Handbook on International Trade Policy
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Handbook on International Trade Policy

  • Elgar original reference

Edited by William A. Kerr and James D. Gaisford

The Handbook on International Trade Policy is an insightful and comprehensive reference tool focusing on trade policy issues in the era of globalization. Each specially commissioned chapter deals with important international trade issues, discusses the current literature on the subject, and explores major controversies. The Handbook also directs the interested reader to further sources of information.
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Chapter 20: Tariff Spikes and Tariff Escalation

André M. Nassar, Zuleika Arashiro and Marcos S. Jank

Extract

20 Tariff spikes and tariff escalation André M. Nassar, Zuleika Arashiro and Marcos S. Jank Introduction In this chapter we discuss the concepts of tariff spikes and tariff escalation and suggest methodologies for calculation and measurement. Tariff spikes are usually imposed on products that a country considers sensitive, due to its low competitiveness in that specific sector. Despite the fact that it covers only a small portion of the total tariff lines, they can function as an effective mechanism to limit international trade. For foreign suppliers, tariff spikes affect trade by pressing prices down and restricting market access. Although tariff spikes are broadly recognized as an obstacle to agricultural trade, they had never been fully addressed at the WTO. With the Doha Round negotiations, however, their importance has become evident. Tariff escalation occurs when countries impose tariffs on processed products that are higher than tariffs on raw materials incorporated as inputs. By acquiring raw materials at international prices and protecting domestic processing industries, countries foster domestic industrialization while they limit trade on processed goods. This chapter is organized in four sections, including this introduction and the final remarks. The next section addresses tariff spikes while the third section deals with tariff escalation. Both follow the same structure: conceptualization, methodology and numerical applications. A brief set of concluding comments ends the chapter. Tariff spikes A tariff spike – or tariff peak – can be defined as a tariff that is considerably above a predefined tariff cut...

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