True and false barriers to trade
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True and false barriers to trade book
The analysis of the protectionist effects of a policy of public transfers is obviously much easier than that of the effects of a tax policy. As far as the beneficiaries are national and not foreign producers, it is typically a situation in which some producers enjoy a comparative advantage relative to their foreign competitors. A tax such as the VAT - whether it is differentiated according to the products or not, whether it is refunded on exports or not - has no protectionist effects, because it introduces no discrimination depending on whether the producer is foreign or not. The VAT is levied on the basis of location of the different stages of the productive process, whether the owners of the corresponding incomes are located on the national territory or not. Differences in VAT rates between countries have no protectionist effect.