IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2005-102.html
   My bibliography  Save this paper

Outsourcing Tariff Evasion: A New Explanation for Entrepôt Trade

Author

Listed:
  • International Monetary Fund

Abstract

Traditional explanations for indirect trade carried out through an entrepôt have focused on savings in transport costs and on the role of specialized agents in processing and distribution. We provide an alternative perspective based on the possibility that entrepôts may facilitate tariff evasion. Using data on direct exports to mainland China and indirect exports to it via Hong Kong SAR, we find that the indirect export rate rises with the Chinese tariff rate, even though there is no legal tax advantage to sending goods via Hong Kong SAR. We undertake a number of extensions to rule out plausible alternative hypotheses.

Suggested Citation

  • International Monetary Fund, 2005. "Outsourcing Tariff Evasion: A New Explanation for Entrepôt Trade," IMF Working Papers 2005/102, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2005/102
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=18202
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rauch, James E., 1999. "Networks versus markets in international trade," Journal of International Economics, Elsevier, vol. 48(1), pages 7-35, June.
    2. Raymond Fisman & Shang-Jin Wei, 2004. "Tax Rates and Tax Evasion: Evidence from "Missing Imports" in China," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 471-500, April.
    3. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    4. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470, Elsevier.
    5. Andriamananjara, Soamiely & Arce, Hugh M. & Ferrantino, Michael J., 2004. "Transshipment in the United States," Working Papers 15871, United States International Trade Commission, Office of Economics.
    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. Ferrantino, Michael J. & Wang, Zhi, 2008. "Accounting for discrepancies in bilateral trade: The case of China, Hong Kong, and the United States," China Economic Review, Elsevier, vol. 19(3), pages 502-520, September.

    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. Wei, Shang-Jin & Fisman, Raymond & Moustakerski, Peter, 2007. "Outsourcing Tariff Evasion: A New Explanation for Entrepôt Trade," CEPR Discussion Papers 6078, C.E.P.R. Discussion Papers.
    2. Raymond Fisman & Peter Moustakerski & Shang-Jin Wei, 2008. "Outsourcing Tariff Evasion: A New Explanation for Entrepôt Trade," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 587-592, August.
    3. Dean Yang, 2008. "Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 1-14, February.
    4. Dean Yang, 2008. "Integrity for Hire: An Analysis of a Widespread Customs Reform," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 25-57, February.
    5. Lorenzo Rotunno & Pierre-Louis Vézina, 2012. "Chinese Networks and Tariff Evasion," The World Economy, Wiley Blackwell, vol. 35(12), pages 1772-1794, December.
    6. Cyril Chalendard, 2015. "Use of internal information, external information acquisition and customs underreporting," CERDI Working papers halshs-01179445, HAL.
    7. Javorcik, Beata S. & Narciso, Gaia, 2008. "Differentiated products and evasion of import tariffs," Journal of International Economics, Elsevier, vol. 76(2), pages 208-222, December.
    8. Cyril Chalendard, 2015. "Use of internal information, external information acquisition and customs underreporting," Working Papers halshs-01179445, HAL.
    9. Bilal M. Khan & Karrar Hussain & Zara Liaqat, 2024. "Trade misreporting: Evidence from Pakistani importers," The World Economy, Wiley Blackwell, vol. 47(2), pages 390-414, February.
    10. Mishra, Prachi & Subramanian, Arvind & Topalova, Petia, 2008. "Tariffs, enforcement, and customs evasion: Evidence from India," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1907-1925, October.
    11. Liu, Xuepeng & Shi, Huimin & Ferrantino, Michael, 2016. "Tax evasion through trade intermediation: Evidence from Chinese exporters," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 518-535.
    12. Iacovone, Leonardo & Ferro, Esteban & Pereira-López, Mariana & Zavacka, Veronika, 2019. "Banking crises and exports: Lessons from the past," Journal of Development Economics, Elsevier, vol. 138(C), pages 192-204.
    13. Yuheng Lin & Dooruj Rambaccussing & Yu Zhu, 2024. "The impact of international students in the UK on the cultural goods trade," French Stata Users' Group Meetings 2024 29, Stata Users Group.
    14. Antoine Bouët & Devesh Roy, 2012. "Trade protection and tax evasion: Evidence from Kenya, Mauritius, and Nigeria," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 21(2), pages 287-320, April.
    15. Malgouyres, Clément & Mayer, Thierry & Mazet-Sonilhac, Clément, 2021. "Technology-induced trade shocks? Evidence from broadband expansion in France," Journal of International Economics, Elsevier, vol. 133(C).
    16. Mirco Tonin, 2014. "Reporting import tariffs (and other taxes)," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(1), pages 153-173, February.
    17. Dany Bahar & Andreas Hauptmann & Cem Özgüzel & Hillel Rapoport, 2019. "Migration and Post-Conflict Reconstruction: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia," Working Papers 2019-12, CEPII research center.
    18. Volpe Martincus, Christian & Blyde, Juan, 2013. "Shaky roads and trembling exports: Assessing the trade effects of domestic infrastructure using a natural experiment," Journal of International Economics, Elsevier, vol. 90(1), pages 148-161.
    19. Do, Quy-Toan & Levchenko, Andrei A., 2007. "Comparative advantage, demand for external finance, and financial development," Journal of Financial Economics, Elsevier, vol. 86(3), pages 796-834, December.
    20. Facchini, Giovanni & Liu, Maggie Y. & Mayda, Anna Maria & Zhou, Minghai, 2019. "China's “Great Migration”: The impact of the reduction in trade policy uncertainty," Journal of International Economics, Elsevier, vol. 120(C), pages 126-144.

    More about this item

    Keywords

    WP; tariff rate;

    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:imf:imfwpa:2005/102. 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: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    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.