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Edited by William A. Kerr and James D. Gaisford
Chapter 20: Tariff Spikes and Tariff Escalation
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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