This paper examines the question: Who bears the larger portion of the excess burden of a tariff-the country that imposes it, or a country that it trades with? For a country that can influence its terms of trade, there are two ways of approaching this question. This paper shows that under certain assumptions, the extra burden from a marginal change in the homecountry tariff is shared equally between the home and foreign country at a tariff rate equal to twice the optimal tariff for the home country. Also, the cumulative welfare effect of a tariff in the home country, relative to free trade, turns out to be equalized across countries when the home tariff equals four times its optimal tariff. The paper provides an application of these results and points policymakers to the types of data that are relevant if they want to negotiate over "burden sharing."
International Monetary Fund. Secretary's Department
The speeches made by officials attending the IMF–World Bank Annual Meetings are published in this volume, along with the press communiqués issued by the International Monetary and Financial Committee and the Development Committee at the conclusion of the meetings.
This collection of papers delivered at a seminar, moderated by Ungku A. Aziz, in Kuala Lumpur addresses issues of economic and structural adjustment and trade and exchange rate policies in Southeast Asia.
The study reveals agricultural import restrictions are widely applied in Asia, but that Japan and Korea impose lower average tariffs and nontariff barriers with less frequency than most Asian countries. It also finds several low and middle-income countries enforce relatively low protection for basic foodstuffs, while high-income countries tend to impose relatively high protection for foods. Finally, commodity patterns of trade and protection suggest scope exists for successful reciprocal negotiations to liberalize agricultural trade mainly between low and middle-income Asian countries. Though similar gains might be achieved by unilateral liberalization, reciprocal negotiations are more feasible politically and, on a most-favored-nation basis, would imply greater trade expansion.