Impact of Para-Tariffs in Sri Lanka: The Case for Improved Transparency in Border Taxes

25 Pages Posted: 24 Jul 2020 Last revised: 3 Aug 2020

Date Written: July 10, 2020

Abstract

In an era of global trade dominated by global value chains, much of the recent empirical
analysis has focused on the impacts of non-tariff barriers, behind-the-border measures, and other
transaction costs on integration. Though most countries have substantially lowered their Most Favored Nation tariffs, evidence is surfacing from developing countries that other border taxes are on the rise, increasing the level and complexity of protection. Para-tariffs are often disguised, under-reported, and, in some cases, total protection levels exceed committed tariff bindings under the WTO. A case study of Sri Lanka, using partial and general equilibrium modelling, shows that the phased reduction of para-tariffs and unification with existing customs tariff structures could boost domestic production, promote exports, raise employment and GDP, while simplifying tariff administration. Increasing the transparency of border taxes requires full implementation of WTO Article II on reporting tariff schedules, including para-tariffs, together with institutional capacity building of developing countries across their respective customs and other related agencies.

Keywords: Trade Policy, International Trade Organizations, Economic Integration

JEL Classification: F13, F15

Suggested Citation

Pitigala, Nihal and Singh, Prakash, Impact of Para-Tariffs in Sri Lanka: The Case for Improved Transparency in Border Taxes (July 10, 2020). Available at SSRN: https://ssrn.com/abstract=3648573 or http://dx.doi.org/10.2139/ssrn.3648573

Prakash Singh

Goa Institute of Management ( email )

Sanquelim Campus, Poriem, Sattari
Ribandar
Sattari, Goa 403505
India

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