Trade Rules and Struggle for Margin

Abstract

Protection is often simply understood as a high trade barrier. If tariffs on inputs or the components are also high, high tariffs on final products may not offer much protection. The notion of “effective protection”, the protection of added value, is more useful. The increase of duty on mechanical decks affects the effective protection on VCRs negatively. The effective protection of various duties is presented. The benefits and disadvantages of higher tariffs on VCRs and mechanical decks are visualised in computation. They were made in order to analyse the interests of competitors in trade policy actions. The outward processing legislation and its advantages are explained. It appears that Thomson had some relative advantages as a consequence of the higher duty on mechanical decks directly related to this outward protection. Both effective protection and outward processing benefits are computed from actual cost compositions.