An assessment of import tariff costs for Italian exporting firms
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An assessment of import tariff costs for Italian exporting firms Ilaria Fusacchia1 · Alessandro Antimiani2 · Luca Salvatici1 Received: 31 December 2019 / Accepted: 28 September 2020 © The Author(s) 2020
Abstract Since production and trade are increasingly organized within global value chains (GVCs), assessing who effectively pays the cost of protection is not straightforward and since productive processes are internationally fragmented, quantifying the effects of trade policy requires an enhanced analytical framework that takes international input–output linkages into account to assess the implications trade costs have on competitiveness at national and sector levels. This paper defines a new synthetic measure of trade protection based on the value added in trade, capturing the effects that the tariff structure has on exporting firms that rely on imported intermediate inputs. The index, defined in a general equilibrium framework, provides a theoretically sound protection measurement in the context of GVCs. We assess trade protection by computing protection indexes at the bilateral level on both gross imports and imports to exports using the Global Trade Analysis Project computable general equilibrium model. These indexes are used to investigate the relationship between the European Union tariffs and integration of the Italian GVCs. In the case of Italy, imports to exports are overall less protected than gross imports with significant differences at the sector level. Despite the low levels of nominal protection, industrial sectors play a central role in explaining our results. EU tariffs mostly affect Italian exporting firms in the case of chemical products, wearing apparel and leather products. Keywords Trade policies · Trade restrictiveness index (TRI) · Global trade analysis project (GTAP) · Global value chains (GVCs) · Value added trade JEL Codes F13 · F17 · D58
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s4088 8-020-00202-8) contains supplementary material, which is available to authorized users. * Ilaria Fusacchia [email protected] Extended author information available on the last page of the article
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Economia Politica
1 Introduction The long European stagnation following the 2008–2009 global crisis has fuelled renewed debate about the importance of a strong industrial base to sustain and strengthen recovery and foster competitiveness. The debate is going to be even more important in the coming months due to the economic consequences of the COVID-19 epidemic. The design of appropriate trade policy measures to achieve this goal requires a full understanding of the characteristics of the current manufacturing production paradigm in terms of organization of international supply chains and production networks and clear identification of the main linkages between countries and sectors. About one half of global exchanges is related to global value chains (GVCs). The associated increase in trade in intermediates (that is
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