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Potential trade distortion effects of state trading enterprises under the tariff-rate quota scheme

Author

Listed:
  • Yoon, Jung-hyun
  • Lim, Song Soo

Abstract

The paper analyzes the potential trade distortion effects of state trading enterprises (STEs) on soybean imports to Korea. Traditionally, STEs have exercised exclusive rights to import the so-called strategic products, to ensure food security, domestic price stabilization, and import mark-ups. However, STE imports have been criticized on the grounds that industries using soybeans as a raw material are unable to obtain a diverse mix of quality material and cannot exercise the right to choose their own ingredients. Under a theoretical framework, a tariff equivalent of the STE is postulated to equate imports by private firms with imports by the STE. An empirical model is constructed and estimated using annual data spanning 1980-2009. The estimated results show that providing exclusive rights to imports has a negative effect on market access. When the STE pursues consumer welfare, the import-reducing effect turns out to be smaller than that in the producer welfare maximization case.

Suggested Citation

  • Yoon, Jung-hyun & Lim, Song Soo, 2013. "Potential trade distortion effects of state trading enterprises under the tariff-rate quota scheme," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 7, pages 1-19.
  • Handle: RePEc:zbw:ifweej:201331
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    File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2013-31
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    File URL: https://www.econstor.eu/bitstream/10419/78707/1/756334985.pdf
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    References listed on IDEAS

    as
    1. Philip C. Abbott & Linda M. Young, 1999. "Wheat-Importing State Trading Enterprises: Impacts on the World Wheat Market," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(2), pages 119-136, July.
    2. McCorriston, Steve & MacLaren, Donald, 2009. "The Trade and Welfare Effects of State Trading in China," 2009 Conference, August 16-22, 2009, Beijing, China 51203, International Association of Agricultural Economists.
    3. McCorriston, Steve & MacLaren, Donald, 2007. "Do state trading exporters distort trade?," European Economic Review, Elsevier, vol. 51(1), pages 225-246, January.
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    Cited by:

    1. Ahmed, Wasim & Hussain, Safdar & Jafar, Rana Muhammad Sohail & Guang-Ju, Wang & Rabnawaz, Ambar & Saqib, Zulkaif Ahmed & JianZhou, Yang, 2016. "Impacts of Trade Liberalization on Dairy Industry in China," MPRA Paper 70385, University Library of Munich, Germany.

    More about this item

    Keywords

    state trading enterprises; tariff-rate quotas; tariff equivalents; soybeans; sensitive products;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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