Tariff Escalation and Invasive Species Risk

Anh Tu, John C. Beghin, Estelle Gozlan
October 2005  [05-WP 407]

We investigate the interface between trade and invasive species (IS) risk, focusing on the existing tariff escalation in agro-forestry product markets and its implication for IS risk. Tariff escalation in processed agro-forestry products exacerbates the risk of IS by biasing trade flows toward increased trade of primary commodity flows and against processed-product trade. We show that reducing tariff escalation by lowering the tariff on processed goods increases allocative efficiency and reduces the IS externality, a win-win situation. We also identify policy menus for trade reforms involving tariffs on both raw input and processed goods, leading to win-win situations.

Keywords: agro-forestry products, exotic pest, international trade, invasive species, tariff escalation, trade flows.

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