IDEAS home Printed from https://ideas.repec.org/h/wsi/wschap/9789814551434_0002.html
   My bibliography  Save this book chapter

Welfare Costs Of U.S. Quotas In Textiles, Steel And Autos

In: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects

Author

Listed:
  • Jaime de Melo
  • David Tarr

Abstract

This paper quantifies the welfare effects and resource shifts that would occur if U.S. quantitative restrictions (QRs) in textiles, steel and autos were removed. Estimates are derived from a static ten-sector general equilibrium model of the U.S. economy. The welfare loss from the QRs is estimated at approximately U.S. $20 billion (1984 dollars) Due to the high rent transfer component of QRs (about 75%), the average across-the-board tariff equivalent of QRs (in terms of welfare costs) is estimated at about 20%, a rate which predates the early days of multilateral tariff reduction.

Suggested Citation

  • Jaime de Melo & David Tarr, 2014. "Welfare Costs Of U.S. Quotas In Textiles, Steel And Autos," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 2, pages 39-47, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814551434_0002
    as

    Download full text from publisher

    File URL: https://www.worldscientific.com/doi/pdf/10.1142/9789814551434_0002
    Download Restriction: Ebook Access is available upon purchase.
    File URL: https://www.worldscientific.com/doi/abs/10.1142/9789814551434_0002
    Download Restriction: Ebook Access is available upon purchase.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Baldwin, Robert E. & Mutti, John H. & Richardson, J. David, 1980. "Welfare effects on the United States of a significant multilateral tariff reduction," Journal of International Economics, Elsevier, vol. 10(3), pages 405-423, August.
    2. Harris, Richard, 1984. "Applied General Equilibrium Analysis of Small Open Economies with Scale Economies and Imperfect Competition," American Economic Review, American Economic Association, vol. 74(5), pages 1016-1032, December.
    3. John Whalley, 1984. "Trade Liberalization among Major World Trading Areas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262231204, April.
    4. Robert C. Feenstra, 1988. "Quality Change Under Trade Restraints in Japanese Autos," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(1), pages 131-146.
    5. Jones, Ronald W & Berglas, Eitan, 1977. "Import Demand and Export Supply: An Aggregation Theorem," American Economic Review, American Economic Association, vol. 67(2), pages 183-187, March.
    6. Anderson, James E, 1985. "The Relative Inefficiency of Quotas: The Cheese Case," American Economic Review, American Economic Association, vol. 75(1), pages 178-190, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. de Melo, Jaime & Tarr, David, 1990. "Do wage distortions justify protection in the U.S. auto and steel industries?," Policy Research Working Paper Series 517, The World Bank.
    2. Steven J. Matusz & David G. Tarr, 2017. "Adjusting To Trade Policy Reform," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 4, pages 77-114, World Scientific Publishing Co. Pte. Ltd..
    3. Rutherford, Thomas F. & Tarr, David G., 1998. "Trade liberalization and endogenous growth in a small open economy : a quantitative assessment," Policy Research Working Paper Series 1970, The World Bank.
    4. Kenneth A. Reinert, 1993. "Textile and Apparel Protection in the United States: A General Equilibrium Analysis," The World Economy, Wiley Blackwell, vol. 16(3), pages 359-376, May.
    5. Meysut Saygili & Ralph Peters & Christian Knebel, 2018. "African Continental Free Trade Area: Challenges and Opportunities of Tariff Reductions," UNCTAD Blue Series Papers 82, United Nations Conference on Trade and Development.
    6. Robert W. McGee, 1998. "Some Ethical Issues for Accountants in Antidumping Trade Cases: An Examination of Recent Case Studies With Emphasis on Latin America," International Trade 9805008, University Library of Munich, Germany.
    7. Vinokurov, Evgeny & Demidenko, Mikhail & Pelipas, Igor & Tochitskaya, Irina & Shymanovich, Gleb & Lipin, Andrey & Movchan, Veronika, 2015. "Estimating the Economic Effects of Reducing Non-Tariff Barriers in the EEU," MPRA Paper 68058, University Library of Munich, Germany.
    8. Thomas F. Rutherford & David G. Tarr, 2017. "Trade liberalization, product variety and growth in a small open economy: a quantitative assessment," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 17, pages 389-414, World Scientific Publishing Co. Pte. Ltd..
    9. Morris Morkre & David Tarr, 2014. "Reforming Hungarian Agricultural Trade Policy: A Quantitative Evaluation," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 3, pages 49-74, World Scientific Publishing Co. Pte. Ltd..
    10. Balistreri, Edward J. & Tarr, David G., 2016. "Comparison of Welfare Results from Trade Liberalization in the Armington, Krugman and Melitz Models: Impacts with features of real economies," Conference papers 332773, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Jaime de Melo & David Tarr, 2015. "VERs under imperfect competition and foreign direct investment: A case study of the US–Japan auto VER," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 22, pages 461-483, World Scientific Publishing Co. Pte. Ltd..
    12. Jaime de Melo & Julie Stanton & David Tarr, 2015. "Revenue-Raising Taxes: General Equilibrium Evaluation of Alternative Taxation in U.S. Petroleum Industries," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 24, pages 505-529, World Scientific Publishing Co. Pte. Ltd..
    13. Blonigen, Bruce A. & Liebman, Benjamin H. & Pierce, Justin R. & Wilson, Wesley W., 2013. "Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas," Journal of International Economics, Elsevier, vol. 89(2), pages 369-378.
    14. Bruce A. Blonigen & Benjamin H. Liebman & Justin R. Pierce & Wesley W. Wilson, 2012. "Are all trade policies created equal? empirical evidence for nonequivalent market power effects of tariffs and quotas," Finance and Economics Discussion Series 2012-17, Board of Governors of the Federal Reserve System (U.S.).
    15. Bacchetta, Marc & Jansen, Marion, 2003. "Adjusting to trade liberalization: The role of policy, institutions and WTO Disciplines," WTO Special Studies, World Trade Organization (WTO), Economic Research and Statistics Division, volume 7, number 7.
    16. Balistreri, Edward J. & Tarr, David G., 2017. "Market Structure and the impact of RCEP in The Philippines: What are the Differences between Melitz, Krugman and Armington Models," Conference papers 332835, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    17. Peter B. Dixon, 2006. "Evidence-based Trade Policy Decision Making in Australia and the Development of Computable General Equilibrium Modelling," Centre of Policy Studies/IMPACT Centre Working Papers g-163, Victoria University, Centre of Policy Studies/IMPACT Centre.
    18. Peter Walkenhorst, 2004. "Liberalising Trade in Textiles and Clothing: A Survey of Quantitative Studies," International Trade 0401007, University Library of Munich, Germany.
    19. Jensen, Jesper & Tarr, David, 2002. "Trade, foreign exchange, and energy policies in the Islamic Republic of Iran : reform agenda, economic implications, and impact on the poor," Policy Research Working Paper Series 2768, The World Bank.
    20. Kala Krishna & Kathleen Hogan & Phillip Swagel, 1989. "The Non-Optimality of Optimal Trade Policy: The U.S. Automobile Indust ry Revisited, 1979-1985," NBER Working Papers 3118, National Bureau of Economic Research, Inc.
    21. Balistreri, Edward J. & Tarr, David G., 2020. "Comparison of deep integration in the Melitz, Krugman and Armington models: The case of The Philippines in RCEP," Economic Modelling, Elsevier, vol. 85(C), pages 255-271.
    22. Porto, Guido, 2012. "The cost of adjustment to green growth policies : lessons from trade adjustment costs," Policy Research Working Paper Series 6237, The World Bank.
    23. World Bank, 2001. "Trade and Foreign Exchange Policies in Iran : Reform Agenda, Economic Implications and Impact on the Poor," World Bank Publications - Reports 15478, The World Bank Group.
    24. Sam Laird & David Vanzetti & Santiago Fernández de Córdoba, 2005. "Smoke And Mirrors: Making Sense Of The Wto Industrial Tariff Negotiations," UNCTAD Blue Series Papers 30, United Nations Conference on Trade and Development.
    25. Gallaway, Michael P. & Blonigen, Bruce A. & Flynn, Joseph E., 1999. "Welfare costs of the U.S. antidumping and countervailing duty laws," Journal of International Economics, Elsevier, vol. 49(2), pages 211-244, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Robert C. Feenstra, 1992. "How Costly Is Protectionism?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 159-178, Summer.
    2. Kym Anderson, 2005. "On the Virtues of Multilateral Trade Negotiations," The Economic Record, The Economic Society of Australia, vol. 81(255), pages 414-438, December.
    3. Jaime de Melo & David Tarr, 2015. "VERs under imperfect competition and foreign direct investment: A case study of the US–Japan auto VER," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 22, pages 461-483, World Scientific Publishing Co. Pte. Ltd..
    4. Lewis, Jeffrey D. & Robinson, Sherman & Wang, Zhi, 1995. "Beyond the Uruguay Round: The implications of an Asian free trade area," China Economic Review, Elsevier, vol. 6(1), pages 35-90.
    5. Lutz, Stefan H., 2002. "The Effects of Quotas on Vertical Intra-Industry Trade," ZEW Discussion Papers 02-61, ZEW - Leibniz Centre for European Economic Research.
    6. Hazledine, Tim, 1989. "Industrial Organisation Foundations Of Trade Policy Modelling," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 33(1), pages 1-19, April.
    7. repec:kap:iaecre:v:11:y:2005:i:2:p:163-173 is not listed on IDEAS
    8. Harris, Richard G. & Kwakwa, Victoria, 1989. "The 1988 Canada-United States Free Trade Agreement: A Dynamic General Equilibrium Evaluation of the Transition Effects," Queen's Institute for Economic Research Discussion Papers 275215, Queen's University - Department of Economics.
    9. Goolsbee, Austan, 2004. "Taxes and the quality of capital," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 519-543, March.
    10. de Melo, Jaime & Robinson, Sherman, 1989. "Product differentiation and foreign trade in CGE models of small economies," Policy Research Working Paper Series 144, The World Bank.
    11. Stefan Lutz, 2005. "The Effect of Quotas on Domestic Product Price and Quality," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 11(2), pages 163-173, May.
    12. de Melo, Jaime & Tarr, David, 1990. "Do wage distortions justify protection in the U.S. auto and steel industries?," Policy Research Working Paper Series 517, The World Bank.
    13. Fernand Martin, 1991. "Measuring the Impact of Free Trade: Local Analysis versus Regional and National Models," International Regional Science Review, , vol. 14(1), pages 1-14, April.
    14. Don Fullerton & Gilbert E. Metcalf, 2002. "Environmental Controls, Scarcity Rents, and Pre-existing Distortions," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 26, pages 504-522, Edward Elgar Publishing.
    15. Robert Z. Lawrence & Lawrence Edward, 2010. "Do Developed and Developing Countries Compete Head to Head in High Tech?," Working Paper Series WP10-8, Peterson Institute for International Economics.
    16. C. Michael Aho & Thomas O. Bayard, 1984. "Costs and Benefits of Trade Adjustment Assistance," NBER Chapters, in: The Structure and Evolution of Recent US Trade Policy, pages 153-194, National Bureau of Economic Research, Inc.
    17. Jae W. Chung, 1998. "Effects of U.S. Trade Remedy Law Enforcement under Uncertainty: The Case of Steel," Southern Economic Journal, John Wiley & Sons, vol. 65(1), pages 151-159, July.
    18. Lucy Rees & Rod Tyers, 2004. "On the Robustness of Short Run Gains from Trade Reform," CEPR Discussion Papers 474, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    19. Bouët, Antoine & Fontagné, Lionel & Mimouni, Mondher & Von Kirchbach, Friedrich, 2002. "Market Access Maps for GTAP: A Bilateral Measure of Merchandise Trade Protection," Conference papers 331018, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    20. Lee, Hiro & van der Mensbrugghe, Dominique, 2005. "The impact of the US safeguard measures on Northeast Asian producers: General equilibrium assessments," MPRA Paper 82288, University Library of Munich, Germany.
    21. Blonigen, Bruce A. & Liebman, Benjamin H. & Pierce, Justin R. & Wilson, Wesley W., 2013. "Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas," Journal of International Economics, Elsevier, vol. 89(2), pages 369-378.

    More about this item

    Keywords

    International Trade Policy; Developing Countries; Computable General Equilibrium; World Bank; Regional Trade Policy; Services Liberalization; Foreign Direct Investment; Trade and Poverty;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F00 - International Economics - - General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:wschap:9789814551434_0002. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscientific.com/page/worldscibooks .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.