (NTBs), using a structural gravity model. The analysis uses disaggregated data, registered in the year 2017, on EU imports (defined at level HS-6 digit) from a large number of exporters (187 developed and developing countries) and also includes the intra-EU trade. Our results show robust and positive estimates for the impact of preferences on bilateral trade flows, however, higher non-tariff barriers are likely to play a role in reducing both the extensive margins of trade, and so tariff preferences alone are not sufficient to access international markets. The impact of NTBs on the intensive margin of trade is ambiguous; some measures may act as catalysts and therefore increase trade, and others may act as an additional cost of trade and thus hinder trade.

India’s Response to Increases in Imports from Countries Subject to Preferential Tariffs Under FTAs: Bilateral Safeguard Investigations?

India has entered into several Free Trade Agreements (FTAs) that provide for the possibility of imposition of bilateral safeguard measures when increase in imports causes injury to the domestic industry in India. The bilateral safeguard measure can be in the form of temporary suspension of further reduction or withdrawal of tariff preferences; some also contain provisions relating to preliminary safeguard duty, transition period, duration of safeguard measure, liberalization of safeguard duty, among others. Provisional bilateral safeguard measures were imposed in case of Refined Palm Oil from Malaysia and in case of Phthalic Anhydride & Polybutadiene Rubber from Korea. Bilateral safeguard measures are an effective tool in protecting the domestic industry from a sudden increase in imports, and also help in reversing trade deficits. Free Trade Agreements, India, Bilateral Safeguards, ASEAN, Korea, Malaysia, trade deficit, imports, customs duty, Rules, investigation

FTA 활용 기업이 제출한 전자원산지증명서 효력 인증의 문제: 전자원산지증명서와 전자화원산지증명서를 중심으로

After the WTO was notified of the Regional Trade Agreements (RTAs) between Mongolia and Japan in June 2016, all WTO members have implemented RTAs. As such, FTA preferential trade is becoming more common, and the importance of certificate of origin has come to force. The goal of this study is to examine the validity of various forms and to propose the applicability of swift preferential tariffs focused on scanned-certificates of origin. It is difficult to completely replace paper documents with electronic documents. However, when the paper documents are converted into sanned-documents, it allows not only prompt transmission but also reduction of document storage cost. As for Korea, application and issuance of the certificate of origin are being processed electronically. Therefore, the confirmation of authenticity is not necessary. However, when it was processed to other countries where Electronic Origin Date Exchange System (EODES) has not established, there are still many c hallenges f or s wift c learance b ecause d igital o ne i s converted b ack to t he p aper o ne. This requires the confirmation of authenticity. As a solution for this issue, this paper suggest the system that electronically issued scanned-certificate of origin c an b e verified b y the issuing agency d irectly. Under t his proposed s ystem, swift c ustoms clearance and preferential tariffs would be possible even if EODES is not established.

Integration Projects of Russia and EAEU: Chance for Extension Export?

The article deals with the possibilities of improving the access of Russian goods to foreign markets through regional trade agreements. Participation in such agreements has acquired mass character in the current century, within their framework about two thirds of transboundary commodity flows are already moving. The main peculiarity of regionalism development in this century is the pro‑integration character of the concluded agreements, which are not limited to agreements on free trade zones of goods, but cover a wide range of issues of trade in services, investment cooperation, competition, environment, labor standards, i.e. they envisage a movement towards greater institutional homogeneity of economies. Until recently, Russia was limited to the tasks of preserving and developing economic ties in the post‑Soviet space, and only after the establishment of the Eurasian Economic Union did it start showing interest in signing free trade agreements with non-CIS countries. To date, the EAEU has concluded free trade agreements with a number of countries and is negotiating a FTA with several more countries. The EAEU integration policy has not yet brought any noticeable results in terms of a significant reduction of tariff barriers into total foreign markets: the current and planned integration projects will allow Russia to enjoy tariff preferences on less than one tenth of the global market. Possible new union agreements on preferential trade with ASEAN countries can only help Russia to expand its scope, while the creation of liberal economic partnerships such as WTO plus is not on the Russian integration agenda. Nor is there any intention to promote the idea of a FTA with Russia’s largest trade partners – the EU and China – in the EAEU. The conclusion is made that it is vital for Russia to address the problem of increasing the competitiveness of manufacturing industries, without which further facilitation of access to foreign markets through free trade agreements may not be possible.

From Preferential Trade Arrangements to Free Trade Agreements: One of the Downturns of Cooperation in International Relations?

Since the signing of the General Agreement on Tariffs and Trade (GATT) and the creation of the World Trade Organization (WTO), preferential trade agreements (PTAs) have been an interesting tool to promote international cooperation through the granting of non-reciprocal and/or unilateral tariff preferences by developed countries to developing countries. These international agreements have tended to generate critical trade dependencies for the receiving countries. Due to the circumstances of world trade and due to the lack of interest of the grantors to maintain this type of tariff preference, these developing countries are forced to renegotiate their PTAs into to free trade agreements (FTAs). To demonstrate this, we conducted a qualitative analysis to characterize the behavior of PTAs and their impact on the configuration of FTAs and to obtain indicators and trends. The results suggested a predominance of FTAs and a decline in PTAs. This was done to maintain access to the markets within those granting countries, which also became the main trading partners of these PTA recipient countries.

The Nexus between International Trade, FDI and Income Inequality

Purpose – This paper investigated the effect of international trade affects income inequality. It also compares the different effects between developing and developed countries over the period from 2005 to 2014 for 58 countries. Design/methodology – The econometric estimation was used to identify the relationship between export, import, FDI, GDP, unemployment and income inequality. In this empirical analysis, we utilized a Vector Error Correction (VEC) model using panel data. Findings – The findings show that there is a close correlated between trade and income inequality. The higher export ratio of GDP tends to have a 1.79 times more income inequality in developing countries than in developed countries. The higher import ratio of GDP tends to have a 2.44 times higher income inequality in developing countries than in developed countries. Further, Increasing FDI tend to have an approximately 1.43 times higher income inequality in developing countries than in developed countries. Korea is in the middle of developed and developing countries’ result. Originality/value – To correct the global income inequality regarding trade, developed countries’ proactive trade policies, such as granting preferential tariff benefits to developing countries, are likely to be needed and Income Safety Net in international trade must be taken into account.

Preferential tariffs and development of Norwegian rose import from Africa

PurposeImports of cut roses increased after Norway implemented a preferential tariff scheme for the least developed countries in 2002. When the scheme was extended to more countries in 2008 – among them Kenya – imports exploded. This article studies the subsequent changes in supply channels, import costs and the way Norwegian firms imported.Design/methodology/approachQualitative data, obtained through interviews among five rose importers, are combined with quantitative data for all importing firms and transactions in Norway for the years 2003–2014. These data are analysed in light of recent economic theories on international trade.FindingsWhen Kenya was included in the scheme, imports from Europe and domestic production in Norway decreased substantially. Imports from some African countries with low income levels also declined. Importing under GSP involves high fixed import costs due to stringent procedures. Each firm's imports increased gradually, and over time learning may have facilitated importing. Direct trade with African producers and control over the logistics chain seem to have become more important.Research limitations/implicationsThe analysis builds mainly on data for Norwegian importers, not for African exporters.Practical implicationsSimplifying the GSP procedures could increase Norwegian imports from developing countries and induce establishment of new trade relationships, perhaps also for other products than roses.Originality/valueUsing a mixture of original qualitative data as well as unique, detailed and comprehensive quantitative data, the article provides new insights into how preferential tariff reductions for developing countries’ exports to a developed country affect trade and buyer–supplier relationships.

Trade Policy Uncertainty and Stock Returns

A recent literature has documented large real effects of trade policy uncertainty (TPU) on trade, employment, and investment, but there is little evidence that investors are compensated for bearing such risk. To quantify the risk premium associated with TPU, we exploit quasi-experimental variation in exposure to TPU arising from Congressional votes to revoke China's preferential tariff treatment between 1990 and 2001. A long-short portfolio designed to isolate exposure to TPU earns a risk-adjusted return of 3.6-6.2% per year. This effect is larger in sectors less protected from globalization, and more reliant on inputs from China. Industries more exposed to trade policy uncertainty also had a larger drop in stock prices when the uncertainty began, and more volatile returns around key policy dates. Our results are not explained by the effects of policy uncertainty on expected cash-flows, investors' forecast errors, and import competition from China.

INFLUENCE OF CUSTOMS AND TARIFF REGULATION MEASURES IN FOREIGN TRADE ACTIVITY ON THE FORMATION OF INTERNAL PRICES OF THE EURASIAN ECONOMIC UNION

The influence of customs and tariff regulation measures on the formation of domestic prices of the Eurasian Economic Union, the legal regulation of the application of various mechanisms of customs and tariff regulation, – have been considered. As the analysed measures have been selected: import customs duties, export customs duties, tariff preferences, tariff privileges and tariff quotas. The statistical data on the dynamics of prices for some categories of goods presented on the official website of the Ministry of Economic Development of the Russian Federation and their dependence on the measures of customs and tariff regulation, – have been presented in the article. An analysis of the relationship between the measures of customs and tariff regulation and domestic prices in the Eurasian Economic Union has been carried out on the example of the Russian Federation.

Indonesia – Safeguard on Certain Iron or Steel Products

AbstractIn July 2014, Indonesia implemented a safeguard tariff on galvalume, a type of galvanized flat-rolled steel. Chinese Taipei and Viet Nam challenged the measure, mainly claiming that Indonesia's administering authority failed to satisfy various substantive and procedural requirements of the GATT 1994 and the Safeguards Agreement. The Panel and AB found that the tariff was not a safeguard measure but rather was a simple increase in Indonesia's applied rate. Interestingly, Viet Nam, the largest import supplier, is a member of a free trade area with Indonesia, meaning Viet Nam is not subject to the MFN rate. Viet Nam's preferential tariff treatment likely influenced Indonesia's decision to claim the action was a safeguard. Ironically, even though the Appellate Body essentially rejected its claims, the ruling benefits Viet Nam.