On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs

This chapter examines the arguments for and against a uniform tariff structure. Arguments against uniformity are: terms of trade; ‘strategic,’ infant or restructuring industry considerations, revenue or balance of payments purposes, and tariffs as...

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Main Author: Tarr, David G.
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2017
Subjects:
Online Access:http://documents.worldbank.org/curated/en/562241486624901336/On-the-design-of-tariff-policy-a-practical-guide-to-the-arguments-for-and-against-uniform-tariffs
http://hdl.handle.net/10986/26132
id okr-10986-26132
recordtype oai_dc
spelling okr-10986-261322021-04-23T14:04:33Z On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs Tarr, David G. tariffs trade policy uniform tariffs infant industry protection tariff revenues balance of payments WTO tariff uniformity This chapter examines the arguments for and against a uniform tariff structure. Arguments against uniformity are: terms of trade; ‘strategic,’ infant or restructuring industry considerations, revenue or balance of payments purposes, and tariffs as a negotiating tool at the WTO. Arguments in favor of uniformity are: political economy considerations; administrative convenience; and reduction of smuggling and corruption in customs. The author maintain that tariff uniformity is the best choice in practice. A uniform tariff conveys a number of advantages, the most important of which is that if the tariff is uniform, the gains to industry lobbying are much smaller (and may be negative), creating a kind of free-rider problem for the lobbying industry and dramatically reduces the incentive to lobby for protection. Then: (1) the level of protection is likely to be lower (the recent experience of Chile is a dramatic case in point); (2) there is a direct saving of resources from the reduced lobbying; (3) the reduction to the gains from lobbying for protection provides a vastly improved signal to valuable entrepreneurial talent which will thus be encouraged to create better and cheaper products; and (4) the reduction in resources devoted to lobbying will result in less corruption in government, which may have positive spillover effects into other dimensions of government activity. 2017-02-22T20:51:05Z 2017-02-22T20:51:05Z 2000-09 Working Paper http://documents.worldbank.org/curated/en/562241486624901336/On-the-design-of-tariff-policy-a-practical-guide-to-the-arguments-for-and-against-uniform-tariffs http://hdl.handle.net/10986/26132 English en_US CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic tariffs
trade policy
uniform tariffs
infant industry protection
tariff revenues
balance of payments
WTO
tariff uniformity
spellingShingle tariffs
trade policy
uniform tariffs
infant industry protection
tariff revenues
balance of payments
WTO
tariff uniformity
Tarr, David G.
On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs
description This chapter examines the arguments for and against a uniform tariff structure. Arguments against uniformity are: terms of trade; ‘strategic,’ infant or restructuring industry considerations, revenue or balance of payments purposes, and tariffs as a negotiating tool at the WTO. Arguments in favor of uniformity are: political economy considerations; administrative convenience; and reduction of smuggling and corruption in customs. The author maintain that tariff uniformity is the best choice in practice. A uniform tariff conveys a number of advantages, the most important of which is that if the tariff is uniform, the gains to industry lobbying are much smaller (and may be negative), creating a kind of free-rider problem for the lobbying industry and dramatically reduces the incentive to lobby for protection. Then: (1) the level of protection is likely to be lower (the recent experience of Chile is a dramatic case in point); (2) there is a direct saving of resources from the reduced lobbying; (3) the reduction to the gains from lobbying for protection provides a vastly improved signal to valuable entrepreneurial talent which will thus be encouraged to create better and cheaper products; and (4) the reduction in resources devoted to lobbying will result in less corruption in government, which may have positive spillover effects into other dimensions of government activity.
format Working Paper
author Tarr, David G.
author_facet Tarr, David G.
author_sort Tarr, David G.
title On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs
title_short On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs
title_full On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs
title_fullStr On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs
title_full_unstemmed On the Design of Tariff Policy : A Practical Guide to the Arguments For and Against Uniform Tariffs
title_sort on the design of tariff policy : a practical guide to the arguments for and against uniform tariffs
publisher World Bank, Washington, DC
publishDate 2017
url http://documents.worldbank.org/curated/en/562241486624901336/On-the-design-of-tariff-policy-a-practical-guide-to-the-arguments-for-and-against-uniform-tariffs
http://hdl.handle.net/10986/26132
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