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Chapter 8 Analysis of a Tariff

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1 Chapter 8 Analysis of a Tariff

2 8.1 Introduction Chapter Objective
To understand the effects of import tariffs on the imposing country and the world.

3 Contents Purposes for imposing a tariff Types of Tariffs
Ways to measure tariff levels Effects of a tariff on a small country Effects of a tariff on a large country

4 8.2 The Evolvement of Tariffs
What is a tariff ? The origin of tariffs: Tarifs The Evolvement of Tariffs

5 8.3 Why would a Country Impose a Tariff? Discourage consumption
Generate revenue Reduce deficit in the balance of payment Protect domestic industries

6 8.4 Types of Tariffs Specific Tariffs 从量税 Ad Valorem Tariffs 从价税

7 Import Tariffs MFN rates Export Tariffs Transit Duties 过境税
Ordinary rates Export Tariffs Transit Duties 过境税

8 Import Surtaxes General Import Surtaxes Specific Import Surtaxes
Anti-dumping Duties 反倾销税 Countervailing Duties 反补贴税

9 Variable Levy 差价税 Common Agricultural Policy 共同农业政策
Target Price Threshold Price Variable Levy = Threshold Price - CIF Price

10 Preferential duties Lomé Convention 1975 洛美协定 ASEAN 东盟

11 Generalized System of Preferences 普遍优惠制
History UNCTAD 联合国贸发会议 Geneva New Delhi The Group of 77

12 Preferences and Coverage
Recipient Countries Products Covered Magnitude of Preference

13 GSP and China

14 8.5 Customs Tariff and Commodity Classification
海关税则 Tariff No. Description of Goods Rate of Duty

15 Commodity Classification
Customs Cooperation Council Nomenclature (CCCN) 海关合作理事会税则商品目录 Standard International Trade Classification 国际贸易标准分类 (SITIC) Harmonized Commodity Description and Coding System ( HS ) 商品列名与编码协调制度

16 第76章 铝及其制品 7601 未锻轧铝 7601.1000 非合金铝 7601.2000 铝合金 7602 废铝碎料
第76章 铝及其制品 未锻轧铝 非合金铝 铝合金 废铝碎料 废铝碎料 铝粉及片状粉末 非片状粉末 片状粉末

17 8.6 Ways to Measure Tariff Level
simple average 简单平均 weighted average 加权平均

18 8.7 What Happens When a Small Country Imposes an Import Tariff?

19 Consumer Surplus 消费者剩余
PY Consumer Surplus P0 Expenditure D O Y Y

20 Producer Surplus 生产者剩余
PY Producer Surplus S P0 Costs O Y Y

21 PY Sd H E P0 V G P1+t SW+t a b c d P1 SW Z F Dd O Y Y4 Y0 Y Y Y

22 Loss in Consumer Surplus: a + b + c + d
a : Redistribution Effect c : Revenue Effect b : Production Effect A deadweight loss from inefficient domestic production d : Consumption Effect A deadweight loss from higher price and lower consumption volume b+d : Total deadweight losses

23 8.8 What Happens When a Large Country Imposes an Import Tariff?

24 PY Sd Sd+W+t b t Sd+W d P1 a c P0 P2 e Dd O Y1 Y Y2 Y Y

25 a , b, c, d The same as in the small country case. e : terms-of-trade effect Tariff revenue from the exporting country

26 Net Welfare effect If e>b+d, domestic welfare If e<b+d, domestic welfare In any case, world welfare

27 Nationally Optimal Tariff
t*=1/Sm Sm: Price elasticity of foreign export supply curve

28 Nationally Optimal Tariff
Beggar-thy-neighbor policy Tariff war

29 8.9 The Effective Rate of Protection
Under free trade Domestic Value-added (V) V0 = Pf – Pi f : imported finished product i : imported inputs

30 V0 = Pf – Pi Under tariff protection V1 = Pf (1+tf) – Pi (1+ti) If V1 > V0 , Protection is effective. ERP = = a= Pi / Pf V1 - V0 tf – ati V0 1- a

31 ERP and Tariff Structure
Suppose Country A imports X, Pf =20, Pi =15, a=3/4,. If tf=10% ,ti=0%; ERP=40%. If tf=10% ,ti=10%; ERP=10%. If tf=10% ,ti=20%; ERP=-20%.

32 ERP and Tariff Structure
If tf > ti , ERP> tf . If tf = ti , ERP= tf = ti . If tf < ti , ERP< tf .

33 Summary Effects of import tariffs Small country Large country
Effective rate of protection

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