Agriculture Reference
In-Depth Information
the general tariff reforms for the period 1997-2001. This database emerges
from a model smulaton n whch the only shocks are the documented
changes in tariffs by sector. The pattern of these inter-industry flows
ndcates the magntude of the expendtures on ntermedate nputs
and on import tariffs by firms in each industry and the proportions of
their respective outputs that are exported. Second, the proportions of
expendtures on mported (as dstnct from home-produced) ntermedate
inputs are calculated, along with the average proportions of these that enter
export producton. Expendtures on tarffs for export producton follow for
each industry. Finally, this sum is returned through the implementation of
equvalent export subsdes (or reduced export taxes).
The application offered here is one in which the manufacturing sector,
to which duty drawbacks primarily apply, is aggregated into only 'light
manufacturng' and 'other manufacturng'. At ths level of aggregaton
there s a consderable volume of ntra-ndustry trade. A substantal
share of the cost of manufactured exports takes the form of expendture
on manufactured intermediate inputs, of which a significant volume is
imported (Table A9.2). In these circumstances, the use of export subsidies
to proxy duty drawbacks s crude but t offers the followng realstc
consequences.
The export industry expands in response to its greater profitability
The prce of the ndustry's product rses n the home market. Although
this effect is not realistic, it has the realistic consequence that there
s substtuton n favour of mports n ntermedate consumpton and
so the home market share n ntermedate nputs falls
The government s dened the revenue that would have come from
the tariffs on intermediates used for export production, in this case
by gvng t back n the form of export subsdes.
The 2001 export tax rates used are thus modified to take account of
the ad valorem equvalent export subsdy rates that are proxes for duty
drawbacks. The resultng pattern of equvalent trade taxes and subsdes
is listed in Table A9.3. The most substantial effect of the duty drawbacks
s n the manufacturng sector wth the equvalent export tax rate on lght
manufacturng fallng by about a thrd and heavy manufacturng recevng
an equvalent export subsdy of 1 per cent. In the 1990s 'other crops' and
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