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GTAP Resource #4212

"A GTAP Model Extension for Specific Tariff"
by Narayanan, Badri and Nelson Villoria

In the standard GTAP model (Hertel, 1997), all import tariffs are treated as ad valorem, i.e., as fractions of prices. In real world, however, the tariff structure is rather complicated, with the prevalent presence of non-ad valorem instruments such as Tariff-Rate-Quotas (TRQs) and specific tariffs. While there have been GTAP model-based applications that deal with TRQs (Elbehri and Pearson, 2005), specific tariffs have not been modeled in this framework so far.
Our objective is to develop a GTAP extension that has additional features to capture the specific tariff effects and illustrate its usefulness with an application. The data sources for this model, apart from GTAP 8 Data Base (Narayanan, McDougall and Aguiar, 2012), is the MacMAP tariff dataset constructed by ITC and CEPII. Guimbard, Jean and Mimouni (2012) outline the methodology used to compute Ad Valorem Equivalents (AVEs) of specific tariff from the raw data on specific tariff. We employ this data to compute the revenue from specific tariff. We consider a stochastic simulation in order to show the effect of the presence of specific tariffs on price stability.

Prevalence of Specific Tariffs

We will provide a list of a few major commodities and country-pairs for which the AVEs of specific tariffs are quite high and dominant. Among these, the size of associated trade flows varies from low to high. For importers who import less of certain commodities from partners facing high AVEs of specific tariffs, it is likely that the specific tariffs are prohibitive, particularly when the partners produce and export these commodities to other countries. In this paper, we conduct an in-depth analysis of the specific tariff dataset to identify a list of commodities and countries. This would form a basis for preparing the GTAP Data Base aggregation needed for the analysis.

Specific tariffs are prevalent in food and agricultural commodities, particularly in beverages and tobacco, milk products...

Resource Details GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Narayanan, B. (4/15/2013)
Updated: Narayanan, B. (4/15/2013)
Visits: 352
- Agricultural policies
- Food prices and food security
- The GTAP Data Base and extensions

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