Effects of Restraining Steel Exports from the Republic of Korea and Other Countries to the United States and the European Economic Community

David Tarr

Chapter 25 in Trade Policies for Development and Transition, 2017, pp 595-616 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In this article a model is developed to evaluate the impact on an exporting country of a restraint imposed on its export by an importing economy in the context of a three-region model of world trade in a single product. The welfare changes in any of the three regions in the model and in the global economy can be evaluated.The model is applied to the restraints imposed on steel exports from the Republic of Korea to the United States and the European Economic Community (EEC). The United States and the EEC are found to have incurred significant losses as a result of the restraints. The largest part of these losses are quota rents transferred to Korea and the rest of the world. Under reasonable parameter assumptions, Korea and the rest of the world obtain net gains from the quotas, because the resource misallocation costs are smaller than the quota rents.The model is modified to analyze a tariff barrier rather than a quantitative restraint. It is found that an “equivalent” tariff on steel transforms Korea and the rest of the world from net gainers to net losers as a result of a restraint.

Keywords: International Trade Policy; Developing Countries; Transition Countries; Growth; Poverty; Environment; Multilateral; Adjustment Costs; Autos and Steel (search for similar items in EconPapers)
JEL-codes: F13 (search for similar items in EconPapers)
Date: 2017
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Journal Article: Effects of Restraining Steel Exports from the Republic of Korea and Other Countries to the United States and the European Economic Community (1987)
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