TAXES IN INTERNATIONAL TRADE THEORIES AND TRADE POLICY INSTRUMENTS (original) (raw)
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International Trade and Tax Law: A Very Close Relationship
Boletim de Ciências Económicas, 2022
This article elucidates the profound relationship between international trade and taxation. A brief historical evolution of the multilateral trade system is presented, and the WTO and its structuring legal principles are exposed, highlighting the dispute settlement system. The international tax organizations, especially the OECD, are appreciated comparing the soft law normative production to the hard law of the WTO. The discussion and analysis of the use of taxes as a protectionist barrier, the problem of harmful tax competition, and the urgency of international tax coordination are some of the topics visited. In summary, international trade and tax law are closely related through the legally binding rules of international trade, the provisions of tax treaties, and the potential for conflicts between domestic tax legislation and tax treaties.
2012
concrete inferences. Consequently, we are forced to rely on our subjective judgment when drawing on economic theory for the interpretation of Art. III GATT. In this Chapter, we concentrate on the study of Art. III.2 GATT dealing with fiscal instruments. 1.1 The Text of Art. III GATT The full text of Art. III GATT and its Interpretative Notes are reproduced here: Article III* National Treatment on Internal Taxation and Regulation 1. The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford protection to domestic production.* 2. The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1.* 3. With respect to any existing internal tax which is inconsistent with the provisions of paragraph 2, but which is specifically authorized under a trade agreement, in force on April 10, l947, in which the import duty on the taxed product is bound against increase, the contracting party imposing the tax shall be free to postpone the application of the provisions of paragraph 2 to such tax until such time as it can obtain release from the obligations of such trade agreement in order to permit the increase of such duty to the extent necessary to compensate for the elimination of the protective element of the tax. 4. The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application 6 of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product. 5. No contracting party shall establish or maintain any internal quantitative regulation relating to the mixture, processing or use of products in specified amounts or proportions which requires, directly or indirectly, that any specified amount or proportion of any product which is the subject of the regulation must be supplied from domestic sources. Moreover, no contracting party shall otherwise apply internal quantitative regulations in a manner contrary to the principles set forth in paragraph 1.* 6. The provisions of paragraph 5 shall not apply to any internal quantitative regulation in force in the territory of any contracting party on July 1, 1939, April 10, 1947, or March 24, l948, at the option of that contracting party; Provided that any such regulation which is contrary to the provisions of paragraph 5 shall not be modified to the detriment of imports and shall be treated as a customs duty for the purpose of negotiation. 7. No internal quantitative regulation relating to the mixture, processing or use of products in specified amounts or proportions shall be applied in such a manner as to allocate any such amount or proportion among external sources of supply. 8. (a) The provisions of this Article shall not apply to laws, regulations or requirements governing the procurement by governmental agencies of products purchased for governmental purposes and not with a view to commercial resale or with a view to use in the production of goods for commercial sale. (b) The provisions of this Article shall not prevent the payment of subsidies exclusively to domestic producers, including payments to domestic producers derived from the proceeds of internal taxes or charges applied consistently with the provisions of this Article and subsidies effected through governmental purchases of domestic products. 9. The contracting parties recognize that internal maximum price control measures, even though conforming to the other provisions of this Article, can have effects prejudicial to the interests of contracting parties supplying imported products. Accordingly, contracting parties applying such measures shall take account of the interests of exporting contracting parties with a view to avoiding to the fullest practicable extent such prejudicial effects. 10. The provisions of this Article shall not prevent any contracting party from establishing or maintaining internal quantitative regulations relating to exposed cinematograph films and meeting the requirements of Article IV.
The WTO and Direct Taxation : Direct Tax Measures and Free Trade
2018
The power to tax is one the highest privileges of sovereignty. Therefore, one might ask how the World Trade Organization (WTO), a supranational body, far from relying on a solidarity like in the EU or even the US, might dare to rule on direct taxes. Yet, membership in the WTO is voluntary. Today’s globalized world grants more wealth to all states and their citizens than any other period in human history. The foundation of this freedom, wealth, and of those opportunities is efficient world-wide trade. If a WTO member state abuses its power to levy direct taxes in order to put obstacles in the way of trade, the WTO has not only the right, but the duty to level the playing field between its members.
The World Economy, 2011
This paper asks two questions concerning Border Tax Adjustments for climate purposes, when viewed from a trade perspective: First, under what conditions are BTAs possible in the WTO-world? To address this issue, the paper provides a detailed discussion of the relevant law and case law. We also apply our main conclusions on what we consider to be paradigmatic cases of measures to address climate change where trade concerns are raised. We conclude that the WTO regime is no major obstacle to those aspiring to use BTAs, although the allocation of the burden of proof could be an issue. The second issue addressed is whether the economic literature on the desirability of BTAs adequately reflects concerns that have been raised in the trade policy community. Here we conclude that it has hardly addressed these concerns at all. We also point to some aspects of BTAs that would be important to take into account in a more complete analysis.
The Pure Theory of International Trade
Econometrica, 1965
The English classical model of foreign trade is the source of many propositions which form the body of international trade theory today. Despite attacks on other branches of classical theory it still survives as a basic tool of analysis. Its survival can be attributed to its applicability to leading policy issues in the country in which it originated, and to the power of its methodology: it was logically immune to the criticisms of general equilibrium and macroeconomic analysis. The classical economists were content to establish the direction in which the terms of trade move as a result of such disturbances as dishoarding, tariff adjustments, devaluation, income transfers and productivity changes. Nowadays more refined methods make it possible to derive more implications from the model, implicit in their analysis, and to ascertain the quantitative extent of the change in the terms of trade. The purpose of this paper is to derive and summarize these results. Specifically, I shall construct an international trade model owing its origin to the classical school, and apply it to determine the exact effects on international equilibrium of unilateral transfers, productivity changes, export and import taxes, and production and consumption taxes. Many of the conclusions are already known, but it is believed that the methods employed will help to simplify the techniques used in this branch of international trade theory, and that the results established will provide a convenient survey of the subject. The first part of the analysis will be concerned with the implications of the two-country two-commodity model usually employed by the classical economists. In the final section an attempt is made to determine the validity of the results when there are many countries.
General consumption taxes and international trade: A duality approach
1990
The paper analyzes the effects of general consumption taxes levied under alternative tax principles. It is shown that different national tax rates imposed under a general destination principle or a general origin principle create no relative price distortions and no redistributional effects in a simple international trade model. Under mixed tax principles, nationally diverging tax rates are no longer neutral, however. Two such cases are studied: in the first setting, the destination principle applies to trade in intermediate goods while final consumer goods are taxed under the origin principle. In a second case (which has been termed a restricted origin principle) trade within an economic union is based on the origin principle while trade with third countries follows the destination principle. It is argued that the abolition of border controls in the European Community will inevitably lead to either the one or the other of these mixed principles for taxing international trade.
2020
Using perfectly competitive, general equilibrium models of international trade, specific import tariffs, specific export taxes, and ad valorem trade taxes are compared in a trade war. A trade war is modelled as a NE in trade policies, where each country can choose to use ad valorem trade taxes (import tariffs or export taxes, which are equivalent), or specific import tariffs, or specific export taxes. In the two-country case, where there is a negative terms of trade externality a specific export tax dominates a specific import tariff or ad valorem trade taxes. Hence, the Lerner Symmetry Theorem does not hold for specific trade taxes in a trade war. This result continues to hold when the model is extended to the case of many countries assuming that there is a negative terms of trade externality. In a trade policy game where two countries export the same good so there is a positive terms of trade externality in the trade policy game between these two countries, the results are reverse...