Import tariffs and export subsidies in the World Trade Organization : a small-country approach

Date

2012-09

Journal Title

Journal ISSN

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Publisher

ARTNeT, United Nations ESCAP

Abstract

This paper proposes a simple small-country model to explain the asymmetric treatment between import tariffs and export subsidies in WTO. In the model, the anticipation of protection creates inefficient investment. A government may choose to commit to a tariff prohibition agreement and/or export subsidy prohibition agreement in order to eliminate this anticipation and achieve a social welfare gain. However, when committing to these agreements, the government loses political contributions collected from protectionism. Governments choose protection rates (import tariffs/export subsidies) to maximize a weighted sum of social welfare and lobbying contributions.

Description

Keywords

EXPORT SUBSIDIES, TRADE BARRIERS, GOVERNMENT ROLE, IMPORT RESTRICTIONS, POLITICAL ASPECTS, CAPITAL MOVEMENTS, ECONOMETRIC ANALYSIS, TRADE AGREEMENTS, INTERNATIONAL TRADE, WTO

Citation

DOI