TY - JOUR
T1 - The welfare effects of repealing the U.S. Offshore Assembly Provision
AU - Mendez, Jose
N1 - Funding Information:
Correspondence to: J.A. Mttndez, Economics Department, University, Tempe, AZ 85287, USA. *I benefited greatly from earlier work with Richard Boltuck, Tracy Murray, and Don Rousslang on other issues raised by the repeal of the Offshore Assembly Provision. I also benefited from the substantive comments of three anonymous referees. Finally, I wish to acknowledge funding support provided by the Arizona State University Economics Department. ‘The OAP consists of two items in the Harmonized Tariff Schedule of the United States (HTS). Tariff item 9802.00.60 assesses a duty on the foreign value added of U.S. metal products sent abroad for processing and then reimported. Item 9802.00.80 grants duty-free entry to U.S. materials or components that are assembled abroad. From 1962 to 1988, these tariff items were classified as item 806.30 and 807.00, respectively, under the Tariff Schedule of the United States, Annotated (TSUSA). The HTS replaced the TSUSA on 1 January 1989. ‘Organized labor is the OAP’s most vocal and longstanding opponent. The AFL-CIO has urged repeal of the OAP since 1966, when it argued that the provision had encouraged U.S. firms to shift their assembly operations to Mexico [Grunwald and Flamm (1985, p. 14)]. More recently (25 June 1990), the International Ladies’ Garment Workers’ Union argued for its repeal in testimony before the House Subcommittee on Trade. Other unions that have voiced their opposition to the OAP include the International Union of Electricians, the United Auto
Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.
PY - 1993/2
Y1 - 1993/2
N2 - This paper develops new estimates of the welfare and domestic production effects of repealing the US Offshore Assembly Provision (OAP). Although the controversy surrounding the OAP has recently intensified, the only such estimates of repealing the OAP weredeveloped by Finger (1976). The estimates are developed by applying a partial equilibrium trade model of a two-stage production process to nineteen productct categories in which OAP trade was important in 1986. The paper find that repael of the OAP reduces domestic welfare. However, the effects are small and almost negligible in percentage terms. The important effects of repeal are distributional.
AB - This paper develops new estimates of the welfare and domestic production effects of repealing the US Offshore Assembly Provision (OAP). Although the controversy surrounding the OAP has recently intensified, the only such estimates of repealing the OAP weredeveloped by Finger (1976). The estimates are developed by applying a partial equilibrium trade model of a two-stage production process to nineteen productct categories in which OAP trade was important in 1986. The paper find that repael of the OAP reduces domestic welfare. However, the effects are small and almost negligible in percentage terms. The important effects of repeal are distributional.
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U2 - 10.1016/0022-1996(93)90064-5
DO - 10.1016/0022-1996(93)90064-5
M3 - Article
AN - SCOPUS:38249006686
SN - 0022-1996
VL - 34
SP - 1
EP - 22
JO - Journal of International Economics
JF - Journal of International Economics
IS - 1-2
ER -