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2021 ; 38
(1
): 31-56
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An assessment of import tariff costs for Italian exporting firms
#MMPMID35422601
Fusacchia I
; Antimiani A
; Salvatici L
Econ Polit (Bologna)
2021[]; 38
(1
): 31-56
PMID35422601
show ga
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.