TARIFF VALUATION BASES AND TRADE AMONG DEVELOPING-COUNTRIES - DO DEVELOPING-COUNTRIES DISCRIMINATE AGAINST THEIR OWN TRADE

When establishing the value of imports for tariff assessment, most countries apply duties to a cost-insurance-freight (c.i.f.) value of the traded good. One effect of using a c.i.f. valuation base is to place a disproportionate burden on countries that have relatively higher freight and insurance costs. Using matched tariff and transport cost information for six Latin American countries this study examines the influence of alternative valuation procedures on the level and incidence of tariff protection. The results show that developing countries are generally at a major transport and insurance cost disadvantage (relative to developed countries) on inter-regional trade and that the relatively high Latin American tariffs applied on c.i.f prices further worsen their competitive position. A shift to free-on-board (f.o.b.) valuation would remove the bias against developing country intra-trade. © 1991, Taylor & Francis Group, LLC. All rights reserved.