Trade Policy Analysis in the Presence of Duty Drawbacks
Duty drawback schemes, which typically involve a combination of duty rebates and exemptions, are a feature of many countries' trade regimes. They are used in highly protected developing economies as a means of providing exporters with imported...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2002/05/5135133/trade-policy-analysis-presence-duty-drawbacks http://hdl.handle.net/10986/17424 |
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okr-10986-17424 |
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| recordtype |
oai_dc |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ALLOCATIVE EFFICIENCY CAPITAL GOODS CLOTHING EXPORTS COMPARATIVE ADVANTAGE COMPETITIVENESS CONSUMERS CUSTOMS DEVELOPED COUNTRIES DEVELOPING COUNTRIES DUTY FREE ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC IMPACTS ECONOMIC INTEGRATION ECONOMICS ELASTICITIES ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL RESEARCH EMPLOYMENT EQUILIBRIUM EXCHANGE RATE EXCHANGE RATES EXPERIMENTS EXPORT EXPANSION EXPORT MARKETS EXPORT PRICES EXPORT PROCESSING ZONES EXPORT PROMOTION EXPORT SECTOR EXPORT SUBSIDIES EXPORT TAX EXPORT TAXES EXPORTERS EXPORTS FACTOR DEMAND FOREIGN TRADE FREE TRADE FULL EMPLOYMENT FUNCTIONAL FORMS GENERAL EQUILIBRIUM MODEL IMPERFECT SUBSTITUTES IMPORTS INCOME INCOME DIFFERENTIALS INPUT PRICES INPUT USE INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERNATIONAL MARKETS INTERNATIONAL TRADE MARKET PRICES METALS MULTILATERAL TRADE MULTILATERAL TRADE NEGOTIATIONS PERMITS POLICY ANALYSIS POLICY INSTRUMENTS POLITICAL ECONOMY PRICE SETTING PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH QUOTAS REAL GDP REVENUE COLLECTION SMUGGLING STRUCTURAL CHANGE TARIFF CUTS TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TARIFF REFORMS TAX RATES TAX REVENUE TRADE AGREEMENTS TRADE BALANCE TRADE FLOWS TRADE LIBERALIZATION TRADE MODELS TRADE NEGOTIATIONS TRADE POLICY TRADE REFORM TRADE REFORMS TRADE REGIME TRADE REGIMES TRADE VOLUME URUGUAY ROUND UTILITY FUNCTION VALUE ADDED WORLD TRADE |
| spellingShingle |
ALLOCATIVE EFFICIENCY CAPITAL GOODS CLOTHING EXPORTS COMPARATIVE ADVANTAGE COMPETITIVENESS CONSUMERS CUSTOMS DEVELOPED COUNTRIES DEVELOPING COUNTRIES DUTY FREE ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC IMPACTS ECONOMIC INTEGRATION ECONOMICS ELASTICITIES ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL RESEARCH EMPLOYMENT EQUILIBRIUM EXCHANGE RATE EXCHANGE RATES EXPERIMENTS EXPORT EXPANSION EXPORT MARKETS EXPORT PRICES EXPORT PROCESSING ZONES EXPORT PROMOTION EXPORT SECTOR EXPORT SUBSIDIES EXPORT TAX EXPORT TAXES EXPORTERS EXPORTS FACTOR DEMAND FOREIGN TRADE FREE TRADE FULL EMPLOYMENT FUNCTIONAL FORMS GENERAL EQUILIBRIUM MODEL IMPERFECT SUBSTITUTES IMPORTS INCOME INCOME DIFFERENTIALS INPUT PRICES INPUT USE INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERNATIONAL MARKETS INTERNATIONAL TRADE MARKET PRICES METALS MULTILATERAL TRADE MULTILATERAL TRADE NEGOTIATIONS PERMITS POLICY ANALYSIS POLICY INSTRUMENTS POLITICAL ECONOMY PRICE SETTING PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH QUOTAS REAL GDP REVENUE COLLECTION SMUGGLING STRUCTURAL CHANGE TARIFF CUTS TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TARIFF REFORMS TAX RATES TAX REVENUE TRADE AGREEMENTS TRADE BALANCE TRADE FLOWS TRADE LIBERALIZATION TRADE MODELS TRADE NEGOTIATIONS TRADE POLICY TRADE REFORM TRADE REFORMS TRADE REGIME TRADE REGIMES TRADE VOLUME URUGUAY ROUND UTILITY FUNCTION VALUE ADDED WORLD TRADE Ianchovichina, Elena Trade Policy Analysis in the Presence of Duty Drawbacks |
| relation |
Policy Research Working Paper;No. 3312 |
| description |
Duty drawback schemes, which typically
involve a combination of duty rebates and exemptions, are a
feature of many countries' trade regimes. They are used
in highly protected developing economies as a means of
providing exporters with imported inputs at world prices,
thus increasing their competitiveness, while maintaining the
protection on the rest of the economy. In China, duty
exemptions have been central to the process of trade reform
and have led to a tremendous increase in processed exports
using imported materials. Despite the widespread use and
importance of duty drawbacks, these new trade liberalization
instruments have been given relatively little attention in
empirical multilateral trade liberalization studies. The
paper presents an empirical multi-region general equilibrium
model, in which the effects of policy reform are
differentiated based on the trade orientation of the firms.
The model is useful for analyzing trade liberalization in
the presence of duty drawbacks, assessing whether countries
should introduce or abolish these types of arrangements, and
evaluating the impact of improved duty drawback system
administration. The author's analysis shows that
failure to account for duty exemptions in the case of
China's recent WTO accession will overstate the
increase in China's trade flows by 40 percent, welfare
by 15 percent, and exports of selected sectors by as much as
90 percent. The magnitude of the bias depends on the level
of pre-intervention tariffs and the size of tariff cuts-the
larger the initial distortions and tariff reductions, the
larger the bias when duty drawbacks are ignored. The bias in
the estimates of China's real GDP, trade flows, and
welfare changes due to WTO accession increases more than
three times when China's pre-intervention tariffs are
raised from their 1997 levels to the much higher 1995
levels. These results suggest that trade liberalization
studies-focusing on economies in which protection is high,
import concessions play an important role, and planned
tariff cuts are deep-must treat duty drawbacks explicitly to
avoid serious errors in their estimates of sectoral output,
trade flows, and welfare changes. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Ianchovichina, Elena |
| author_facet |
Ianchovichina, Elena |
| author_sort |
Ianchovichina, Elena |
| title |
Trade Policy Analysis in the Presence of Duty Drawbacks |
| title_short |
Trade Policy Analysis in the Presence of Duty Drawbacks |
| title_full |
Trade Policy Analysis in the Presence of Duty Drawbacks |
| title_fullStr |
Trade Policy Analysis in the Presence of Duty Drawbacks |
| title_full_unstemmed |
Trade Policy Analysis in the Presence of Duty Drawbacks |
| title_sort |
trade policy analysis in the presence of duty drawbacks |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2002/05/5135133/trade-policy-analysis-presence-duty-drawbacks http://hdl.handle.net/10986/17424 |
| _version_ |
1764437004952535040 |
| spelling |
okr-10986-174242021-04-23T14:03:37Z Trade Policy Analysis in the Presence of Duty Drawbacks Ianchovichina, Elena ALLOCATIVE EFFICIENCY CAPITAL GOODS CLOTHING EXPORTS COMPARATIVE ADVANTAGE COMPETITIVENESS CONSUMERS CUSTOMS DEVELOPED COUNTRIES DEVELOPING COUNTRIES DUTY FREE ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC IMPACTS ECONOMIC INTEGRATION ECONOMICS ELASTICITIES ELASTICITY ELASTICITY OF SUBSTITUTION EMPIRICAL RESEARCH EMPLOYMENT EQUILIBRIUM EXCHANGE RATE EXCHANGE RATES EXPERIMENTS EXPORT EXPANSION EXPORT MARKETS EXPORT PRICES EXPORT PROCESSING ZONES EXPORT PROMOTION EXPORT SECTOR EXPORT SUBSIDIES EXPORT TAX EXPORT TAXES EXPORTERS EXPORTS FACTOR DEMAND FOREIGN TRADE FREE TRADE FULL EMPLOYMENT FUNCTIONAL FORMS GENERAL EQUILIBRIUM MODEL IMPERFECT SUBSTITUTES IMPORTS INCOME INCOME DIFFERENTIALS INPUT PRICES INPUT USE INTERMEDIATE GOODS INTERMEDIATE INPUTS INTERNATIONAL MARKETS INTERNATIONAL TRADE MARKET PRICES METALS MULTILATERAL TRADE MULTILATERAL TRADE NEGOTIATIONS PERMITS POLICY ANALYSIS POLICY INSTRUMENTS POLITICAL ECONOMY PRICE SETTING PRODUCERS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH QUOTAS REAL GDP REVENUE COLLECTION SMUGGLING STRUCTURAL CHANGE TARIFF CUTS TARIFF RATE TARIFF RATES TARIFF REDUCTIONS TARIFF REFORMS TAX RATES TAX REVENUE TRADE AGREEMENTS TRADE BALANCE TRADE FLOWS TRADE LIBERALIZATION TRADE MODELS TRADE NEGOTIATIONS TRADE POLICY TRADE REFORM TRADE REFORMS TRADE REGIME TRADE REGIMES TRADE VOLUME URUGUAY ROUND UTILITY FUNCTION VALUE ADDED WORLD TRADE Duty drawback schemes, which typically involve a combination of duty rebates and exemptions, are a feature of many countries' trade regimes. They are used in highly protected developing economies as a means of providing exporters with imported inputs at world prices, thus increasing their competitiveness, while maintaining the protection on the rest of the economy. In China, duty exemptions have been central to the process of trade reform and have led to a tremendous increase in processed exports using imported materials. Despite the widespread use and importance of duty drawbacks, these new trade liberalization instruments have been given relatively little attention in empirical multilateral trade liberalization studies. The paper presents an empirical multi-region general equilibrium model, in which the effects of policy reform are differentiated based on the trade orientation of the firms. The model is useful for analyzing trade liberalization in the presence of duty drawbacks, assessing whether countries should introduce or abolish these types of arrangements, and evaluating the impact of improved duty drawback system administration. The author's analysis shows that failure to account for duty exemptions in the case of China's recent WTO accession will overstate the increase in China's trade flows by 40 percent, welfare by 15 percent, and exports of selected sectors by as much as 90 percent. The magnitude of the bias depends on the level of pre-intervention tariffs and the size of tariff cuts-the larger the initial distortions and tariff reductions, the larger the bias when duty drawbacks are ignored. The bias in the estimates of China's real GDP, trade flows, and welfare changes due to WTO accession increases more than three times when China's pre-intervention tariffs are raised from their 1997 levels to the much higher 1995 levels. These results suggest that trade liberalization studies-focusing on economies in which protection is high, import concessions play an important role, and planned tariff cuts are deep-must treat duty drawbacks explicitly to avoid serious errors in their estimates of sectoral output, trade flows, and welfare changes. 2014-03-27T19:40:57Z 2014-03-27T19:40:57Z 2002-05 http://documents.worldbank.org/curated/en/2002/05/5135133/trade-policy-analysis-presence-duty-drawbacks http://hdl.handle.net/10986/17424 English en_US Policy Research Working Paper;No. 3312 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |