EFFECT OF TARIFF ESCALATION ON GHANAIAN COCOA EXPORTS: AN EMPIRICAL PERSPECTIVE

Abstract

This study analyses the effects of tariff escalation on Ghanaian cocoa exports in four importing markets: USA, EU, Japan and Malaysia. The study estimates nominal and effective protection coefficients in these markets based on ad-valorem equivalent of applied and bound specific tariffs. Results revealed that, effective protection exists in the Japanese and Malaysian cocoa industries at different stages of processing on both bound and applied tariffs. In contrast, the USA and the EU do not effectively protect their cocoa industries, thus, no tariff escalation on applied tariffs against cocoa imports from Ghana. This study concludes that from a static effect, higher tariffs do have a negative consequence on Ghanaian cocoa exports in these importing countries. From a dynamic perspective however, the relationship between tariff structures in these importing countries and Ghanaian cocoa exports is somewhat ambiguous and each situation has to be viewed on their own merit. A complete elimination of tariffs as a form of trade barrier on Ghanaian cocoa exports does not necessarily imply that Ghana could easily increase its exports of value added cocoa.

Keywords

• Tariff escalation
• Effective rate of protection
• Ghanaian cocoa exports