Working Paper: CEPR ID: DP401
Authors: Jaime de Melo; David Tarr
Abstract: This paper quantifies welfare costs and resource shifts that would occur if US quantitative restrictions in textiles, steel and autos were removed. Estimates are derived from a static ten-sector general the equilibrium model of the US economy. The welfare loss from the quantitative restrictions is estimated at approximately 1984 US$20 to their high rent transfer component (about 75%), these restrictions are equivalent (in welfare terms) to an average across the board tariff of 20% such rates were common in the early days of multilateral tariff reduction.
Keywords: voluntary export restraints; quantitative restraints; welfare costs; general equilibrium
JEL Codes: 421; 422; 122
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Removal of U.S. quantitative restrictions (QRs) in textiles, steel, and autos (F13) | welfare gain of approximately $20-22 billion annually (D69) |
| Welfare loss from quantitative restrictions (D69) | $20 billion (F69) |
| Income or rent transfers to foreigners (F24) | $15 billion (F69) |
| Distortionary costs associated with protection (H31) | $6 billion (G19) |
| Eliminating restrictions (F13) | net benefit of approximately $10.4 billion over six years (H69) |
| Welfare costs arise from quotas on textiles and clothing imports (F16) | largest welfare costs (H53) |