Publication:
Trade Policy Analysis in the Presence of Duty Drawbacks

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dc.contributor.authorIanchovichina, Elena
dc.date.accessioned2014-03-27T19:40:57Z
dc.date.available2014-03-27T19:40:57Z
dc.date.issued2002-05
dc.description.abstractDuty 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.en
dc.identifierhttp://documents.worldbank.org/curated/en/2002/05/5135133/trade-policy-analysis-presence-duty-drawbacks
dc.identifier.doi10.1596/1813-9450-3312
dc.identifier.urihttps://hdl.handle.net/10986/17424
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 3312
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectALLOCATIVE EFFICIENCY
dc.subjectCAPITAL GOODS
dc.subjectCLOTHING EXPORTS
dc.subjectCOMPARATIVE ADVANTAGE
dc.subjectCOMPETITIVENESS
dc.subjectCONSUMERS
dc.subjectCUSTOMS
dc.subjectDEVELOPED COUNTRIES
dc.subjectDEVELOPING COUNTRIES
dc.subjectDUTY FREE
dc.subjectECONOMIC ANALYSIS
dc.subjectECONOMIC DEVELOPMENT
dc.subjectECONOMIC IMPACTS
dc.subjectECONOMIC INTEGRATION
dc.subjectECONOMICS
dc.subjectELASTICITIES
dc.subjectELASTICITY
dc.subjectELASTICITY OF SUBSTITUTION
dc.subjectEMPIRICAL RESEARCH
dc.subjectEMPLOYMENT
dc.subjectEQUILIBRIUM
dc.subjectEXCHANGE RATE
dc.subjectEXCHANGE RATES
dc.subjectEXPERIMENTS
dc.subjectEXPORT EXPANSION
dc.subjectEXPORT MARKETS
dc.subjectEXPORT PRICES
dc.subjectEXPORT PROCESSING ZONES
dc.subjectEXPORT PROMOTION
dc.subjectEXPORT SECTOR
dc.subjectEXPORT SUBSIDIES
dc.subjectEXPORT TAX
dc.subjectEXPORT TAXES
dc.subjectEXPORTERS
dc.subjectEXPORTS
dc.subjectFACTOR DEMAND
dc.subjectFOREIGN TRADE
dc.subjectFREE TRADE
dc.subjectFULL EMPLOYMENT
dc.subjectFUNCTIONAL FORMS
dc.subjectGENERAL EQUILIBRIUM MODEL
dc.subjectIMPERFECT SUBSTITUTES
dc.subjectIMPORTS
dc.subjectINCOME
dc.subjectINCOME DIFFERENTIALS
dc.subjectINPUT PRICES
dc.subjectINPUT USE
dc.subjectINTERMEDIATE GOODS
dc.subjectINTERMEDIATE INPUTS
dc.subjectINTERNATIONAL MARKETS
dc.subjectINTERNATIONAL TRADE
dc.subjectMARKET PRICES
dc.subjectMETALS
dc.subjectMULTILATERAL TRADE
dc.subjectMULTILATERAL TRADE NEGOTIATIONS
dc.subjectPERMITS
dc.subjectPOLICY ANALYSIS
dc.subjectPOLICY INSTRUMENTS
dc.subjectPOLITICAL ECONOMY
dc.subjectPRICE SETTING
dc.subjectPRODUCERS
dc.subjectPRODUCTION FUNCTION
dc.subjectPRODUCTIVITY
dc.subjectPRODUCTIVITY GROWTH
dc.subjectQUOTAS
dc.subjectREAL GDP
dc.subjectREVENUE COLLECTION
dc.subjectSMUGGLING
dc.subjectSTRUCTURAL CHANGE
dc.subjectTARIFF CUTS
dc.subjectTARIFF RATE
dc.subjectTARIFF RATES
dc.subjectTARIFF REDUCTIONS
dc.subjectTARIFF REFORMS
dc.subjectTAX RATES
dc.subjectTAX REVENUE
dc.subjectTRADE AGREEMENTS
dc.subjectTRADE BALANCE
dc.subjectTRADE FLOWS
dc.subjectTRADE LIBERALIZATION
dc.subjectTRADE MODELS
dc.subjectTRADE NEGOTIATIONS
dc.subjectTRADE POLICY
dc.subjectTRADE REFORM
dc.subjectTRADE REFORMS
dc.subjectTRADE REGIME
dc.subjectTRADE REGIMES
dc.subjectTRADE VOLUME
dc.subjectURUGUAY ROUND
dc.subjectUTILITY FUNCTION
dc.subjectVALUE ADDED
dc.subjectWORLD TRADE
dc.titleTrade Policy Analysis in the Presence of Duty Drawbacksen
dspace.entity.typePublication
okr.crossref.titleTrade Policy Analysis in the Presence of Duty Drawbacks
okr.date.doiregistration2025-04-10T10:30:25.438183Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2002/05/5135133/trade-policy-analysis-presence-duty-drawbacks
okr.globalpracticeTrade and Competitiveness
okr.guid736231468761960804
okr.identifier.doi10.1596/1813-9450-3312
okr.identifier.externaldocumentum000090341_20040917145608
okr.identifier.internaldocumentum5135133
okr.identifier.reportWPS3312
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/09/17/000090341_20040917145608/Rendered/PDF/wps3312.pdfen
okr.topicInternational Economics and Trade::World Trade Organization
okr.topicInternational Economics and Trade::Free Trade
okr.topicInternational Economics and Trade::Trade Policy
okr.topicInternational Economics and Trade::Export Competitiveness
okr.topicEconomic Theory and Research
okr.topicInternational Economics and Trade::Rules of Origin
okr.topicEnvironmental Economics and Policies
okr.unitOff of Sr VP Dev Econ/Chief Econ (DECVP)
okr.volume1 of 1
relation.isAuthorOfPublication814995f9-044c-566a-9355-890a6ac260ae
relation.isAuthorOfPublication.latestForDiscovery814995f9-044c-566a-9355-890a6ac260ae
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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