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Are duty drawbacks on exports worth the hassle?

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  • Elena Ianchovichina

Abstract

Many countries use duty drawbacks on exports, yet there is no consensus whether countries should embrace or abandon them. The answer depends on countries' development priorities and economic conditions. An increase in the drawback has a positive impact on export competitiveness, but the welfare effect is ambiguous. A welfare increase is more likely if the economy is small with high input tariffs, low initial drawback, low administrative costs and tariff leakages. In China duty drawback removal after meeting its WTO commitments improves welfare, but hurts economic efficiency, export competitiveness, and real incomes. Further liberalization can mitigate these negative effects.

Suggested Citation

  • Elena Ianchovichina, 2007. "Are duty drawbacks on exports worth the hassle?," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 881-913, August.
    • Handle: RePEc:cje:issued:v:40:y:2007:i:3:p:881-913
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    9. Tatsuo Hatta, 2018. "Revenue-Constrained Combination of an Optimal Tariff and Duty Drawback," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 13(1), pages 52-67, March.
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    16. Bussolo,Maurizio & Vargas Da Cruz,Marcio Jose, 2015. "Does input tariff reduction impact firms'exports in the presence of import tariff exemption regimes ?," Policy Research Working Paper Series 7231, The World Bank.
    17. Fabrice Defever & Alejandro Riaño, 2017. "China’s Dual Export Sector," Discussion Papers 2017-01, University of Nottingham, GEP.
    18. Wang, Jiao & Mayes, David & Wan, Guanghua, 2005. "Effects of WTO membership on income distribution and labour movement in China : A CGE analysis," BOFIT Discussion Papers 18/2005, Bank of Finland, Institute for Economies in Transition.
    19. Gnutzmann-Mkrtchyan, Arevik & Van Damme, Isabelle, 2020. "Expired measures, excess duty drawbacks and causation: The Appellate Body report in EU - PET (Pakistan)," Hannover Economic Papers (HEP) dp-665, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
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    More about this item

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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