Triple win for trade in renewable resource goods by use of.pdfVIP

Triple win for trade in renewable resource goods by use of export taxes Abstract We challenge the free trade paradigm, in particular for developing countries exporting natural resource goods, by demonstrating positive economic and environmental effects of an export tax for renewable resource goods (RET). The two-sector general equilibrium model designed has an open-access renewable resource industry and a manufacturing industry. The economic, environmental and social effects of using an export tax on goods from the open-access renewable resource industry are analysed. It is demonstrated that the gross domestic product, the steady state resource stock and the domestic consumption of both products increase with the RET compared to free trade with no trade taxes. Key words: Trade, export tax, renewable resource, open-access, fisheries, development 1 1. Introduction International trade is liberalised and increasing and there has been debate about the welfare and environmental effects of this, in particular for developing countries exporting natural resource goods, whether managed or open-access. Some fear that this may harm both welfare and resource stocks in export countries, others are convinced that most, if not all, countries will benefit from increased trade (for discussions, see e.g. OECD, 2003; Bulte and Barbier, 2005; Emran, 2005; Nielsen, 2006). Policy advisers and international economic policy organisations usually favour a reduction in import tariffs and other trade taxes, but governments may be concerned about loss of revenues from such a reduction. This paper challenges the open trade paradigm by demonstrating positive economic and environmental effects of an export tax for renewable resource goods (RET), within the framework of a general equilibrium model. In the 1970s and 1980s the average share of trade tax in total tax revenues was a