Modeling of Duty Drawback by Means of Domestic Final Consumption Subsidy

We suggest an approach to take the Duty Drawback regime into account in a general equilibrium frame. A change of tariffs is imitated by a virtual subsidy for domestic consumers. The approach is based on a specific shock calculation and requires neither a change of the general equilibrium model nor an adjustment of the database. As an illustrative example we analyze a tariff reduction comparing the suggested approach with a normal application. Model results show clearly that the Duty Drawback regime has a considerable influence.