Differentiated Products and Evasion of Import Tariffs
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World Bank, Washington, DC
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Emerging literature has demonstrated
some unique characteristics of trade in differentiated
products. This paper contributes to the literature by
postulating that differentiated products may be subject to
greater tariff evasion due to the difficulties associated
with assessing their quality and price. Using product-level
data on trade between Germany and 10 Eastern European
countries during 1992-2003, the authors find empirical
support for this hypothesis. They show that the trade gap,
defined as the discrepancy between the value of exports
reported by Germany and the value of imports from Germany
reported by the importing country, is positively related to
the level of tariff in 8 out of 10 countries. Further, the
authors show that the responsiveness of the trade gap to the
tariff level is greater for differentiated products than for
homogeneous goods. A one-percentage-point increase in the
tariff rate is associated with a 0.6 percent increase in the
trade gap in the case of homogeneous products and a 2.1
percent increase in the case of differentiated products.
Finally, the data indicate that greater tariff evasion
observed for differentiated products tends to take place
through misrepresentation of the import prices.
Palabras clave
AGRICULTURAL PRODUCTS, AVERAGE TARIFF, AVERAGE TRADE, BILATERAL TRADE, BUSINESS ENVIRONMENT, COMMODITIES, COUNTRY TARIFF, CUSTOMS CLEARANCE, CUSTOMS CLEARANCE PROCEDURES, DIFFERENTIATED GOODS, EXPORT _ QUANTITY, EXPORT PRICES, FOREIGN DIRECT INVESTMENT, FOREIGN SUPPLIERS, HIGH TARIFF PRODUCTS, HOME MARKET, IMPORT DUTIES, IMPORT DUTY, IMPORT PRICES, IMPORT TARIFFS, INTERNATIONAL AGREEMENTS, POLITICAL ECONOMY, PREFERENTIAL TARIFF, PREFERENTIAL TRADE, PREFERENTIAL TRADE AGREEMENTS, PRICE OF IMPORTS, PRICED, PRODUCT DIFFERENTIATION, TARIFF BARRIERS, TARIFF DATA, TARIFF LEVELS, TARIFF RATE, TARIFF RATES, TARIFF STRUCTURE, TRADE DATA, TRADE FLOWS, TRADE LIBERALIZATION, TRADE RELATIONSHIPS, TRADING PARTNER, TRANSPORT COSTS, VALUE OF EXPORTS, VALUE OF IMPORTS, WHOLESALERS, WORLD TRADE, WORLD TRADE ORGANIZATION, ZERO TARIFF, ZERO TARIFFS