Tariff Escalation and Invasive Species Risk

provided by Research Papers in Economics

Tariff Escalation and Invasive Species Risk

Anh Tu and John Beghin*

Iowa State University

Draft of 05-15-05

Selected Paper prepared for presentation at the 2005 American Agricultural Economics
Association Annual Meeting, Providence, Rhode Island, July 24-27, 2005

Abstract

We investigate the interface between trade and invasive species (IS) risk, focusing on the
existing tariff escalation in agricultural and food-processing markets and its implication IS risk.
Tariff escalation in processed agro-forestry products exacerbates the risk of IS by biasing trade
flows towards increased trade of primary commodity flows and against processed-product trade.
We show that reductions of tariff escalation by reduction of the tariff on processed goods
increase allocative efficiency and reduce 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.

*We thank GianCarlo Moschini, Estelle Gozlan, Harvey Lapan, and Denis Mcgee for comments and discussions.
Estelle Gozlan and Denis Mcgee provided us with background information regarding pests associated with
agricultural and wood products and tariff escalation in wood products.

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