22 Pages Posted: 29 Jun 2007
Date Written: February 2007
Traditional explanations for indirect trade through an entrepôt have focused on savings in transport costs and on the role of specialized agents in processing and distribution. We provide an alternative perspective based on the possibility that entrepôts may facilitate tariff evasion. Using data on direct exports to mainland China and indirect exports via Hong Kong SAR, we find that the indirect export rate rises with the Chinese tariff rate, even though there is no legal tax advantage to sending goods via Hong Kong SAR. We undertake a number of extensions to rule out plausible alternative hypotheses based on existing explanations for entrepôt trade.
Keywords: Corruption, middleman, tax evasion
JEL Classification: F1, H2
Suggested Citation: Suggested Citation
Fisman, Raymond J. and Moustakerski, Peter and Wei, Shang-Jin, Outsourcing Tariff Evasion: A New Explanation for Entrepôt Trade (February 2007). CEPR Discussion Paper No. 6078. Available at SSRN: https://ssrn.com/abstract=997391
By Naci Mocan
This is a CEPR Discussion Paper. CEPR charges a fee of $5.00 for this paper.Login using your CEPR Personal Profile
File name: SSRN-id997391.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.